Is it too Early to Open a Baby Savings Account for Your Kid?


Before you have kids, planning for them and imagining what life will be like seems easy. You might have wild dreams about opening their college savings account with a hearty initial principal, teaching them how to save money, and sending them off to college at 18 years old knowing you’ve given them the skills to make good financial choices.

Of course, after you have your first kid, that all changes when you buy that first box of diapers and discover they are more expensive than you could have ever imagined. Using a budget app is a start, but how do you prepare for your child’s financial future when you’re still building your own?

The short answer: By opening a savings account for your baby. The best savings accounts for children start early so the money has adequate time to grow. 

Sure, using a kid’s allowance is a good way to introduce your children to the concepts of finance but you’ll need to go beyond filling up a piggy bank to provide your little one with a healthy financial future.

Save for College by Starting Early

A variety of savings accounts exist, but one of the most important will be the account built up for your child’s entrance into higher education. When saving for a college education, you should give the principal balance as much time to grow as possible on account of two (very powerful) words: compounding interest. For example, if you can open a college savings account, such as a 529 College Saving Plan, as soon your baby is born, you’ll give your son or daughter 18 years of potential growth they can later tap into for college tuition and expenses. 

Of course, it would be ideal if you could dump $20,000 into this account right away and not worry about it for the next 18 years, but even a small initial investment can grow substantially over time.

Bottom line: a college savings account should be opened as soon as possible with regular deposits being made into the account. These deposits don’t have to be budget-busting amounts; think more along the lines of $100-$200 a month. 

Different Savings Plans: Emergency and Opportunity Savings

There are two kinds of savings you can utilize to start an account for your kids, but both involve storing up cash. An emergency fund is usually held at a bank or credit union, whereas opportunity money (for children, at least) is often held in a piggy bank.

The best time to open these accounts will vary greatly depending on the developmental levels of the child. But a good rule of thumb is when the child can understand the value of money; they can understand the idea that storing up that money will allow them to make larger purchases. By the time they are in first grade, most children will have a good grasp of these concepts — this is a great time to start a savings account for a child. 

The Best Savings Account for Baby

Opening a savings account for a baby will ensure that your daughter or son can receive long-term savings. But many accounts’ structure depends on if your children depositing money or if you will be making the contributions. The right account for you and your child depends on your financial goals and current circumstances.

One of the best gifts you can give to your children is a life insurance policy. Most companies will issue these any time after the child is 30 days old (assuming he or she is in good health). Choosing a financially strong company will ensure maximum growth and less risk.

If you would rather utilize the stock market, a UGMA or a UTMA can be opened anytime after the child is born. For those who want to teach their children the benefits of saving for retirement, an IRA for your child can get them a jump-start on their retirement. As soon as they have a taxable income, they can open one of these accounts (with your help, of course).

FAQ: Savings Account for Baby

Can I open a savings account for my baby?

Definitely. Whether you’re a new parent or will become one very soon, opening a bank account for a baby is a prudent step to help protect your child’s financial future. Not only does this give your children a leg up when preparing for big financial expenses like their college education, but a burgeoning savings account will you also give you peace-of-mind as they grow — even if you don’t agree with their Greek Life choices.

Is it a good idea to open a savings account for a child?

Opening a savings account for a child is a great idea! Many people wonder when they should open a savings account for their children. The answer? As soon as they are born. With that said, there are some aspects that will come with time, such a getting a credit card or teaching them the value of saving for bigger items. But the sooner you can open the account, the longer it will have to grow and compound.

Do savings accounts have debit cards?

In general, no. While you’re likely not going to need a debit card for your baby savings account, there will be a day when your child has outgrown their diapers and needs a debit card to pay for online expenses. At this point, you may want to consider opening a checking account. But you can cross that bridge when your child is older.

Can I open a children’s savings account online?

Yes! Whether you’re starting a baby savings plan or getting your older children involved with a bank account for kids, modern tech makes it easy. Start a virtual piggy bank today and set your child on a path to future financial success.

Do you have children? How have you taught them to know and understand money?

Scott Sery is a contributing writer at When he’s not writing about personal finance, you can find him fishing, hunting, backpacking, caving, and rock climbing in Montana. Follow them on Twitter at @OneSmartDollar.