Yes, I opened a High Yield Savings Account with Marcus for my 9 month old baby. I am a big proponent of HYSAs, as they are a great way to save money that you don’t want to risk losing. HYSA’s have a high interest rate (with my referral to Marcus you can get 5.5% APY at this time!), earning you 550X more than what you would get at a traditional bank’s savings account. Our HYSA account makes us decent passive income. Unlike stocks, the HYSA has a guaranteed rate of return every month. And we don’t feel any risk with losing our savings. If you want to learn more about High Yield Savings Accounts, check out this post I wrote.
Why did I open a HYSA for my Infant Baby?
My son is 9 months old. So why did I open a HYSA for my Infant Baby? Recently, my son received two monetary gifts. The first was from his aunt, who wanted to start a tradition of gifting him $50 for Christmas so that he could save money for a Euro Trip when he turned 18 years old. The second gift was from two friends of ours, who gave him small cash for Chinese New Year. Which got me to thinking, how should I best guard his money?
I’ve decided that I wanted to keep his gifts separate from our accounts, because keeping track of that can be a nightmare. I also figured, even though investing his gifts in stocks will give a higher rate of return in the long-run, I did not want to risk losing money in his portfolio. With stock volatility, it would be unfortunate if, at the time he turned 18 years old, the market should choose to plummet. Because my sister-in-law’s wish was to fund a Euro trip before college, I knew that it was time-dependent. Lastly, I knew that a regular savings account at a bank would yield 1/500 of what a Marcus HYSA would. So that is why I chose to store his monetary gifts in a HYSA account.
How to open a HYSA Account for an Infant Baby?
So, you can’t really open an account for an infant baby alone. However, you can open a separate account under your name and make your infant the beneficiary. At 18 years old, you can also switch your account to a joint account so your child can access the funds. It was easy to open an account. I just did it online, and if you want to take advantage of the extra 1% APY for the first three months, you can sign up using my referral link here. Now that it’s all set up, it’s a matter of depositing his monetary gifts into my Chase Personal Checking Account and then sending it to his Marcus account.
(PS: It is imperative that you name your child and husband the beneficiary to ALL your accounts if that is what you wish in the event that you pass. In some states, your assets do not always transfer to your spouse or child automatically. Some states will deem your parents next of kin, so make sure your assets have the correct beneficiaries tied to them.)
To summarize, a HYSA is a great tool for your infant baby’s savings because:
- There is no risk of losing the money.
- It earns 500X the interest of a traditional bank’s savings account.
- The money will automatically go to the beneficiary you named shall something happen to you.
- At 18 years old, he can have access to his money.
- It is easy to use.
- I can keep track of his gifted money without confusing it with our own money.
If you are a new mom or have kids but are not sure how to help them financially, check out my post Essential Finance Moves Parents Can Make For A Newborn Baby. Set them up for future success today!
Photo by micheile henderson on Unsplash
