Explore practical savings tools—from 529 plans to UGMA accounts—that help you prepare for both college and beyond
As parents, one of the greatest gifts we can give our children is the foundation for a secure financial future. While we can’t predict exactly what their path will look like—whether they pursue higher education, launch a business, or simply need help navigating life’s early expenses—we can take steps now to prepare them for those milestones.
This blog will walk through some of the smartest ways to save for your child’s future, highlighting both traditional options and lesser-known ones. Whether you’re just getting started or looking to diversify your family’s financial plan, these ideas can help you feel more confident knowing you’re setting your child up with opportunities—and peace of mind—for the road ahead.
Start With a Savings Account
The simplest place to start when saving for your child’s future is often the most effective: a savings account. This is an easy, low-risk way to begin setting money aside while building the habit of consistent saving. Many banks and credit unions even offer special “youth savings accounts” designed specifically for children, which can be a fun way to get your child involved in learning about money.
A savings account offers accessibility and safety, making it a smart first step for families who are new to saving or may not have extra money to invest right away. Your deposits are federally insured (up to certain limits), and though interest rates may not be sky-high, your money grows steadily without risk. Over time, this account can serve as an emergency fund for child-related expenses or be used as a stepping stone to more advanced savings vehicles.
Even better, opening a savings account in your child’s name can become a teachable moment. You can show them how deposits and interest work, reinforcing the idea that money grows when you set it aside instead of spending it right away. While it won’t cover college tuition or buy a first car on its own, a savings account is a practical and empowering way to start building toward bigger goals.
Consider a 529 Plan
If college is on your radar, a 529 plan is one of the most powerful tools you can use to prepare. These state-sponsored savings plans are specifically designed to help families set aside money for future education expenses, and they come with unique tax advantages that make them stand out from a regular savings account.
Here’s how it works: you contribute money to the plan, and it grows tax-deferred over time. When your child eventually uses the funds for qualified education costs—like tuition, room and board, textbooks, or even certain K-12 expenses—the withdrawals are tax-free. Some states also offer tax deductions or credits for contributions, which means you can save on your state income taxes while investing in your child’s future.
If higher education is a priority for your family, this plan should be near the top of your list.
Explore Custodial Accounts
For parents who want a little more flexibility than a 529 plan provides, custodial accounts—specifically UTMA or UGMA accounts—are a smart option to consider.
These accounts allow you to save and invest on behalf of your child, but unlike 529s, the money isn’t limited to education expenses. That means the funds could be used for college, but also for a first car, starting a business, or even a down payment on a home when your child reaches adulthood.
Here’s how they work: you open the account as the custodian, and your child is the beneficiary. You can contribute cash, stocks, bonds, or mutual funds, and the money grows until your child comes of age (usually 18 or 21, depending on your state). At that point, the account legally becomes theirs to manage as they see fit.
Custodial accounts do come with some trade-offs. Because the assets legally belong to the child, they may impact eligibility for financial aid more than parent-owned accounts. Additionally, once your child reaches the age of majority, you’ll no longer have control over how the money is spent.
If you’re looking for a versatile way to invest in your child’s future while keeping options open, a UGMA or UTMA account may be the right fit.
Invest For the Long Haul
While savings accounts and dedicated plans like 529s or custodial accounts are excellent starting points, it’s also worth looking at long-term investment options to build lasting wealth for your child. Investing in assets like stocks, bonds, or low-cost index funds can give your savings the opportunity to grow much faster than they would in a traditional bank account.
The key advantage of investing is the power of compounding over time. Even modest contributions, if invested wisely, can snowball into significant amounts over the course of 10, 15, or 20 years. Even investing just $100 a month in a broad-market index fund could grow significantly by the time your child is ready for college or reaches adulthood.
Of course, investments come with some level of risk, so it’s important to choose a strategy that matches your comfort level. Many parents opt for diversified funds that spread money across different sectors, balancing growth potential with stability. Others may mix in bonds or safer vehicles to reduce volatility. The beauty of investing is that you can adjust your approach as your child gets older and their needs become clearer.
When paired with other financial tools—like a 529 plan or custodial account—long-term investments can serve as the engine that accelerates your child’s financial foundation. By thinking beyond simple savings and embracing smart investing strategies, you’re not just setting money aside—you’re actively growing it into opportunities and security for your child’s future.
There’s no single “perfect” way to save. What you really need is to layer different tools together to fit your family’s needs, goals, and budget. A simple savings account can be a great starting point, while options like 529 plans and custodial accounts help you plan for even bigger milestones. By taking small, consistent steps today, you can ease future financial burdens while teaching your child valuable lessons about money, responsibility, and planning ahead.
No matter where you’re starting from, every dollar saved and every smart choice made is a step toward giving your child the gift of stability and opportunity.
