From Toys to Trust Funds: Smarter Gifts for the Kids This Year.
’Tis the season. The Christmas countdown is officially loud, and I already know you’re knee-deep in Black Friday and Cyber Monday chaos. Everything you’ve been eyeing all year is magically 25% off, and the kids gave you their Christmas list back in September like they were submitting a project proposal. Meanwhile your favorite finance creators (yes... including your boy) are flooding your feed to remind you not to blow the bag before December even hits.
But let’s talk gifts for a second.
Every year it feels like the holidays turn into a materialistic Olympics. No shade — I’ve been there too. But especially for the parents, godparents, aunties, uncles, and “I’m basically family” folks… have you ever thought about gifting the kids something that hits way harder than a toy they’ll forget by spring?
You hear me all the time talking about building savings, investing early, and creating real wealth for yourself. But kids can get that same head start too — with a little help. Warren Buffett didn’t become Warren Buffett because of a lucky break in his 40s. My guy started investing at 10 years old. Not because he walked into a brokerage on his own, but because somebody put him in a position to win early.
So this year, instead of only going for the newest game system or the latest pair of kicks, consider gifting something different. Something that grows. Something that teaches. Something that benefits them long after the wrapping paper hits the floor.
Let’s talk about the types of accounts you can set up (or contribute to) that could genuinely change a kid’s financial life.
The Best Investment &
Savings Gifts for Kids
1. UGMA/UTMA Custodial Account (Investment Account for Minors)
A custodial account is one of the easiest ways to give a kid a real investing head start. You (or any adult) control the account until they’re grown, but the money legally belongs to them from day one. That means every dollar you put in — and every dollar it grows into — is theirs to use once they hit adulthood. It’s flexible, simple to open, and lets you invest in real assets like stocks, ETFs, and index funds instead of handing out toys they'll forget by February.
Best For / Pros
A flexible way to invest on behalf of a child.
You can invest in stocks, ETFs, index funds, bonds, etc.
No contribution limits — family members can give as much as they want.
A truly educational financial gift: the child sees how money grows over time.
Things to Know / Limits
The money legally belongs to the child. Once they hit 18–21 (depends on state), they get full control.
May impact future financial aid eligibility for college.
Earnings can trigger the Kiddie Tax—meaning some gains get taxed at the parent’s rate.
Cons Worth Mentioning
You can’t pull the money back for yourself. Once you gift it, it’s theirs.
If they turn 18 and decide that money is going toward a Dodge Charger… welp. You can only pray.
2. 529 College Savings Plan
If you want to give a gift that screams “future first,” a 529 plan is the gold standard for education savings. It’s designed to help kids pay for college, trade school, and even some K–12 expenses with major tax perks along the way. You put money in, it grows tax-free, and as long as it’s used for schooling, it can be withdrawn tax-free too. It’s one of the cleanest ways to help a kid avoid student loans before they even know what FAFSA stands for.
Best For / Pros
If you want to gift something that screams “education first,” this is it.
Money grows tax-free, and withdrawals for school are also tax-free.
Can be used for college, trade school, some K–12 expenses, and even student loan payments.
Things to Know / Limits
Must be used for qualified education expenses to avoid taxes/penalties.
Each state has its own plan; some offer tax deductions for contributions.
Cons Worth Mentioning
If the child doesn’t go to college or trade school, using the money for something else gets messy (taxes + penalty).
Investment choices are limited to what's inside the plan.
3. Custodial Roth IRA (If the Child Has Earned Income)
A custodial Roth IRA is the kind of gift that hits harder the older they get. If the child has earned income (think babysitting, summer jobs, part-time work), you can open a Roth IRA in their name and let decades of tax-free growth do the heavy lifting. It’s not a quick-access account — this is compound interest with a long runway — but it’s one of the strongest generational wealth plays you can make for a kid who’s already earning their own money.
Best For / Pros
A top-tier generational wealth play if the kid has a job — babysitting, lifeguarding, McDonald’s, etc.
Money grows tax-free, forever.
Decades of compounding can turn even small contributions into something serious.
Things to Know / Limits
The child MUST have earned income to contribute.
Annual contributions capped at the lesser of their income or the IRS limit (currently around $7k).
Designed for long-term use (retirement), so not super flexible.
Cons Worth Mentioning
Not an option for really young kids unless they earn legitimate income.
Withdrawals before retirement age come with rules.
4. High-Yield Savings Account for Kids
A high-yield savings account is a simple, low-risk way to help kids understand saving without overwhelming them with investing jargon. Think of it as their starter bank account: easy to open, FDIC-insured, and a safe place for their birthday money, allowance, or small gifts to grow. It won’t make them rich, but it introduces healthy habits early and gives them a real sense of ownership over their money.
Best For / Pros
Simple, safe, no-risk way to build a savings habit.
Great gift for younger kids who aren’t ready for investing yet.
Many banks offer kid-friendly setups with joint or custodial access.
Things to Know / Limits
Interest rates change often.
Growth is slow — won’t beat inflation in the long term.
Cons Worth Mentioning
Lower upside compared to investing.
You need to be disciplined about contributing consistently.
5. Youth or Teen Bank Account (13–17)
Teen bank accounts give older kids a safe way to manage money while still having a parent’s supervision. They usually come with a debit card, spending controls, and easy mobile banking — perfect for teaching budgeting, responsibility, and “don’t spend your whole check in one day” energy. It’s not an investment account, but it’s a powerful teaching tool and a bridge to smarter financial decisions as they grow.
Best For / Pros
Helps older kids learn banking, budgeting, and money management.
Some offer debit cards with spending controls.
Good “starter account” before they graduate to real investing.
Things to Know / Limits
Spending limits vary by bank.
Usually requires a parent or guardian to co-own.
Cons Worth Mentioning
More “financial education” than “financial growth.”
Not as impactful long term as an investment account.
Bringing It Home
A pair of sneakers is cool. A toy is fun. But a gift that grows with them? A gift that puts a kid years ahead while the rest of the world spends money that’s forgotten by spring? That’s different. That’s impact. That’s the kind of love that echoes long after the holidays fade.
If you’re already building your own financial freedom story, this is just an extension of that same mindset. Wealth is built, not wished for — and you can help the next generation start that journey early.
And if you need a simple, beginner-friendly way to help someone take their first real money step, grab The Money Move Manual and send it to a friend, cousin, or new parent. It’s a free resource I created to make this whole journey less confusing and way more doable. A small push today can set someone up for a lifetime of smarter choices.
