Investing for Kids Builds Financial Independence
Parents today have more options than ever for giving their children a financial head start - but the real power lies in starting early and being consistent. A recent U.S. Bank guide explains how introducing your child to investing and financial independence now can set them up for greater flexibility and confidence later.
Why start early
When you invest for a child, even modest regular contributions have time on their side - the longer the time horizon, the more chance compounding has to work. That means your child isn’t just saving - they’re growing their potential.
What to teach
- Set clear goals - whether it’s a laptop, trade certification, car, or college.
- Explain the difference between saving and investing - saving typically sits in cash, while investing means buying assets that may grow (and may fluctuate).
- Use tools like a UTMA (Uniform Transfers to Minors Act) account to give your child access to funds when they reach the age of majority - and to build investment behavior early.
Why a UTMA account works
UTMAs offer flexibility that many education‑only plans don’t. The funds can be used for many life goals, supporting whatever path your child chooses. Starting with small monthly contributions - even $25 - can help you build a meaningful resource over time.
Getting started today
- Choose a monthly amount you can sustain - consistency matters more than size.
- Open (or schedule to open) your child’s investment account and automate contributions.
- Include your child in age‑appropriate conversations about how their money is working for them.
Don't just take our word for it
Hear what trusted money experts say about why UTMA and UGMA accounts can be a smart way to invest for a child’s future.
There are some tax advantages to using UGMA and UTMA accounts… Since they’re in your child’s name, the accounts will be taxed according to their tax bracket… There are no contribution limits on UGMA and UTMA accounts.
Dave Ramsey
Personal Finance Expert
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Investing for your kid’s future
Dave Ramsey
Personal Finance Expert
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...you could consider opening an account where you can dive deeper with the kids by your side. The easiest way to do so is to open a custodial account, known as an UGMA ... or UTMA ... account.
Jill Schlesinger
Emmy winning Business Analyst
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Straightforward “starter” investing account for kids
JILL SCHLESINGER
Emmy winning Business Analyst
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You can give children money that can accumulate somewhat tax-free over time... I love them (UTMAs) because they were like, trusts that you didn't need lawyers to create.... I think it's one of the better tax breaks around though. I know hunting for tax breaks may not sound very exciting, but that's how you take care of your family.
Jim Cramer
CNBC Host
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Give children money that can accumulate over time
Jim Cramer
CNBC Host
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