investing for my family's future
The secret of successful saving for your children is to start early.
Key Takeaways
Saving a nest egg can give your children a great start in life and it can help the financial wellbeing of your whole family.
The longer you contribute for, the more your children may benefit, and there are lots of ways to save.
A financial adviser can help you choose the smartest ways to save for your children or grandchildren.
Children are our greatest pleasure and our top priority but raising them is expensive. Steep price rises in recent years have pushed the cost of raising a child from birth to age 18 significantly higher. In the United States, the average cost now exceeds $300,000 (and can reach over $400,000 in high-cost states like Hawaii). In many European countries, families also face rising expenses for housing, childcare, education and daily living, though costs and support systems vary widely by nation.
With the general costs of parenting plus the increased cost of living, many parents on both sides of the Atlantic feel squeezed struggling to make ends meet, let alone save for big future expenses like university, a car, a gap year or a home deposit.
The good news is that building a financial head start for your kids doesn’t have to break the bank. Starting early and saving consistently can make a huge difference to their future.
Giving your children a financial head start
We all want to do the right thing for our families. Recent research shows that a large majority of parents expect to provide some financial support to family members at some point, beyond day-to-day costs. Until children are established in their careers, many turn to parents or grandparents for help with major expenses such as higher education, travel, weddings or getting onto the property ladder.
If you don’t want these big-ticket items to affect your own standard of living later in life, the best approach is often to start saving little and often, as early as possible.
Allocating money into dedicated savings or investment pots can create helpful discipline and structure. It also sends a positive message to your children about developing good money habits from a young age.
Children who grow up seeing the benefits of consistent saving tend to become more financially literate and secure as adults.
What's the best way to save for my child's future?
Popular and tax-advantaged options in the US and Europe include education savings plans, custodial accounts, and retirement-style vehicles that benefit from long-term compounding.
In the United States, 529 college savings plans are among the most popular choices. Contributions grow tax-deferred and withdrawals are tax-free when used for qualified education expenses (including college, K-12 tuition in many cases, apprenticeships, and more). Many states offer additional tax deductions or credits for contributions. Grandparents and other family members can also contribute.
Other US options include custodial brokerage accounts (UGMA/UTMA) or for children with earned income, a custodial Roth IRA.
In Europe, families often use country-specific tax-advantaged accounts for children, such as education savings plans, junior investment accounts, or long-term savings vehicles that offer tax relief on growth. Rules vary by country — for example, some nations provide generous child benefits or tax credits that can be directed toward savings.
A financial adviser can help you compare these options and see how they fit into your overall family financial plan.
Why consider an education savings plan?
These plans are flexible and straightforward for many families. Anyone can contribute, parents, grandparents, godparents or friends and the money benefits from years of potential compound growth. Choosing a stocks-and-shares style option for the long term can help the savings ride out market fluctuations, provided the time horizon is long enough.
Funds are typically accessible when the child reaches adulthood or for qualified education costs, giving the money maximum time to grow.
Why save into a children’s pension or retirement-style account?
In both the US and Europe, it’s possible to start a retirement account for a child as early as birth (for example, a custodial Roth IRA in the US if the child has earned income, or similar long-term savings vehicles elsewhere). While the money can’t be accessed until much later in life, the extremely long time horizon allows for powerful compounding.
Contributions may also offer tax advantages and can help with estate planning by reducing the size of your taxable estate in some jurisdictions.
Starting small but early can result in a substantial pot by the time your child retires, though you should only contribute what feels comfortable without compromising your own future lifestyle.
Do children pay income tax on their savings?
In most cases, children are subject to the same tax rules as adults but it rarely becomes an issue. They usually have a full personal allowance or tax-free threshold and their savings rarely generate enough income to exceed it. Always check the specific rules in your country, as they differ between the US and European nations.
Family-friendly financial advice
Passing your wealth on doesn’t have to happen after you’re no longer around. We can help you decide on the smartest ways to save for your children. If you’d like personalized guidance on building a family financial plan across generations, get in touch today.
An investment placed into funds (equities) would not have the security of capital associated with a deposit account with a bank or building society.
The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.
Sources
LendingTree, Cost of Raising a Child Study, 2026. Average cost to raise a child from birth to age 18 in the US now exceeds $300,000 (reaching $303,418 nationally, with higher figures in states like Hawaii).
Wells Fargo, 2026 Money Study, 2026. Approximately two-thirds (64%) of parents with Gen Z children (ages 18–28) report providing ongoing financial support.
Fidelity Investments, 529 College Savings Plan Overview and 2026 Contribution Limits. Tax-advantaged growth and withdrawal rules for qualified education expenses.
IRS.gov, 529 Plans: Questions and Answers, updated 2026. Federal tax treatment and rules for 529 plans.
Fidelity Investments, Roth IRA for Kids / Custodial Roth IRA, 2026. Contribution limits and rules (up to $7,500 in 2026, subject to earned income).