There is a new way to invest for a child: the federal Trump Accounts. Open one, and the government drops in $1,000 for babies born through 2028; after that, a family can add up to $5,000 a year, and so can grandparents, aunts, uncles, even employers. The account is worth knowing — but the real gift isn't the money, it's the head start. When you invest for a child early, time has the potential to do much of the work.
Picture two children, each given $1,000 to invest. One receives it at birth, the other on their tenth birthday. Same amount, same investment, yet by eighteen the first child could have nearly double the second — not because anyone was smarter or chose better, but simply because one had ten more years for that money to grow. Growth is never guaranteed, but time gives it the best chance, and time is the one advantage a child has that no adult can buy back.
Most parents wait: for the raise, the bonus, the year that finally feels stable. The math tends to reward the early far more than the generous.
Compound interest means that any money your investment earns can begin to earn too — slow at first, with the potential to build over the years. A small amount set aside each month, given enough time, has the potential to become something meaningful by the time a child turns eighteen.
As a kid, my parents gave me an allowance and nudged me to invest part of it. Over time it grew — enough to buy my own luggage for a family trip. Buying that suitcase myself felt as good as the trip, maybe better; it was the first time money felt like something I owned, not something I was handed. That feeling is the real gift — the quiet sense that your money can grow while you get on with life.
The best part? One person doesn't have to carry it. A birthday can become more than a toy that breaks by fall; a graduation check, a graduation stake.
I saw this with a family I work with. Years ago, the grandparents began setting small amounts aside for their grandchildren's education — a little every birthday and holiday, and no one made a fuss. Then the pandemic came and the children's father lost his business. It was the kind of year that ends a lot of educations, but theirs didn't miss a beat: the money was already there, set aside years earlier by people who understood how quickly a childhood passes. That is what starting early can buy — room to absorb the year you never saw coming.
None of this happens in silence. The families who do it well aren't the wealthiest; they're the ones who let money into the conversation — generation to generation, around the kitchen table. A child who grows up hearing how money is used, and why, inherits something no balance can hold: a way of thinking that outlives the account itself.
Money left without purpose is money wasted. What turns it into a force for good isn't the amount but the aim — a family that knows what its money is for, and points it, on purpose, toward the things they truly value. That is real financial well-being.
Start the account if you can. But start the conversation no matter what.
Elaine King, CFP®, TEP is the founder of Family and Money Matters™, where she helps families turn money into a positive force across generations — because money without purpose is wasted.