Baby bonds

What It Means

Baby bonds are publicly funded accounts that a government sets aside for children, usually those from lower-income families, and invests until the child becomes a young adult. At that point the young adult can claim the money for uses the program approves, such as education, buying a home or starting a business. Despite the name, parents don't buy them, and only a few places run them: Connecticut was the first to pass a program, followed by Washington, DC, and the Urban Institute counted California among the places that had passed one as of February 2023.

How People Say It

• "Our son was born on HUSKY, so he has a baby bond."
• "She can claim her baby bond for college at 18."
• "Is a baby bond the same as a savings bond?"

The Breakdown

Worked example, Connecticut. A baby is born in Hartford in 2026 and the birth is covered by HUSKY Health. The state invests up to $3,200 on the baby's behalf automatically.

The treasurer's office says the final amount depends on when the claim is made. To claim, the young adult must live in Connecticut, have completed an approved financial literacy course, and use the money for one of four things: buying a home in Connecticut, starting or investing in a Connecticut business, education or job training, or saving for retirement.

What the result means. The state treasurer's office invests and manages the money until it's claimed. What a parent can do is keep the paperwork and make sure the child knows the claim window, 18 to 30, exists.

Other programs. Washington, DC's Child Trust Fund, created by D.C. Law 24-53 (the Child Wealth Building Act of 2021), is for children born and living in the District with Medicaid coverage at birth in households at or below 300% of the federal poverty level. Rules differ by program, so check the one where your child was born.

Good to Know

Trump Accounts are a separate federal program. Created by the law signed July 4, 2025, they're a new kind of traditional IRATraditional IRAAn individual retirement account where contributions may be tax-deductible, growth is tax-deferred, and withdrawals are taxed as income. See more for children, and the IRS says the Treasury will make a one-time $1,000 pilot contribution for each eligible U.S. citizen child born from January 1, 2025, through December 31, 2028, with a valid Social Security number, when an adult opens the account for the child and makes the election on IRS Form 4547. Unlike Connecticut's program, that one needs a form. Check irs.gov/trumpaccounts for the current rules.

Related Terms and Categories

• Generational wealth

  Money, property and other assets passed from one generation of a family to the next, through inheritances, gifts during life or help such as paying for school.

• 529 plan

  A state-sponsored, tax-advantaged account for education costs, where growth is free of federal income tax when spent on qualified expenses.

• Custodial account

  An account an adult manages for a minor, usually under state UGMA or UTMA law, where the money legally belongs to the child from the day it goes in.

• Kids savings account

  A bank or credit union savings account opened for a child, usually jointly with a parent or as a custodial account, where the child's money earns interest.

• Savings bond

  A US Treasury savings bond, sold today as EE or I bonds through TreasuryDirect, that earns interest for up to 30 years and can be cashed after one.

• Compound interest

  Interest paid on your original amount and on the interest it has already earned, so each year's interest is a little bigger than the last.

Saving and investing basics