Latest / Silver FM 100.6 / How to jumpstart your child's financial future

Transcript

How to jumpstart your child's financial future · Silver FM 100.6

• 0:00
  Speaker 1: This message comes from the Center for U.S. Voters Abroad Foundation.
• 0:04
  Speaker 1: All U.S. citizens abroad may request an absentee ballot to
• 0:08
  Speaker 1: vote in the 2026 election. Visit registerabroad.com to get started.
• 0:13
  Speaker 2: My nephew's birthday is coming up, and I think I'm
• 0:17
  Speaker 2: going to put money in his investment account instead of
• 0:20
  Speaker 2: getting him a bunch of toys. Please do that.
• 0:23
  Speaker 3: You know what he does not need and his parents
• 0:25
  Speaker 3: do not need is another noisy... flashy toy that takes
• 0:31
  Speaker 3: up space on the floor that they're going to step
• 0:32
  Speaker 3: on in the middle of the night and curse you for.
• 0:35
  Speaker 2: Please do that.
• 0:36
  Speaker 3: And, you know, I think it's really common these days.
• 0:39
  Speaker 3: Your circles want to help, you know, grandparents, aunts, uncles.
• 0:43
  Speaker 3: Like I opened Ted's 529 at the urging of my
• 0:48
  Speaker 3: aunt and uncle who are super financially savvy. They were like, please, please,
• 0:51
  Speaker 3: please do this before he's born. And every single birthday,
• 0:55
  Speaker 3: every single Christmas on my birthday, They contribute to his 529,
• 0:59
  Speaker 3: which I just think is so loving.
• 1:01
  Speaker 4: Yeah.
• 1:02
  Speaker 2: I think some family members will be relieved.
• 1:04
  Speaker 3: To have something they can contribute.
• 1:07
  Speaker 2: To and not have to pick out the right toy
• 1:11
  Speaker 2: or the right gift.
• 1:12
  Speaker 3: Yeah, it can take some pressure off.
• 1:13
  Speaker 2: He already has the dancing cat that repeats phrases. So
• 1:17
  Speaker 2: what else could he need?
• 1:19
  Speaker 3: I've seen that thing.
• 1:20
  Speaker 2: Awful. My dad thinks it's a spy. Yeah, it's creepy.
• 1:24
  Speaker 2: You're listening to LifeKit. I'm Marielle Segarra, and I am
• 1:27
  Speaker 2: talking to LifeKit reporter Andy Tegel, who's been reporting on
• 1:32
  Speaker 2: how new parents can build a financial nest egg for
• 1:36
  Speaker 2: their kids. Andy, how hard is this to do, to
• 1:40
  Speaker 2: plan for your kids' future financially?
• 1:42
  Speaker 5: I mean.
• 1:43
  Speaker 3: It's not hard in the same way like AP Calculus
• 1:46
  Speaker 3: is hard, but it can be very mentally.
• 1:49
  Speaker 2: Taxing to do this stuff.
• 1:50
  Speaker 3: It requires a lot of time and emotional resources to
• 1:53
  Speaker 3: get done right. And you know who is extra, extra
• 1:57
  Speaker 3: short on time and emotional resources, Mariel?
• 2:00
  Speaker 2: You.
• 2:00
  Speaker 6: New parents.
• 2:01
  Speaker 2: Yeah, new parents. I guess you're not a new parent,
• 2:05
  Speaker 2: but yeah.
• 2:06
  Speaker 3: Also me. Yeah, I'm out of that newborn parent phase,
• 2:08
  Speaker 3: which is such a special time for so many reasons.
• 2:13
  Speaker 3: And it's exactly when you should start setting up those
• 2:16
  Speaker 3: accounts or, you know, at least talking about these kinds
• 2:18
  Speaker 3: of accounts. But also when you have the perfect excuse
• 2:23
  Speaker 3: to push a lot of these decisions off.
• 2:25
  Speaker 1: Right?
• 2:26
  Speaker 3: That's the way one source put it.
• 2:27
  Speaker 2: And it is so true. Totally. I also think, though,
• 2:30
  Speaker 2: it helps to remember that you don't have to do
• 2:32
  Speaker 2: everything at once and that you don't have to set
• 2:35
  Speaker 2: aside a huge amount every month. Because you have a
• 2:39
  Speaker 2: long time horizon, right? If you start contributing... in small
• 2:42
  Speaker 2: amounts now than you've got many years, maybe even decades
• 2:46
  Speaker 2: for it to compound before your kid is going to
• 2:48
  Speaker 2: tap into it. Yeah, absolutely.
• 2:50
  Speaker 3: And I think that's an important point. You know, you
• 2:52
  Speaker 3: don't have to be rich to start building up your
• 2:54
  Speaker 3: kid's financial future. This process is possible for a lot
• 2:58
  Speaker 3: of people because it's not about wealth so much as
• 3:01
  Speaker 3: follow through. So if any of our listeners are becoming
• 3:04
  Speaker 3: parents this year or are hoping to become parents even
• 3:07
  Speaker 3: in the next couple of years, it's as simple as
• 3:09
  Speaker 3: opening up an investment account, In particular, the 530A. It's
• 3:13
  Speaker 3: sometimes called a Trump account. Here's behavioral scientist and professor
• 3:16
  Speaker 3: Wendy De La Rosa to explain.
• 3:18
  Speaker 7: They're essentially free money that new parents can claim and
• 3:21
  Speaker 7: start on their journey of investing for their children for free, essentially,
• 3:26
  Speaker 7: from our federal government. And so claiming that is sort
• 3:30
  Speaker 7: of step one. You can't put money into an account
• 3:33
  Speaker 7: that you don't have.
• 3:34
  Speaker 2: So that's a good starting place. And often we say
• 3:37
  Speaker 2: on LifeKit, right, it's like start small, take the first step.
• 3:41
  Speaker 2: In this case, it's like just open the account.
• 3:44
  Speaker 3: The gap between knowing and doing. You got to do it.
• 3:47
  Speaker 3: And we can help. We can help get you motivated.
• 3:50
  Speaker 2: On this episode of Life Kit, we'll talk more about
• 3:52
  Speaker 2: Trump accounts and other kinds of investment accounts that you
• 3:55
  Speaker 2: can open for your child and how to prioritize between them.
• 3:59
  Speaker 2: That's after the break. I haven't seen my son since 2012.
• 4:14
  Speaker 8: This is Deborah Tice. The disappearance of her son, Austin,
• 4:18
  Speaker 8: is one of the biggest missing person cases in the world.
• 4:21
  Speaker 8: What do you want from me?
• 4:22
  Speaker 7: I should solve the mystery.
• 4:24
  Speaker 2: I know that my son is somewhere alive.
• 4:27
  Speaker 8: Listen to Where Is Austin Tice? from NPR's Embedded and
• 4:30
  Speaker 8: BBC Radio 4 on the NPR app or wherever you
• 4:34
  Speaker 8: get your podcasts.
• 4:35
  Speaker 6: This week on Sources and Methods, behind closed doors at
• 4:38
  Speaker 6: the highest levels of the intelligence community on 9-11.
• 4:42
  Speaker 1: We said you can go.
• 4:43
  Speaker 7: If we have to die, we have to die.
• 4:45
  Speaker 6: And how that day is still shaping global events.
• 4:48
  Speaker 4: Difficult decisions were made.
• 4:50
  Speaker 9: We have shortchanged totally our soft power.
• 4:53
  Speaker 6: Listen now to a special episode of Sources and Methods,
• 4:56
  Speaker 6: the national security podcast from NPR.
• 4:59
  Speaker 10: This week on Wait, Wait, Don't Tell Me, we talk
• 5:01
  Speaker 10: with our panel Mo Rocca, Shane Torres, and Annie Rawrida
• 5:04
  Speaker 10: about the latest trend in dating, smelling bad on purpose.
• 5:07
  Speaker 1: This pheromone maxing is just not bathing.
• 5:10
  Speaker 4: Yes.
• 5:10
  Speaker 3: Yeah.
• 5:11
  Speaker 10: So this is like when Uber came out and they're like,
• 5:12
  Speaker 10: it's not.
• 5:13
  Speaker 1: Taxi, it's ride share.
• 5:15
  Speaker 10: Don't miss our full conversation and the rest of our games.
• 5:17
  Speaker 10: Listen to the Wait, Wait, Don't Tell Me podcast in
• 5:19
  Speaker 10: the NPR app or wherever you get your podcasts.
• 5:25
  Speaker 2: You were saying, Andy, that any parent really can set
• 5:28
  Speaker 2: up their kids for financial success in the future. What
• 5:33
  Speaker 2: about if you're in a situation where money is tight?
• 5:36
  Speaker 3: Yeah, that's a good question because that's where a lot
• 5:38
  Speaker 3: of people are at right now, right? So important caveat
• 5:42
  Speaker 3: before we jump in here, Mariel. We're going to walk
• 5:44
  Speaker 3: through a lot of different forward-thinking savings methods, but all
• 5:47
  Speaker 3: of my sources said the very first step new parents
• 5:50
  Speaker 3: should take is to prioritize your financial needs. Meaning, Make
• 5:54
  Speaker 3: sure you're on solid financial footing before allocating anything towards
• 5:59
  Speaker 3: those kid investment accounts.
• 6:00
  Speaker 2: With the exception of the free money from the government.
• 6:04
  Speaker 3: With the exception of that free money, which we're going
• 6:06
  Speaker 3: to get to in just a minute. So pay off
• 6:08
  Speaker 3: your debt, build up that emergency fund, fund your retirement account,
• 6:13
  Speaker 3: and then you can think about turning to those kid
• 6:15
  Speaker 3: investment accounts. A little at a time when you have
• 6:18
  Speaker 3: money to spare. I talked to Bola Shokenby about this.
• 6:21
  Speaker 3: She's a certified financial education instructor, she's the founder of
• 6:25
  Speaker 3: Clever Girl Finance, and she's a mom to twins. She
• 6:28
  Speaker 3: told me that parents can sometimes get so focused on
• 6:30
  Speaker 3: saving for their children that they can forget about protecting
• 6:33
  Speaker 3: their own finances. But you don't want to put everything
• 6:36
  Speaker 3: towards your child's future and then end up becoming financially
• 6:39
  Speaker 3: dependent on those kids because you didn't prepare for your own.
• 6:43
  Speaker 2: Okay, so in this episode, we're assuming that you do
• 6:46
  Speaker 2: already have those fundamentals covered. Now let's talk about are options.
• 6:52
  Speaker 2: What kinds of investment accounts are out there for kids?
• 6:56
  Speaker 11: All right.
• 6:57
  Speaker 2: The Trump accounts.
• 6:58
  Speaker 3: They're also known as the 530A federal accounts. So what's
• 7:02
  Speaker 3: special about this account is that for any U.S. citizens
• 7:05
  Speaker 3: born between 2025 and 2028, the federal government offers a
• 7:06
  Speaker 3: one-time $ 1, 000 initial contribution when an account is opened. Wendy
• 7:15
  Speaker 3: De La Rosa says for anyone who's about to become
• 7:18
  Speaker 3: a new parent, this one is a no-brainer.
• 7:20
  Speaker 2: What about parents whose kids were born before 2025, so
• 7:24
  Speaker 2: they don't qualify for that $ 1, 000 deposit? Is there still
• 7:29
  Speaker 2: a reason for them to open one of these accounts?
• 7:32
  Speaker 3: Short answer, maybe. This account is meant for long-term retirement savings,
• 7:36
  Speaker 3: and it comes with a fair amount of strings. So
• 7:39
  Speaker 3: for one, money can't be withdrawn until the child reaches 18, period.
• 7:44
  Speaker 3: And withdrawals before they reach 59 and a half are
• 7:48
  Speaker 3: subject to penalties.
• 7:49
  Speaker 2: With a few exceptions.
• 7:50
  Speaker 1: Okay.
• 7:51
  Speaker 3: Other things to know is you'll pay tax up front
• 7:53
  Speaker 3: on the money you put in there. If your employer
• 7:56
  Speaker 3: contributes to the plan, that money will be taxed later
• 7:58
  Speaker 3: when your child withdraws it. In addition to the $ 1, 000
• 8:01
  Speaker 3: from the government, you and your employer can contribute a
• 8:03
  Speaker 3: combined $ 5, 000 per year. Also, the money in that account
• 8:08
  Speaker 3: will only be invested in low-cost, broad U.S. market index products.
• 8:12
  Speaker 3: So it's earmarked for very specific investments. which isn't the
• 8:15
  Speaker 3: same with other accounts. So it's pretty inflexible comparatively. Bola
• 8:20
  Speaker 3: says if your child doesn't qualify for the government seed
• 8:22
  Speaker 3: money and you haven't started saving for the future yet,
• 8:25
  Speaker 3: other accounts like a 529 or a Roth IRA are
• 8:29
  Speaker 3: likely better, more flexible options. If you do want to
• 8:32
  Speaker 3: open it, put it last on your list.
• 8:33
  Speaker 2: All right, let's talk about another popular investment account for kids,
• 8:39
  Speaker 2: the 529 plan.
• 8:42
  Speaker 3: Yeah, this is probably the one most people have heard of.
• 8:45
  Speaker 3: It's a state-sponsored investment account specifically for qualified education costs.
• 8:50
  Speaker 3: You don't have to go with a state plan, but
• 8:52
  Speaker 3: there are usually incentives to do so. Contributions are after tax,
• 8:57
  Speaker 3: and whoever opens the account, it's usually a parent, but
• 9:00
  Speaker 3: it could also be a grandparent or another relative, indefinitely
• 9:04
  Speaker 3: controls the account. So it doesn't pass on to the
• 9:07
  Speaker 3: child after a certain age. And it's worth taking the
• 9:09
  Speaker 3: time to open one of these because the earnings are tax-free.
• 9:13
  Speaker 2: So if your kid turns 18, you don't have to
• 9:17
  Speaker 2: give them that money?
• 9:18
  Speaker 11: Nope.
• 9:19
  Speaker 3: It's yours.
• 9:21
  Speaker 2: So you could use it like for your own schooling?
• 9:23
  Speaker 9: Yes.
• 9:24
  Speaker 3: You can change the beneficiary as well. Like if your
• 9:27
  Speaker 3: kid decides they don't want to go to school. It's
• 9:29
  Speaker 3: also not just strictly college. It can be trading credential programs,
• 9:34
  Speaker 3: K through 12. I even read online like it can
• 9:36
  Speaker 3: be for qualified expenses like a printer, dorm room expenses,
• 9:39
  Speaker 3: things like that.
• 9:40
  Speaker 1: Oh, okay.
• 9:40
  Speaker 4: Yeah.
• 9:41
  Speaker 2: Yeah, because I think the fear is that you'll put
• 9:43
  Speaker 2: money into an account that's then locked up in there
• 9:46
  Speaker 2: and you won't have a need for it. Absolutely.
• 9:49
  Speaker 3: If your kids don't end up going to college or
• 9:51
  Speaker 3: you don't want to use it for education expenses, you
• 9:53
  Speaker 3: can roll those funds over up to $ 35, 000 into a
• 9:55
  Speaker 3: custodial Roth IRA account for your child.
• 10:00
  Speaker 2: Which is a retirement account.
• 10:01
  Speaker 4: Exactly.
• 10:02
  Speaker 2: But also Roth IRAs are, you can withdraw your contributions
• 10:06
  Speaker 2: at any time from a Roth IRA without penalty. So
• 10:09
  Speaker 2: it's not even as, the money's not locked up the
• 10:14
  Speaker 2: same way it is with like a traditional IRA or a, 401k. Exactly.
• 10:21
  Speaker 3: But the 529 account has to have been open for
• 10:24
  Speaker 3: at least 15 years.
• 10:27
  Speaker 2: To do that rollover.
• 10:28
  Speaker 3: Yeah, which is another motivation to open that account as
• 10:31
  Speaker 3: early as you can.
• 10:32
  Speaker 2: What other kinds of investment accounts might parents consider for
• 10:36
  Speaker 2: their kids?
• 10:37
  Speaker 3: So next up is two different types of custodial brokerage accounts,
• 10:42
  Speaker 3: the UTMA and the UGMA, or Uniform Transfers to Minors Act.
• 10:48
  Speaker 3: and Uniform Gifts to Minors Act Accounts.
• 10:51
  Speaker 2: Are you still with me? I have to say UTMA
• 10:53
  Speaker 2: and UGMA sound like two trolls under the bridge that
• 10:57
  Speaker 2: you have to solve these riddles three. Do you get
• 11:00
  Speaker 2: where I'm going with this?
• 11:01
  Speaker 3: Yes, absolutely. Okay, so our friends UTMA and UGMA, they
• 11:05
  Speaker 3: are custodial brokerage accounts, which means they are investment accounts
• 11:10
  Speaker 3: opened and managed by parents on behalf of a child.
• 11:13
  Speaker 3: You can use them for medium to long-term savings. The
• 11:15
  Speaker 3: main difference is that the UTMA can include other assets
• 11:19
  Speaker 3: like real estate or art. Unlike the 529, ownership of
• 11:23
  Speaker 3: these accounts transfers fully to the child at the age
• 11:27
  Speaker 3: of majority. So that's 18 or 21, depending on your state.
• 11:32
  Speaker 3: Contributions are after tax, but investment earnings may be subject
• 11:36
  Speaker 3: to annual kiddie tax rates.
• 11:38
  Speaker 2: Okay, so their tax rates are not as high.
• 11:41
  Speaker 1: Yes, exactly.
• 11:42
  Speaker 3: And UTMA and UGMA, our troll friends, they are the
• 11:45
  Speaker 3: most flexible because these funds can be used for any
• 11:48
  Speaker 3: purpose at any time. They're not earmarked for education. They're
• 11:52
  Speaker 3: not on lockdown until retirement. There's also no limits on
• 11:55
  Speaker 3: contributions or the types of investments you can make with
• 11:57
  Speaker 3: these funds the way that there is with the Trump account.
• 12:00
  Speaker 3: For that reason, they're also not as tax advantaged as
• 12:02
  Speaker 3: the other two. So this is the type of account
• 12:04
  Speaker 3: you might contribute to if you want to help your
• 12:05
  Speaker 3: kid down the line with, say, a down payment on
• 12:07
  Speaker 3: a house or paying for a big wedding, something like that.
• 12:10
  Speaker 3: Final option I'll mention is a custodial Roth IRA. So
• 12:14
  Speaker 3: similar to the grown-up accounts. This account is a way
• 12:16
  Speaker 3: to kickstart tax-free retirement growth for your little one. Contributions
• 12:20
  Speaker 3: are made with after-tax money. However, for the vast majority
• 12:23
  Speaker 3: of brand new parents, this account really won't be relevant
• 12:26
  Speaker 3: because it requires your child to have earned income. So
• 12:29
  Speaker 3: this is more one to consider a little further down
• 12:31
  Speaker 3: the line unless your baby is a baby cat model.
• 12:35
  Speaker 2: Yeah, what is income for a baby?
• 12:37
  Speaker 3: Yes, that was a good question. A note here that
• 12:39
  Speaker 3: income is actually a big umbrella. So they don't need
• 12:42
  Speaker 3: to necessarily have a W-2 in formal jobs like babysitting,
• 12:46
  Speaker 3: dog walking. They can count. They can qualify. You just
• 12:50
  Speaker 3: need to double check with your financial institution because proof
• 12:53
  Speaker 3: of income can vary depending on the institution.
• 12:56
  Speaker 2: After the break, we talk about how to prioritize between
• 13:00
  Speaker 2: these accounts because parents, we understand. You can't do it all,
• 13:05
  Speaker 2: especially not all at once. Hi there.
• 13:14
  Speaker 5: I'm Brittany Luce. And not to brag, but I host
• 13:17
  Speaker 5: a really fabulous podcast. It's called It's Been a Minute.
• 13:20
  Speaker 5: I love making it, and I think you'll love listening
• 13:23
  Speaker 5: to it. Over the last year, hundreds of thousands of
• 13:26
  Speaker 5: listeners have been tuning in, and I gotta say, if
• 13:29
  Speaker 5: you haven't yet, you're missing out. Listen to the It's
• 13:32
  Speaker 5: Been a Minute podcast from NPR today.
• 13:36
  Speaker 4: The day's top headlines, local stories from your community, your
• 13:40
  Speaker 4: next podcast binge listen.
• 13:42
  Speaker 1: You can have it all in one place, your pocket.
• 13:45
  Speaker 1: Download the NPR app today.
• 13:52
  Speaker 2: So We talked about four different kinds of investment accounts.
• 13:57
  Speaker 2: It's a lot to think about. How can parents start
• 14:01
  Speaker 2: to prioritize?
• 14:03
  Speaker 3: So first off, you don't have to open an account
• 14:05
  Speaker 3: just because it exists. Bola told me it is absolutely
• 14:09
  Speaker 3: okay to start with just one or two that align
• 14:12
  Speaker 3: with your goals and contribute what you realistically can. The
• 14:15
  Speaker 3: important thing here is just to get started as soon
• 14:17
  Speaker 3: as you can. You know, like if college is a
• 14:19
  Speaker 3: goal for your family, if that's something you have on
• 14:21
  Speaker 3: the horizon, open that 529. As we said earlier, time
• 14:24
  Speaker 3: is money. And when it comes to these kid accounts,
• 14:26
  Speaker 3: we mean that very literally because compound interest. Listen to
• 14:30
  Speaker 3: Chris Hewitt. He's a dad of two, author of the book,
• 14:33
  Speaker 3: You Are Now the CFO of a Very Small Family.
• 14:36
  Speaker 3: And he is the LifeKit listener who pitched us this
• 14:38
  Speaker 3: story idea.
• 14:39
  Speaker 1: Thank you, Chris.
• 14:39
  Speaker 11: 50 bucks here, 100 bucks there. Over time, at average
• 14:44
  Speaker 11: returns of 7% to 8% can actually make a very
• 14:47
  Speaker 11: large impact over the course of 10, 15, 20 years.
• 14:51
  Speaker 11: and provide, you know, a welcome financial uplift for your
• 14:55
  Speaker 11: children in the future.
• 14:57
  Speaker 2: And I mean, at the same time, you can only
• 15:00
  Speaker 2: do what you can do. But like, if you just
• 15:03
  Speaker 2: are not doing it because you're like, I'll get to that.
• 15:05
  Speaker 4: Right.
• 15:05
  Speaker 2: You know?
• 15:06
  Speaker 3: That's a silly reason to not.
• 15:07
  Speaker 4: Yeah.
• 15:08
  Speaker 2: If you're feeling ambitious and you did want to open
• 15:12
  Speaker 2: all four kinds of accounts that we mentioned today, what's
• 15:15
  Speaker 2: the order of operations that the experts recommended?
• 15:19
  Speaker 3: So if you're a new parent... who feels compelled to
• 15:21
  Speaker 3: open every single one of these, and you have the
• 15:24
  Speaker 3: means to do so. A few different lines of thinking here.
• 15:27
  Speaker 3: For BOLA, the PEMDAS, to max out your child's savings
• 15:31
  Speaker 3: is to start with that free $ 1, 000 in a Trump account,
• 15:34
  Speaker 3: then put money into a 529 plan up to your
• 15:37
  Speaker 3: state's deduction limit for tax-free school savings. After you hit
• 15:43
  Speaker 3: that limit, use a custodial account, UGMA or UGMA, for
• 15:47
  Speaker 3: flexible cash to cover milestones like a first car or
• 15:50
  Speaker 3: And then finally, open that standard Roth IRA the second
• 15:54
  Speaker 3: your kid starts earning income to kickstart their retirement.
• 15:58
  Speaker 2: That's how she would do it. Besides these kinds of
• 16:01
  Speaker 2: investment accounts, is there anything else that parents should be
• 16:04
  Speaker 2: thinking about in terms of setting their kid up for
• 16:08
  Speaker 2: financial success? Yes, there is actually.
• 16:11
  Speaker 3: All the experts I talked to suggested focusing on the
• 16:14
  Speaker 3: same general buckets in the same order. Life insurance, wills
• 16:18
  Speaker 3: and guardianship, and then child savings accounts. So you can
• 16:22
  Speaker 3: do all of those at once, but if you have
• 16:23
  Speaker 3: limited time and energy, first do your life insurance, then
• 16:26
  Speaker 3: your will, then child investment accounts.
• 16:29
  Speaker 2: You know, at the end of the day, I feel
• 16:31
  Speaker 2: like this is really about giving your children the gift
• 16:35
  Speaker 2: of freedom. Like, for a lot of us who didn't
• 16:41
  Speaker 2: graduate with an investment account in hand, it's a really
• 16:46
  Speaker 2: beautiful idea to think that you could put away some money,
• 16:52
  Speaker 2: even a small amount, little by little, so that your
• 16:55
  Speaker 2: kid's life is easier than it would have been otherwise.
• 17:00
  Speaker 2: Because a lot of people, if they don't have a
• 17:03
  Speaker 2: safety net or they don't have any savings, they stay
• 17:07
  Speaker 2: in jobs that are really a bad fit or they
• 17:11
  Speaker 2: really hate what they're doing and they don't leave because
• 17:15
  Speaker 2: they can't. And I like the idea that my kids
• 17:19
  Speaker 2: would have some choice.
• 17:21
  Speaker 3: The gift of options.
• 17:24
  Speaker 2: The gift of choice.
• 17:25
  Speaker 1: Yeah.
• 17:25
  Speaker 3: That's really nice. Yeah. Bola had a really nice sentiment
• 17:29
  Speaker 3: that I want to leave you with. She said, one
• 17:32
  Speaker 3: thing I always remind parents is you don't have to
• 17:36
  Speaker 3: have everything figured out financially all at once the moment
• 17:39
  Speaker 3: your child is born. Just start with what you can
• 17:42
  Speaker 3: afford and build from there. Because as much as we
• 17:45
  Speaker 3: want to give our children every possible advantage, taking care
• 17:49
  Speaker 3: of your overall financial stability is is also part of
• 17:53
  Speaker 3: taking care of your children, which I thought was a
• 17:55
  Speaker 3: really nice way to think about it. Yeah.
• 17:57
  Speaker 2: It's like put on your own oxygen mask first.
• 18:00
  Speaker 9: Yeah.
• 18:01
  Speaker 3: And then keep building from there.
• 18:03
  Speaker 2: Andy, thank you so much for this.
• 18:04
  Speaker 3: Marielle, thank you.
• 18:10
  Speaker 2: Okay, time for a recap. Takeaway one. Sometimes parents get
• 18:14
  Speaker 2: so focused on saving for their kids that they neglect
• 18:18
  Speaker 2: their own finances. Don't do that. Pay off your debt.
• 18:21
  Speaker 2: build up your emergency fund and contribute to your retirement
• 18:24
  Speaker 2: account because you deserve financial security. And because if you
• 18:28
  Speaker 2: don't prepare for the future, your kids may end up
• 18:31
  Speaker 2: having to take care of you financially. Takeaway two, if
• 18:35
  Speaker 2: you have a baby born between 2025 and 2028, sign
• 18:39
  Speaker 2: them up for a 530A investment account, also known as
• 18:43
  Speaker 2: a Trump account. They'll get free money, $ 1, 000 from the
• 18:46
  Speaker 2: government that you can invest in index funds and watch
• 18:49
  Speaker 2: grow over time. The account will transfer to them when
• 18:52
  Speaker 2: they turn 18, but it's meant for retirement. So they'll
• 18:55
  Speaker 2: pay fees on this government money and the profits if
• 18:57
  Speaker 2: they withdraw it before age 59 and a half, with
• 19:00
  Speaker 2: some exceptions. Takeaway three, consider a 529 plan. It's a
• 19:05
  Speaker 2: state-sponsored investment account for qualified education costs. And you don't
• 19:10
  Speaker 2: have to have a child to open one of these.
• 19:12
  Speaker 2: You can make yourself or another family member the beneficiary
• 19:15
  Speaker 2: and then change the name once the baby is born.
• 19:18
  Speaker 2: You also don't have to be the parent to open one.
• 19:21
  Speaker 2: Takeaway four, meet UTMA and UGMA, two types of custodial
• 19:25
  Speaker 2: brokerage accounts for kids. Ownership transfers to your kid at
• 19:29
  Speaker 2: 18 or 21, depending on the state. They may pay
• 19:32
  Speaker 2: taxes on earnings. This account is not as tax advantaged
• 19:37
  Speaker 2: as the others, but as a result, it's more flexible.
• 19:39
  Speaker 2: So it can help your kid with medium-term savings if
• 19:42
  Speaker 2: they want to buy a house or start a business
• 19:45
  Speaker 2: or pay for a wedding. Takeaway five, the custodial Roth IRA.
• 19:50
  Speaker 2: is a retirement account similar to the regular Roth IRA.
• 19:53
  Speaker 2: Contributions are after tax and you can withdraw them anytime.
• 19:57
  Speaker 2: Growth is tax-free once you hit retirement age, but you
• 20:01
  Speaker 2: can only contribute money to this that your child has earned.
• 20:05
  Speaker 2: All right, that's our show. If you love Life Kit
• 20:08
  Speaker 2: and you want even more, follow us on Instagram at
• 20:11
  Speaker 2: NPR Life Kit. There you'll find videos featuring our favorite
• 20:14
  Speaker 2: tips and comics on topics like how to get pregnant
• 20:18
  Speaker 2: and how to make a small home look bigger. You
• 20:21
  Speaker 2: can find those by following at NPR Life Kit. This
• 20:24
  Speaker 2: episode of Life Kit was produced by Sylvie Douglas. Our
• 20:28
  Speaker 2: digital editor is Malika Gareeb and our visuals editor is
• 20:31
  Speaker 2: CJ Rikalan. Megan Cain is our senior supervising editor and
• 20:34
  Speaker 2: And Lauren Gonzalez is our executive producer. Our production team
• 20:38
  Speaker 2: also includes Claire Marie Schneider, Margaret Serino, and Lennon Sherburn.
• 20:42
  Speaker 2: Engineering support comes from Sina Lefredo. Fact-checking by Andrea Lopez Cruzado.
• 20:48
  Speaker 2: Special thanks to Mandy Woodruff-Santos for her input on this story.
• 20:53
  Speaker 2: I'm Mariel Cigarra. Thanks for listening.
• 21:00
  Speaker 4: How do products end up on big box shelves? Well,
• 21:03
  Speaker 4: we at Planet Money. pitch the Planet Money board game.
• 21:07
  Speaker 4: I'm trying not to think how much of a big
• 21:09
  Speaker 4: deal it is and how much work has gone into it.
• 21:11
  Speaker 1: It's really big. Is it helpful if I remind you
• 21:13
  Speaker 1: how big it is? It's sort of the whole thing.
• 21:15
  Speaker 4: We go inside the minds of the people who decide
• 21:19
  Speaker 4: what goes on store shelves. Listen to Planet Money on
• 21:21
  Speaker 4: the NPR app or wherever you get your podcasts.
• 21:26
  Speaker 9: This is Terry Gross, host of Fresh Air. I interviewed
• 21:29
  Speaker 9: feminist icon Gloria Steinem several times over the years. and
• 21:33
  Speaker 9: we've compiled a special episode to celebrate her life and legacy.
• 21:38
  Speaker 2: Women become ourselves after 50.
• 21:41
  Speaker 6: We drop a lot of baggage and really become much
• 21:43
  Speaker 6: more our true selves.
• 21:45
  Speaker 9: Find it on the NPR app or wherever you listen
• 21:48
  Speaker 9: to Fresh Air.