How to Start a Savings Fund for a Baby (Even If You’re Late to the Game)
The “Oops, I Should Have Started Sooner” Moment
Let’s be real—if you’re a parent, you’ve probably had at least one “Why didn’t I do this earlier?” moment. Mine hit when my son turned 15, and I realized I hadn’t set up a serious savings fund for him. Life happened, bills happened, and suddenly, I was Googling “How to save for a kid’s future when you only have a few years left.”
Fast forward to today—he’s 18, and while I didn’t start as early as I wanted, I made smart financial moves that still set him up for success. And guess what? You can do it too! Whether your baby is on the way or already borrowing your car, it’s never too late to start.
The Financial Benefit: Why Saving for Your Baby Matters
- Compound Interest is Your Best Friend – The earlier you start, the more time your money has to grow. Even small contributions can snowball into a huge financial cushion.
- Future-Proofing Against Expenses – College, first car, moving out—big life moments come with big price tags. A savings fund makes them manageable instead of stressful.
- Teaches Kids Financial Responsibility – Having a savings account gives you a natural way to teach financial literacy as they grow.
Open a Custodial Account (UGMA/UTMA) with Charles Schwab or Fidelity
AI Image Prompt: A computer screen displaying a Fidelity and Charles Schwab dashboard, showcasing options for custodial accounts for children.
A UGMA (Uniform Gifts to Minors Act) or UTMA (Uniform Transfers to Minors Act) account is an easy way to set aside money for your child in a tax-advantaged way. These accounts allow you to save, invest, and pass funds directly to your child at 18 or 21 (depending on your state).
How to Do It:
- Step 1: Go to Charles Schwab or Fidelity and search for Custodial Accounts.
- Step 2: Choose between a UGMA/UTMA (best for general savings) or a 529 College Savings Plan (best for education).
- Step 3: Open the account online with your child’s Social Security Number and your information.
- Step 4: Set up recurring contributions—even $25 a month adds up!
Smart Money Move: If you have relatives who love showering your kid with birthday cash, ask them to contribute to the custodial account instead of buying another toy that will end up in the donation bin.
My Personal Experience with Fidelity (Starting Late but Still Winning)
At 15 years old, my son’s savings fund looked… underwhelming. So, I turned to Fidelity, and here’s what I did:
- Opened a Fidelity UGMA account – Since I wasn’t just saving for college, this gave more flexibility than a 529.
- Invested in index funds – Instead of just letting the money sit, I put it in low-risk, high-growth funds to maximize returns in just three years.
- Automated deposits – Even though I started late, setting up consistent $100 monthly contributions made a huge difference.
- Encouraged him to contribute – When he got his first job, I had him put 10% of each paycheck into the account. This taught him early about saving and investing.
Now? He’s 18, and while we didn’t hit millionaire status (yet), he has a solid financial foundation to start adulthood.
Smart Money Move: Fidelity lets you set up fractional investing—meaning even if you only have $10 to spare, you can still buy into high-growth stocks or ETFs.
Consider a High-Yield Savings Account for Short-Term Goals
If you’re not ready to invest, a high-yield savings account (HYSA) is still a fantastic option. It earns more than a traditional savings account and keeps your money easily accessible.
Best High-Yield Savings Accounts for Kids:
- Marcus by Goldman Sachs – No fees, competitive interest rates.
- Ally Bank – Easy online access, strong APY.
- Capital One Kids Savings – Great for teaching financial literacy.
How to Do It:
- Open an HYSA in your name or with your child as a joint owner.
- Use it for short-term savings—like a first car, emergency fund, or big milestone purchases.
- Deposit gift money, birthday cash, or spare change into it.
Smart Money Move: Set up automatic round-ups! Every time you make a purchase, your spare change goes straight into the account.
The 529 College Savings Plan (Tax-Free Education Fund)
Secure their future today! Start a 529 college savings plan and watch their dreams grow.
If college savings is your priority, a 529 plan is your best bet. This tax-advantaged account lets you invest money for education completely tax-free.
Why It’s a Game-Changer:
- Tax-Free Growth – Contributions grow tax-free if used for qualified education expenses.
- State Tax Benefits – Some states offer deductions or credits for 529 contributions.
- No Age Restrictions – If your kid decides to take a gap year, the money is still there waiting.
How to Open One:
- Choose a plan (Fidelity, Vanguard, or your state’s 529).
- Select an investment strategy (target-date funds adjust risk as your child gets older).
- Set up automatic contributions (even $50 a month adds up over 18 years).
Smart Money Move: 529 funds can now be used for trade schools and even K-12 tuition. It’s more flexible than ever!
Parting Advice: It’s Never Too Late!
If you’re feeling guilty about starting late, don’t! The best time to start was yesterday, but the second-best time is right now. Whether your baby is a newborn or a teenager, taking any step toward their financial future is a win.
Quick Recap:
✅ Open a custodial account (Charles Schwab or Fidelity)
✅ Consider a high-yield savings account for short-term savings
✅ Invest in a 529 plan for tax-free education growth
✅ Start small, stay consistent, and let compound interest do its magic!
Trust me, when your kid turns 18 and actually has money waiting for them, you’ll be patting yourself on the back.
More Financial Wisdom & Wealth-Building Tips
- For budget-friendly family finance: How to Budget with a Monthly Paycheck
- For money-saving strategies: Old School Money Hacks That Still Work Today
- For long-term financial freedom: Seven Simple Ways to Get Debt-Free and Stay That Way