Saving money for your kids is one of the most powerful gifts you can give them. Whether you’re setting aside cash for college, their first car or a financial head start in adulthood, starting early makes a huge difference.

But with so many accounts and strategies out there, it’s hard to know where to begin. According to a 2024 Fidelity study, 74% of parents are actively saving for their child’s education—but most are on track to cover less than half of what they’ll actually need. Starting early and choosing the right account makes all the difference.

In this guide, you’ll find the best ways to save money for kids, broken down by account type, age and goal—so you can pick the right strategy for your family. 

And if you’re looking for a fun way to earn a little extra to put toward those savings, KashKick lets you earn real cash in your free time by playing games, taking surveys and exploring deals. It’s perfect for those moments you want to decompress.

Why Saving for Kids Early Matters

Time is the secret ingredient in building wealth. Thanks to compound interest, money saved today grows exponentially over the years ahead.

Here’s a simple example: If you put $1,000 into an account earning 7% annually when your child is born, it could grow to over $7,600 by the time they turn 30—without you adding another cent. Start at age 10 instead? You’re looking at closer to $3,900.

The earlier you start, the harder your money works for you. Even $25 a month adds up faster than you think.

Best Ways to Save Money for Kids

One thing to keep in mind: There’s no single “best” account for every family. Everyone’s financial situation is different, and we’re not financial advisors. The options below are a great place to start your research, but it’s always worth checking with a financial professional before making any big money moves.

Afterall, the right choice depends on your goal, your timeline and how much flexibility you want. Now, here’s a breakdown of the top options:

1. Open a 529 College Savings Plan

If college is the goal, a 529 plan is hard to beat. These state-sponsored investment accounts let your money grow tax-free—and withdrawals are also tax-free when used for qualified education expenses like tuition, room and board, and books.

You can open a 529 through your state or any state’s plan. (You’re not limited to your own.) Many have no minimum opening deposit, and contributions can be as small as $15–$25 a month.

One thing to keep in mind: If your child doesn’t go to college, you can now roll unused 529 funds into a Roth IRA (up to $35,000 lifetime), thanks to SECURE Act 2.0 of 2022. That’s a game-changer for families worried about over-saving.

Best for: Parents focused on funding higher education 

Tax advantage: Yes—contributions grow tax-free; withdrawals for education are tax-free

Flexibility: Medium (penalties for non-qualified withdrawals, but rollover rules have improved)

2. Start a Custodial Savings Account (UGMA/UTMA)

A custodial account under the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act (UTMA) lets you invest money on behalf of your child. You manage it until they reach adulthood (typically 18 or 21, depending on your state), at which point it transfers to them outright.

Unlike a 529, there are no restrictions on how the money is used. It can go toward college, a car, travel or anything else. The trade-off? No special tax benefits. Investment gains are taxable, though minors do get a small annual tax-free threshold (the “kiddie tax” rules apply).

Best for: General savings with no specific purpose in mind 

Tax advantage: Limited (some earnings taxed at the child’s lower rate) 

Flexibility: High—no restrictions on how the money is spent at maturity

3. Open a Kids’ Savings Account at a Bank or Credit Union

This is the simplest way to quietly build a savings balance for your child over time. Many banks and credit unions offer youth savings accounts specifically designed for minors, often with no fees, no minimum balances and competitive interest rates.

Open one, set up an automatic transfer—even $20 or $30 a month—and let it grow in the background. You don’t have to think about it, and the balance steadily builds toward whatever goal you have in mind.

It’s not the most exciting option, but it’s reliable, low-effort and a great foundation to pair with a more growth-focused account like a 529 or custodial brokerage.

Best for: Parents who want a simple, no-fuss account to consistently set money aside 

Tax advantage: None 

Flexibility: Very high

Popular options to research:

• Capital One Kids Savings Account
• Ally Bank Kids Savings Account
• Local credit union youth accounts

4. Invest in a Custodial Roth IRA

Here’s one most parents don’t know about: If your child has earned income (think: babysitting, lawn mowing, a part-time job), they can contribute to a Roth IRA. You can even gift them the contribution amount up to what they earned.

The math on this is staggering. A $1,000 Roth IRA contribution at age 15 could grow to over $40,000 by retirement at 65—assuming a 7% average annual return. That’s the power of starting young.

Contributions (not earnings) can be withdrawn anytime without penalty, giving it some flexibility. But the real win is tax-free growth over decades.

Best for: Teens with earned income who want a massive long-term advantage 

Tax advantage: Yes—grows tax-free; qualified withdrawals in retirement are tax-free

Flexibility: Medium (earnings have restrictions until retirement age)

5. Buy U.S. Savings Bonds (Series I or EE)

U.S. Savings Bonds are one of the safest ways to save for a child—backed by the federal government. Series I bonds are especially popular right now because their interest rate adjusts with inflation, protecting your purchasing power.

You can buy I bonds through TreasuryDirect.gov starting at just $25. The downside? They must be held for at least one year, and there’s a small penalty for cashing out before five years.

Best for: Conservative savers who want zero risk 

Tax advantage: Federal taxes on interest can be deferred; sometimes exempt for education use 

Flexibility: Low—must hold for at least 12 months

6. Open a Brokerage Account and Invest in Index Funds

If you want to go beyond a savings account and actually grow wealth for your child, a low-cost index fund inside a custodial brokerage account can be a powerful tool.

Index funds track the market (like the S&P 500) and historically average around 7–10% annual returns over long periods. Platforms like Fidelity, Vanguard and Schwab offer custodial accounts with no minimums and fractional share investing.

This isn’t a “set it and forget it” option in the sense that markets fluctuate—but over a 10–18 year horizon, history is on your side. 

If you’re new to investing, check out the best investment apps for beginners and a beginner’s guide to investing to get started with confidence.

Best for: Parents comfortable with some market risk who want maximum long-term growth 

Tax advantage: None special (capital gains tax applies) 

Flexibility: High—can be used for anything

7. Try a Kids’ Debit Card and Savings App

While a savings account quietly grows in the background, Greenlight puts money management directly in your child’s hands. It combines a kids’ debit card with a built-in app where you assign chores, set spending limits and create savings goals together—all in real time.

The goal here isn’t accumulation—it’s education. Kids can see exactly where their money is going, work toward something they want and start connecting effort to reward. 

Even better: You can earn a $15 reward through KashKick just for trying Greenlight. Check out the best money-saving apps on KashKick to explore other rewards. Offer amounts are subject to change and may vary.

Best for: Teaching kids to actively manage, spend and save their own money 

Tax advantage: None 

Flexibility: High

8. Contribute to a Health Savings Account (HSA) With Future Use in Mind

This one’s a longer play, but worth mentioning. If you have a high-deductible health plan, you may have access to an HSA. Funds grow tax-free and can be used for medical expenses—a cost that never goes away.

While you can’t open an HSA for your child directly, maximizing your family’s HSA now can free up other money in your budget to save for them. And after age 65, HSA funds can be used for anything (like a traditional IRA).

Best for: Parents looking to optimize their overall household financial picture 

Tax advantage: Triple tax advantage (contributions, growth and withdrawals all tax-free for medical) 

Flexibility: Medium

9. Earn Extra Cash to Boost Your Kids’ Savings With KashKick

Sometimes the hardest part of saving for your kids isn’t knowing where to put the money—it’s finding the extra cash to save in the first place.

That’s where KashKick comes in. KashKick is a free rewards platform where you can earn real cash by playing games, taking surveys and claiming deals—all from your phone. Offer amounts are subject to change and may vary.

Once you earn $10, you can cash out through PayPal or Venmo in just 1–3 days. One stay-at-home mom used KashKick to earn fun money for her family—read her story to see how she made it work. Even a little extra each month, sent straight to your child’s savings account, adds up faster than you’d expect.

Best for: Parents looking for a low-effort way to add more to their kids’ savings 

Earning potential: Varies; real cash paid out via PayPal or Venmo

Flexibility: Very high—earn on your schedule, transfer to savings whenever you want

👉 Sign up for KashKick for free and start earning today.

How to Choose the Best Way to Save Money for Kids

Not sure where to start? Here’s a quick guide:

• If your goal is college: Start with a 529 plan. The tax benefits are unmatched.
• If you want flexibility: A custodial account (UGMA/UTMA) or basic savings account gives you the most options.
• If your teen has a job: Open a custodial Roth IRA immediately. The long-term payoff is remarkable.
• If you want to teach money skills: A kids’ debit card app like Greenlight is a great hands-on tool.
• If you just need to start somewhere: Automate $20–$50 a month into a dedicated savings account. Simple beats perfect every time.

The best strategy is the one you’ll actually stick with. Start small, stay consistent and let time do the heavy lifting.

The Bottom Line

Saving money for your kids doesn’t have to be complicated. Whether you open a 529 plan, invest in index funds or simply automate a small monthly transfer, the best way to save money for kids is to start—now.

Every dollar you set aside today is working for your child’s future, even if you can’t see it yet. And if you want to find a little extra to put toward those savings, KashKick makes it easy to earn real cash in your spare time.

Sign up for KashKick today and put your free time to work for your family’s financial future.