Financial Independence for Kids: Savings and Investments

Lee en Español

The purpose of this blog is to establish the difference between savings and investments. Saving and investing periodically and having clear goals gives you the opportunity to establish financial stability and be able to make your purchases using your money wisely.

As children, most os us had a piggy bank to put our savings. Those savings in the piggy bank do not generate anything, it is as if you had it in your wallet ready to spend it. However, a savings or investments account can generate 0.5% – 10% or more in growth.

Savings and investments accounts have specific uses.

  • Savings: Open a savings account for the money you plan to use within the next 5 years.
  • Investments: Open an investment account for the money you do not plan to use in over 5 years.


Savings accounts provide you easy access to your money. This money can be withdrawn at any time and without penalty. However, these accounts do not provide the best return, meaning your money will not grow as much as with an investment account. Likewise, there is no risk of losses with these accounts. Create goals and savings accounts for money that you need to use in the near future, within the next 5 years. Examples are:

  • Toys and gaming items
  • Phones
  • Car
  • Vacations and other entertainment
  • Just because you want to have money to spend later

Currently, you do not have to visit the bank to open a savings account. You can easily open savings accounts online. To open a savings account the best options are offered by credit unions, here are a few suggestions.

  • Smarty Pig
  • Ally Bank


Investment accounts are for money that you will use in 5 years or more. Access to this money is easy, however not as easy as money in savings accounts. Also, if your money has generated profits you will have to pay taxes. Open an investment account for the following:

  • College Savings
  • Retirement – yes, retirement. You are young now but the time to retire will come. The earlier you start investing and growing your money the earlier you can retire.
  • Buying real estate
  • Simply because you love the idea of letting your money grow through investments

Investments Accounts

  • 529
  • Roth IRA
  • Brokerage

Where do you get the money to save and/or invest?

If you receive an allowance at home, save it. When you have a substantial amount of money you can send it to the investment account. Additionally, use the money received on special occasions and holidays such as birthdays, christmas, graduations to invest. Be bold and ask for cash or direct transfer to your preferred account. This way, you are accumulating and letting your money grow.

Next Steps

  • Create savings and investment goals with an adult. These goals can be updated as often as necessary.
  • Talk with an adult and work on getting your accounts open.
  • Share this information with family and friends.
  • Got questions? Reach out through social media, link at the top.

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