Saving for Your Kids: Better than a Piggy Bank

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Becoming parents has been the biggest joyful change in our lives. While she’s still young, there are plenty of things we are doing to teach her and help her with, including finances. As I mentioned before, you can start early with getting your children to be super savers.

A Cute Baby Looking at Piggy Bank

Since our little one is in the toddler stage we keep it simple; she has a piggy bank for some of her small savings. However as she is getting bigger, we’re looking ahead at different ways we can boost her savings. Every so often we get gifts of money from friends and family for our baby girl’s current and  future expenses. We’re very appreciative to have the thoughts (and very practical) gifts and want to make the most of them.

I know that many parents are in the same boat – they want to help their kids prepare for the future. Even if you’re not sure how you’ll invest the gift money now, at least you’ll have a few options to save for your child’s future that will give you better returns than just stashing it in a piggy bank.

High Yield Savings Account

If you’re on the fence on where to park your gift money, the first suggestion I would make is opening up a high yield savings account. You’ll be earning some interest on it while you decide on a more long term plan.  If you’re pretty sure you won’t need it in the next few years, you may want to up your return by looking at getting  certificates of deposit (CDs). That will increase your return by a bit while still keeping your money safe in a bank that is insured by FDIC or a credit union covered by NCUA.

We opened a savings account for our daughter last year with the gifts that family gave in case we needed anything. Fortunately expenses have fallen within our budget, so we  just keeps tabs on the account and watch it grow. Should we need it for an family emergency or if our daughter decides she wants to save up for a car or her wedding, we have some money we can tap into as needed.

529 Plans

If you’re pretty certain that you want a college fund started for your child, then opening a 529 plan can be a great bonus as you’re using a tax-advantaged account for your investing. When the time comes for the funds to be used, qualified distributions are deductible. But you may not have to wait until your kid is attending college to get some benefits. Depending on the plan you choose, some states offer income tax deductions for qualifying contributions.

Just make sure you check your plans out before signing up to get exactly what you want. There are some great low cost options like Vanguard, but that may mean you don’t get a state income tax deduction, depending on the state.


I’m not saying to invest all your kids money into individual stocks; I think low cost index funds are a better option for most families. However if your kids are older and are eager to learn, you can take a small portion of that money and have them invest it in a company they are familiar with (and has a decent track record or returns). Have them keeps tabs on the company and help them to read the reports and the updates in the newspaper. Even if they lose a bit of money, it’ll be a valuable learning experience for when they invest on their own.

Thoughts on Investing For Your Kids

I’d love to hear about how your family handles gift money and savings? Do you have a college fund started? Are you helping your kids learn about investing?

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