Raising financially confident kids starts long before they ever open their first bank account. It begins in everyday moments when they watch how adults around them talk about money and make decisions. When a child asks why they can’t buy every toy they see at a store or wonders how adults decide what to spend money on, those are opportunities to build the foundation for lifelong financial literacy and empowerment. Even simple conversations, like comparing prices at the grocery store, helping them divide birthday money into spend, save, and share categories, or guiding them through saving for something they really want, shape their early money mindset. These interactions create the emotional blueprint and the money memories they’ll carry into adulthood.
As kids grow, they’re capable of understanding investing much earlier than most adults assume. They don’t need to grasp the complexities of the stock market; they just need relatable examples. When you explain that they can own tiny pieces of the companies that make their favorite things; those examples could be like Disney, Nike, Apple, or LEGO. That's when investing suddenly can become real and exciting. This is also where the magic of compounding growth and time both become superpowers. Even small amounts invested early have the potential to grow significantly over the years, which makes early education so important.
When it comes to actual investing options for kids, families have several meaningful tools available. Custodial brokerage accounts, such as UGMA or UTMA accounts, are one of the most flexible ways to help a child begin investing. An adult manages the account until the child reaches the age of majority, but the money legally belongs to the child from day one. These accounts allow investments in stocks, ETFs, and mutual funds, and they have no contribution limits. They’re a powerful teaching tool because kids can watch their investments rise and fall with the market and learn how long‑term investing works. The key consideration is that once the child becomes an adult, the money is fully theirs to use however they choose, which is why pairing the account with ongoing education is essential.
Another tool that deserves special attention this time of year is the 529 College Savings Plan. May is National 529 College Savings Plan Month, a nationwide effort to raise awareness about how impactful these plans can be for long‑term education planning. A 529 plan offers tax‑free growth and tax‑free withdrawals for qualified education expenses, and some states provide tax deductions or credits for contributions. It’s a tax‑efficient way to save for a child’s future education, and it also creates a natural opportunity to talk with kids about long‑term planning. When they see the accounts grow over time, they begin to understand that education itself is an investment in their future. Families often use 529 Month as a reminder to open a plan, increase contributions, or invite grandparents to participate, turning it into a multigenerational experience.
For older kids and teens who have earned income, a Roth IRA can be a game‑changer. Whether they babysit, mow lawns, work part‑time, or help in a family business, their earned income makes them eligible. A Roth IRA allows contributions to grow tax‑free and even small amounts invested in their teens can start a positive discipline into their retirement savings. More importantly, it teaches them the connection between earning and investing, reinforcing the idea that money is a tool they can put to work. For2026,theRothIRAcontributionlimitforindividualsunderage50is$7,500.
No matter which investment options a family chooses, the most important part of raising financially confident kids is the ongoing conversations. When money is talked about openly and without shame or guilt, kids learn that it’s not something to fear or avoid. It’s simply a tool. Sharing your own money memories, asking what they notice about how people use money, and celebrating their financial wins all help build confidence. These conversations help kids develop healthy money habits that can serve them for a lifetime.
Kids don’t need to wait until adulthood to start building financial confidence. With the right tools, the right conversations, and the right support, they can begin learning and even investing much earlier than most people think. And with May being 529 Month, it’s the perfect reminder for families to revisit their education savings strategy and take one small step that can make a big difference in a child’s future.
Disclosures
This material is for general information and educational purposes only and is not intended to provide specific advice or recommendations for any individual.
Investing involves risk including the loss of principal. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes.
Prior to investing in a 529 Plan investors should consider whether the investor's or designated beneficiary's home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Withdrawals used for qualified expenses are federally tax free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.