What is the best way to save money for children?

I get this question quite a bit from new and existing clients alike. It usually gets brought up by parents, but sometimes it comes from aunts, uncles, grandparents and other guardians.

The answer, as it is to so many financial questions, is: It depends on the financial goals and wishes of the saver.

While it can be hard to determine what a newborn will be interested in at age 18, opening pathways with a nest egg is a good start. Some of the most common account types to save for children:

• 529 plans
• Roth IRAs
• Uniform Gifts to Minors Act (UGMA) accounts
• Coverdell Education Savings Accounts (ESAs)

Each have a different set of benefits, depending on your priorities.

529 plans

529s are tax-advantaged savings vehicles for guardians to save for higher education. Depending on where you live, your state might offer a specific tax benefit for savings efforts.

Some states offer a tax benefit for both in-state 529 plans and plans from other states so you'll need to confirm what regulations apply to you.

Similarly, some states also recapture the benefit if the money is used for noneducation purposes. As you're considering what choice to make, one important piece of the puzzle is confirming your state tax benefits with 529 plans.

With rising higher education costs, 529 plans are becoming more impactful. The passage of the Secure Act 2.0 expanded options for those funds by allowing the rollover of funds to a Roth IRA and a change in beneficiary.

Roth IRA rollover

After an account has been open for 15 years, money within a 529 can be repurposed as Roth contributions, as long as the funds are at least five years old.

For example, if you have $10,000 in a 529 and contributed another $5,000 during year 15, that deposit must remain in the 529 account for five years before it can be moved to a Roth IRA. The initial $10,000 can be transferred during year 15.

While a minor can't sign Roth IRA account paperwork, adults can open a custodial or guardian Roth on their behalf.

I also often hear clients say, "I want to open a Roth IRA for my child." If the minor has a W-2 for wages earned, you can.

I once worked with a grandmother who opened one for a granddaughter who had a minimum wage summer job as a pool lifeguard. Once a year, the two would come in to contribute the amount in the granddaughter's W-2 to a Roth, typically a few thousand dollars.

While the granddaughter spent the money she earned on other things, her grandmother would gift her an equal amount in her Roth contribution. At 18, the grandchild was able to re-register the account in her own name.

Nonqualified distributions

While a 529 account is ideally used for education expenses, nonqualified distributions might also be an option for noneducational uses for 529 funds.

Even if used for other purposes, principal contributions can be withdrawn without tax or penalty, although earnings are charged a 10% penalty to the IRS.

If the account is started for a newborn and the nonqualified withdrawal is completed on or by their 18th birthday, the owner can still enjoy 18 years of state tax benefits and tax-deferred growth.

I sometimes get savers who put their personal experiences first when making decisions for their children's savings. I've heard many times, "I did not have a 529 to pay for higher education, and I made it work."

Other times, the saver might be concerned that a 529 could influence a child's decision to pursue higher education.

In those cases, Uniform Transfers to Minors (UTMA) and Uniform Gifts to Minors Act (UGMA) custodial accounts might be better alternatives.

UTMA and UGMA accounts

As an alternative, these types of accounts let you save for a child without the expectation that the funds will be used for education.

Instead, deposits are an irrevocable gift to the child, and the adult custodian manages investments until the child reaches the age of maturity.

Coverdell Education Savings Account (ESA)

One of the final ways to save for a child's education is with a Coverdell ESA. During my 15-plus years in the industry, I've seen few of these.

In my opinion, 529 accounts are often preferable, given their flexibility. ESAs have low contribution limits, and the assets must be used by age 30.

High-income earners are also ineligible for these accounts and others can only contribute to the account until the child's 18th birthday.

So many choices — what should you do?

I have children and reviewed the same options for my family. For our circumstances, I found the best options to be an UTMA and 529.

The benefits of the 529 shine the most in my opinion, and I have automatic monthly contributions to a 529 for each of my children. As they become comfortable making their own financial decisions, I'm onboard with Roth contributions for unused 529 assets or even cashing out the accounts to give the cash to my children.

I can even transfer an unused 529 for one child to another, without tax or penalty while replacing the funds with personal savings.

For the UTMA account, I deposit any gifts of cash my children receive for holidays or birthdays. To encourage good financial values, I let them decide how much to save.

For those trying to pick the best option for their family, whichever path you choose, you're working toward a goal. We don't know what the future holds, but rest assured you helped your loved one in some way with your savings efforts.

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Just weeks away from the official launch of "Trump Accounts," the child savings vehicles from the 2025 tax bill, a targeted spinoff is set to roll out.

Dubbed "Fostering the Future Accounts," this new initiative is designed to help children in foster care save for future housing, educational, and career development costs as they transition to adulthood.

First Lady Melania Trump and U.S. Department of the Treasury Secretary Scott Bessent announced in a press release that these new accounts will open on July 4, 2026.

“Fostering the Future Accounts give foster children the same chance for asset ownership and long-term wealth building as every other American child," Mrs. Trump remarked. "By investing in our foster youth now, we help strengthen America’s workforce, communities, and economic future."

But because these accounts will be opened and managed by state infrastructure, states must opt in. And not everyone is on board. Read on for who qualifies and what's holding back the remaining 27 states.

Fostering the Future Accounts for kids

The Trump "Fostering the Future Accounts" are an offshoot of standard Trump Accounts structured to help children in foster care save for long-term financial goals, like a down payment on a home or higher education expenses.

To qualify, a child must be:

• Under 18 years old
• A U.S. citizen with a Social Security number

These accounts may be opened by a state, territorial, or tribal child welfare agency. They can also be opened by designated foster parents or other legal guardians in the foster care system.

Which states are participating?

Because Fostering the Future Accounts are managed at the state level, access depends on local legislative approval. So far, governors in the following 23 states have pledged to offer the program, according to White House officials:

Participating state child welfare agencies must submit IRS Form 4547 (Trump Account Election) to formally open an account for each eligible child in their custody.

Fostering the Future Accounts vs. standard Trump Accounts

Although Fostering the Future accounts function the same as a standard Trump Account — investing in stock market index funds to grow tax-deferred savings — there are some nuances in how each is opened and funded.

For instance, when a parent or guardian opens a standard Trump Account, they can claim a $1,000 federal seed deposit directly into the newborn's account, provided their child is born between 2025 and 2028.

However, "a child welfare agency cannot elect to receive the $1,000 pilot program contribution to the child's [Fostering the Future] Account," as the IRS reported in a recent update. Instead, only a foster parent or other qualifying individual who anticipates caring for the child may claim this federal seed money for the child's account.

Here's a table highlighting several other key differences between the two types of accounts:

The Fostering the Future Accounts also have unique funding methods that the federal government doesn't offer for standard Trump Accounts.

For example, state officials can redirect existing state resources — like unused Temporary Assistance for Needy Families (TANF) block grants — into a foster child's savings, according to the Administration for Children and Families (ACF).

Why isn't my state on the list?

Notably, all 23 states opting into Fostering the Future Accounts are GOP-led, reflecting the partisan divide surrounding Trump Accounts, which were a key component of the 2025 Trump tax bill.

But beyond partisan lines, several other reasons exist for why states might heavily debate signing on:

• Strained budgets. State child welfare departments often depend on federal funding streams like TANF and the Social Services Block Grant (SSBG) to operate. Because most states have already finalized their budgets for the upcoming fiscal year, adding new, unplanned programs mid-cycle may be too financially constrained.
• Administrative hurdles. Fostering the Future Account documentation, including individual investment portfolios and private donations for every child, must be monitored. As such, participating state agencies are required to establish new protocols to continuously update this information, which may prove difficult given that children frequently shift between foster homes.
• Legal challenges. Legally, a state, territorial, or tribal child welfare agency may open a Fostering the Future account, but the timeline of who holds account management authority can be constantly in flux. If a child is in temporary emergency care, for instance, and then switches to kinship care or transitions between different county jurisdictions, it may be unclear who is legally authorized to update the account. (Note: the Treasury and ACF released joint guidance related to this issue.)

Ultimately, the Trump administration has set a target for all 50 states to sign on to Fostering the Future Accounts by December 2027.

However, some child welfare advocates worry that a prolonged state-by-state rollout will deepen economic disparities for children aging out of foster care — especially for children who move across state lines due to interstate adoptions or structural changes in their care.

Ruth Anne White, Executive Director of the National Center for Housing and Child Welfare, told independent news outlet, The Imprint. "But it's right there in the Child Welfare Policy Manual [released guidance] – as clear as day."

According to data from the National Council for Adoption, there are roughly 330,000 children in the U.S. foster care system. Statistics from the National Foster Youth Institute show that one in five foster youth face homelessness after aging out of the system, and only half secure gainful employment by age 24. Supporters of the new initiative hope these accounts will disrupt those outcomes.

Yet while supporters have framed Fostering the Future Accounts as a solution to the financial hardships facing youth aging out of care, states will need to overcome complex questions surrounding budget allocations, administrative hurdles, and bipartisan support.

Until then, foster parents and child welfare agencies will find that state lines dictate whether children in their care are eligible for these accounts.

Read More

• How to Claim Your Kid’s Trump Account in 3 Steps
• Adoption Tax Credit: What You Need to Know for 2026
• Child Tax Credit 2026: How Much Is It and What's Changed?

The estate planning field has developed an impressive sophistication when it comes to carrying out a person's final wishes.

Virtually without fail, estate planning documents work as intended, accounts transfer, and instructions are followed to the letter.

When it comes to the orderly dispersal of a person's estate, lawyers and estate planners almost always have the process well in hand. But what they might not fully understand is the reasoning behind the directives.

When a loved one passes, his or her directives might be followed to the letter. But it's not uncommon for family members to be confused about the thinking behind those directives. Why was an asset allocated in a certain way? What priorities shaped those choices?

While the written directions might be clear, the thinking behind those directions could be murky, even hurtful.

So much more to account for today

For decades, estate planning has focused, appropriately, on the orderly transfer of assets, even as the process has grown more complex. Today's plans must account not only for bank accounts and property, but also for online financial tools, subscription services, digital files and, increasingly, cryptocurrency holdings.

In response, a range of tools has emerged to handle those new logistics, such as Apple Digital Legacy and Google Inactive Account Manager allow designated individuals to access accounts after a period of inactivity or death.

Digital vaults and estate organization platforms help centralize passwords, documents and key information.

These are important advances that help loved ones find and manage assets that have been left behind.

While those tools work as intended, they fail to make clear what the deceased person might have been thinking when he or she prepared the final will. I've seen families receive everything they need to administer an estate, but struggle to make sense of it.

The legal framework might be intact, but the human context is missing. Without that context, even well-designed plans can create confusion, tension or second-guessing among those left behind.

This is what I think of as the "context gap" in estate planning.

Why were certain choices made?

A will can distribute assets, but it rarely conveys the reasoning behind those decisions. A trust can outline conditions, but not the personal considerations that shaped them. Even the most detailed plan can't fully capture a person's intentions, relationships or values.

As a result, families are often left to interpret those decisions on their own. Sometimes that interpretation is straightforward. Other times, it isn't.

Siblings might wonder why certain choices were made. Executors could feel uncertain about how much discretion they should exercise. Adult children might struggle to reconcile what they see in documents with what they believed about a parent's wishes.

These are not failures of planning. They are limitations of the tools we've traditionally used.

Even so, estate planning is beginning to evolve into two parallel tracks. The first is the familiar transfer of assets, the management of taxes and the legal structures that ensure everything is handled properly.

The second is communication of intent. This includes messages people might want to leave behind — explanations of key decisions, expressions of gratitude, guidance for future choices or simply words that help loved ones understand not just what was done, but why.

Preserving the meaning behind estate planning

Up to now, people have tried to address this informally. Some have written letters to be opened after death. Others recorded videos or left notes with attorneys or family members.

But these have often been inadequate. They have been difficult to update, and they have not always delivered their messages at the right time — or even at all.

New tools are attempting to address this need more systematically. Platforms focused on what is sometimes called "digital inheritance" aim to complement traditional estate planning by preserving not just assets, but the meaning behind it.

Systems such as OneFinalMessage.com allow individuals to store messages alongside important documents and update them as circumstances change.

Features make it possible to ensure such messages reach the intended recipients when they're needed and not be overlooked or lost. These new products are aimed at recognizing that a complete estate plan may require more than legal precision.

For individuals, this raises a simple but important question: If something were to happen tomorrow, would the people who matter most understand not just what you left them, but why?

For financial advisers and estate planning professionals, all this suggests an opportunity to broaden the conversation. It encourages planners to ask clients how they want to be understood, and whether their plans reflect that.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

As children reach adulthood, many parents assume they'll still be able to step in when needed. In reality, that dynamic often changes quickly. Once a child turns 18, parents can lose both visibility and influence in ways they may not expect.

That's why I suggest having two difficult conversations that can make a meaningful difference: The first helping your children build financial literacy, and the second ensuring you can support them effectively in a medical emergency.

Neither is especially comfortable, but both are far easier to have now than after something goes wrong.

Conversation one: Talk openly about money

Parents are often reluctant to be transparent about money with their children. Some think they're shielding their kids from stress; others are just trying to practice good manners. But in practice, silence creates confusion.

When parents don't explain what's happening financially, children tend to fill in the gaps on their own. And those assumptions are often negative.

In my work with clients in their 20s and 30s, I see the long-term effects of this all the time. Some develop a persistent fear that they'll never be financially secure, even when they're doing well. Others assume a certain lifestyle is easily attainable, only to find themselves living far beyond their means.

Much of this comes down to a lack of context. Income and lifestyle are not always aligned in obvious ways. Some high earners live modestly, while others stretch their budgets to maintain a certain standard of living. Without visibility into the numbers behind those choices, children can develop a distorted understanding of what things actually cost.

That's why it's important to start talking about money earlier, and more specifically, than many families are comfortable with. If you start with simple conversations in the early teenage years, and let the discussions become more detailed as the child grows up, they should have a working understanding of how money functions in day-to-day life by the time they prepare to leave for college or turn 18.

That may include not just opening a bank account, but also:

• How to use debit or credit cards responsibly and build strong credit
• How to budget for fixed and variable expenses
• How student loans, interest and repayment work
• The importance of saving early and how compounding works
• The difference between gross and net pay (including taxes and benefits)

This doesn't mean sharing every detail, but it does mean giving your children a clearer picture of how financial decisions are made. That can include discussions around income ranges and career paths, the cost of housing and day-to-day expenses, savings and investment priorities and trade-offs, and financial setbacks.

Be candid about the full picture, and your children will begin to develop a more intuitive understanding of how money works.

You might also consider bringing a third party into the conversation. If you work with a financial adviser, your child could sit in on a meeting. Hearing these discussions from an objective professional can make the information feel less charged and more credible than when it comes directly from a parent.

Over time, this kind of exposure can reduce anxiety and build confidence. Instead of reacting to money problems with fear or avoidance, your children can begin to see it as something they can understand and manage.

Conversation two: Prepare for a medical crisis

Once your child turns 18, you may assume you'll still be able to step in if something goes wrong. Legally, that's no longer the case.

Under federal privacy laws, doctors and hospitals generally cannot share medical information with you without your child's written consent. That means parents can find themselves in the ER unable to get updates, speak with physicians or understand what's happening in real time.

Consider an unfortunately common scenario: A student experiences a severe mental health episode away from home. Without prior authorization, parents may not be able to speak with providers, review treatment plans or even confirm what care is being given. But with the right documents in place, they can stay informed and provide support when it matters most.

This is why the conversation needs to happen early. You might even make it part of the college send-off, alongside setting up a bank account.

The most important step here is signing a Health Insurance Portability and Accountability Act (HIPAA) authorization form, which authorizes medical providers to share information with you. While HIPAA is a federal law, the specific forms and requirements can vary by state, so it's also important to confirm local requirements.

But remember that this is a conversation. Your adult child may have their own concerns about privacy or independence. Framing this as a way to support them, not control them, can make the discussion more productive.

Don't wait until something goes wrong

These are not conversations you want to delay until something goes wrong. Financial habits are far easier to build early than to correct later, and in a medical crisis, preparation may determine whether you can step in at all.

Discussing both proactively can give your children a stronger foundation for navigating adulthood. These conversations may feel uncomfortable in the moment. But they are far less difficult than the confusion and stress that can arise when these issues are left unaddressed.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Many people don't begin planning for retirement until later in life. Saving earlier can feel financially difficult or secondary to more immediate priorities.

But delaying retirement investing comes at a significant cost: time.

Even modest investments made early can grow substantially through compound returns. The longer money remains invested, the greater the opportunity for growth and long-term financial security in retirement.

Household wealth in the United States is highly concentrated. The top 10% of households hold most household wealth, while the bottom half own only a small share.

One major driver of this divide is access to assets early in life and the long-term power of compounding investments. These differences often begin in childhood.

Children who grow up with savings or investment accounts are more likely to learn the basics of managing and investing money. They might hear conversations about markets at the dinner table or learn early how compound growth works. Over time, those experiences can shape confidence, financial habits and long-term participation in investing.

Many children, however, don't have those advantages. They enter adulthood without access to financial assets or foundational financial education.

As a result, many begin working without understanding the value of a 401(k), long-term investing or how small, consistent contributions can grow over decades. The result is a head start for some and a delayed starting line for others.

That is why proposals for child investment accounts are generating renewed conversation around early wealth-building and financial capability.

The Trump Accounts or 530A accounts create $1,000 pre-seeded investment accounts for children at birth. The broader principle behind them is straightforward: The earlier investing begins, the more powerful its long-term impact can be.

Educational tools should accompany these accounts. Free educational programs such as the SIFMA Foundation's Family InvestQuest™ and Summer Stock Market Game™ can help families build financial knowledge alongside saving and investing habits.

The power of time in investing

One of the simplest truths in finance is also one of the most important: Time is an investor's greatest advantage. The reason is compound growth — investment returns generating additional returns over time.

Consider a simple example. If $1,000 were invested at birth and earned an average annual return of 7%, that single deposit could grow to roughly $3,400 by age 18 without adding another dollar.

If family members contributed an additional $50 per month, the account could grow to about $25,000 by age 18.

If those contributions continued into adulthood, the balance could grow to more than $500,000 by age 59½.

The lesson is clear: Starting early often matters more than investing large amounts later.

But access to that early starting point is not equal for all families.

The growing conversation around early asset-building

Policymakers and financial educators have increasingly explored ways to expand access to investment accounts earlier in life.

Proposals for child investment accounts are built around a simple concept: Create an investment account at birth, provide an initial deposit and allow families, friends or employers to contribute over time.

Similar programs have been tested in several states and cities. Research highlighted by the Milken Institute suggests these child savings accounts or child development accounts are associated with improved financial security, stronger educational outcomes and higher long-term earnings potential.

Children with savings accounts are more likely to attend college, develop stronger savings habits and build greater financial confidence as young adults.

Even relatively small balances can grow meaningfully over nearly two decades. But the benefits might extend beyond the dollars themselves.

When children grow up knowing they have an investment account, they could begin to see themselves as participants in the financial system and future long-term investors.

Access and education must go hand in hand

Expanding access to investment opportunities is only part of the equation. Financial education is equally important.

Through programs such as the SIFMA Foundation's Summer Stock Market Game™ and Family InvestQuest™, families can learn the fundamentals of investing — including diversification, market volatility and long-term planning — in an engaging and accessible way.

Participants manage simulated portfolios using real market data while learning concepts such as asset allocation, risk management and long-term investing.

Research on SIFMA Foundation's financial education programs has found that participants demonstrate improved financial knowledge, greater confidence in investing and stronger engagement with economic concepts.

Such experiences can help demystify investing and prepare young people to make informed financial decisions and avoid when they begin managing real assets.

Financial education can also help young people understand the long-term impact of compounding and the value of beginning retirement investing early.

A step toward a more inclusive financial future

No single policy will close the wealth gap or solve decades of structural inequality. Financial security depends on many factors, including education, income stability, savings habits and access to financial tools.

But initiatives that encourage early asset-building and financial education represent a meaningful step forward. They expand participation in investing, introduce financial concepts earlier and allow time — one of the most powerful forces in wealth creation — to work in the next generation's favor.

For families, the lesson is simple: The earlier conversations about saving and investing begin, the greater their long-term impact can be.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The graduation caps have been tossed, summer heat has arrived, and graduate celebrations are winding down. But as reality sets in, you might notice a surprising line on your financial dashboard: unspent money in your child’s or grandchild’s 529 plan college savings account.

Roughly 10% of families may end up with surplus 529 funds, according to data from Consumer Reports, often thanks to unexpected scholarships or grants, or by choosing a more affordable school. Fortunately, thanks to the SECURE 2.0 Act, you may be allowed to roll those leftover education funds directly into a Roth IRA without paying federal income tax or a penalty.

Yet it isn't always as simple as moving money from point A to point B. The IRS has strict, fine-print rules regarding timelines, lifetime limits, and account history.

Take our 6-question quiz to find out if you can seamlessly pivot your beneficiary's college savings into a retirement head start — or whether a different tax strategy might make more sense for your family.

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If you have a kid heading to college, you have probably half-watched two years of student loan headlines. Forgiveness on, forgiveness off, repayment plans launched and then struck down. Most of it was easy to tune out.

But if you're now sitting down to figure out how to pay next year's bill, you'll discover one of those changes matters a great deal. The Parent PLUS program, the loan most families counted on to cover whatever grants, savings and student loans left behind, now has a limit.

The change comes from the One Big Beautiful Bill Act, which became law in July 2025. For the first time, Parent PLUS borrowing is capped.

If you take out your first PLUS loan for a child starting a program on or after July 1, 2026, you can borrow $20,000 a year per student, up to $65,000 in total.

The cap follows the student, not the parent, so if both parents want to borrow for the same child, they share a single $20,000 a year.

That detail surprises people, but the bigger shift is what the cap replaces. PLUS used to have no ceiling at all. A parent who passed a basic credit check could borrow right up to a school's full cost of attendance, however high that number climbed. Families leaned on it.

For a lot of households, it was less a loan they chose than a gap-filler they assumed would always be there.

Why $65,000 falls short fast

Sixty-five thousand dollars sounds like plenty until you hold it against a real tuition bill. At an in-state public university, it might stretch across all four years. At a private college running $80,000 or $90,000 a year, it barely dents the gap PLUS used to close.

The old program rose with the price of the school. The new one ignores it. A family sending a child to a $25,000 school and a family sending one to a $90,000 school get the same $65,000, which means the households that stretched hardest for an expensive school are the first to hit the wall.

Before you stew over this in the abstract, put numbers to it. Add up four years of cost, then subtract grants and scholarships, the federal loans your student can take out, and what you can realistically pay from income and savings.

What is left is the slice PLUS used to absorb. A college cost and net-price estimator turns that from a vague worry into a figure you can plan around.

What actually changes on July 1, 2026

A few specifics decide who this hits and who it skips.

• New Parent PLUS borrowers are capped at $20,000 a year and $65,000 total per student
• The caps apply to your first PLUS loan for a program that starts on or after July 1, 2026
• If your PLUS loans went out before that date, you can keep borrowing under the old, uncapped rules, but only for three more years or until your child finishes, whichever comes first

That last line is worth sitting with. A parent already borrowing for a current student is in a completely different spot from one whose first PLUS loan lands for a freshman in fall 2026. Same school, same major, very different ceiling, all because of timing.

Graduate and professional students get squeezed harder

This is not only an undergraduate story. The same law ends Grad PLUS loans for new borrowers on July 1, 2026. Graduate students will be limited to $20,500 a year and $100,000 total, and professional students in fields like medicine, dentistry and law will be limited to $50,000 a year and $200,000 total, all under a federal lifetime cap of $257,500.

For professional school, those ceilings fall short of reality. A year of medical school often runs past $50,000 once you count living costs, and Grad PLUS used to make up the difference up to the full cost.

Now a gap opens, and it lands on the students least able to absorb a surprise, the ones still years away from the income their training will eventually produce.

Readers of my previous articles will know the refrain: The steeper your climb to a high salary, the less room you have for a financing mistake along the way.

What to do before the rules change

None of this calls for panic borrowing, and it certainly does not mean piling on debt to beat a deadline. It means trading the old assumption — that PLUS will cover it — for a plan. Start here.

Run the gap first. Before loans enter the picture, set the full four-year cost against everything you will not borrow: Grants, scholarships, 529 money and what you can pay from income. The number left over is the one that matters, and a borrowing-gap planner keeps you from guessing at it.

Use the student's federal loans before the parent loans. Loans in the student's name carry protections and income-driven repayment options that Parent PLUS and private loans do not. Parent borrowing should fill whatever gap remains, not lead.

Know your grandfather window. If you already hold PLUS loans, you may have three more years of uncapped borrowing. Find out when it ends so a junior-year tuition bill does not catch you flat.

Do not build the whole plan on PLUS. For an expensive school, the money above $65,000 has to come from somewhere: Savings, a cheaper school, more scholarships or private loans you take on knowing exactly what you are trading away.

None of those choices gets easier if you push it to the August before senior year. Look hard at repayment options and what each loan type costs over time while you build the plan, not after the money is gone.

The bigger picture

Parent PLUS was never meant to be the whole strategy. It became one because it had no limit, and a backstop with no limit is an easy thing to lean on. The caps do not make college cost more. They take away the cushion that let families avoid looking the price straight in the eye.

That is uncomfortable. It is also a nudge in the right direction. The parents who come through this in good shape will not be the ones who rushed to borrow before the deadline.

They will be the ones who ran the numbers early, picked schools that fit those numbers, and treated borrowing as one piece of a plan instead of the thing that swallowed whatever the plan left behind. The ceiling is here. Better to measure your distance from it now than to find it the hard way.

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• Started Pulling in the Big Bucks? If You Refinance Your Student Loan Now, Here's What You'll Miss

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Dear Wealth Wise: We retired at 57 due to a quick succession of inheritances and tax consequences, but are still too young to access our own retirement savings. We did manage to leave our children with no debt from college or graduate school. Now our 25-year-old wants to attend law school to do public interest law, but the changes to federal loan programs and the loan rates would leave over $180,000 in student loans at graduation. Should we consider providing a low-interest personal loan? What implications for our retirement should we consider?
— Retired But Still Parenting

Dear "Retired But Still Parenting": It's not always easy for young adults to know what professional path they want to follow off the bat. And it's pretty common for college students to major in something that ends up having little to nothing to do with their careers.

There's nothing wrong with being 25 years old and realizing you want to pursue a law degree. And the return on investment could end up being outstanding.

Georgetown University reports that median earnings, net of debt payments, are $72,000 four years after graduation for all law school graduates. And for graduates of top schools, they can exceed $200,000.

But financing a law degree can be daunting, especially in light of student loan changes under the One Big Beautiful Bill Act. Now, law students are generally limited to $50,000 per year in federal loans and $200,000 in total. (While the average cost of law school is about $50,000 per year, elite schools may charge over $80,000 per year, bringing the total cost of a three-year law degree to over $240,000.) Even if these new caps cover all costs, it can still be a lot of debt to graduate with, despite the strong earnings potential.

Of course, for people going into public interest law, the earnings potential may be more capped. On the plus side, public interest lawyers may be eligible for student loan forgiveness down the line.

The Public Service Loan Forgiveness (PSLF) program forgives federal student loan balances for qualifying professionals after 120 monthly payments. Also, almost all law schools offer a Loan Repayment Assistance Program (LRAP), which provides grants or forgivable loans to help qualifying lawyers make their 120 loan payments toward forgiveness.

The catch? A private family loan is not eligible for the PSLF program, and in some cases, a parental loan might also disqualify a student from LRAP support. The result is that the family might saddle their son with a $180,000 private loan when getting a qualifying loan would yield lower out-of-pocket costs through school grants and federal debt forgiveness.

Still, incoming law students should not bank on forgiveness; they may have a change of heart on their career path, or the rules on forgiveness may change. That means the daunting math of financing a law degree may largely stay the same.

Here, we have a couple who retired at 57 due to a series of windfalls. They're still a few years away from accessing their retirement savings penalty-free, and they're wondering whether it makes sense to write their son a low-interest $180,000 loan rather than have him borrow at higher rates.

Given that the going rate for federal Direct Unsubsidized Loans is 7.94%, a parent loan with an interest rate in the 3%-4% range, consistent with applicable federal rates, could yield significant savings. But will granting that loan introduce complications? Here's what the experts have to say.

Figure out where the money is going to come from

It's certainly noble to want to help your son finance a law degree more affordably. But before you start handing out money in any shape or form, make sure you know where it's going to come from, says Patrick Simasko, estate planning attorney at Simasko Law.

"Any assistance you provide should be structured so it protects your retirement," he says. "Since you retired at 57, tapping your own 401(k) could trigger a 10% early withdrawal penalty."

Simasko also points out that there are more affordable borrowing options for law school than for retirement expenses. So before you give out so much as a dime, make sure your retirement plan can handle it, and that you won't be compromising your ability to pay your bills.

Also, don't count on an IOU from your son to make up for the money you hand over today.

"While your child may promise to help you financially once they become a lawyer, they might find other ways to spend their money," Simasko cautions. Instead, make the loan official so your son is obligated to repay it.

Seth Friedman, Sr. Managing Director at Abacus Finance, has similar guidance.

"Retiring at 57 means that you might go a number of years without total access to certain retirement assets, so the preservation of liquidity during that window becomes an important question," he says. "I suggest that you stress-test your retirement plan as though [the loan] will never be paid off. If that does not diminish your long-term financial security, then helping may be justifiable."

Understand the pros and cons of writing a loan versus paying tuition directly

If you're trying to help make law school more affordable for your son, paying tuition directly could be a more tax-efficient way to go about it. When you pay tuition directly, it doesn't count toward your annual gift tax limit (which is $19,000 in 2026) or your lifetime exemption.

That said, Simasko says there's a big benefit to giving your son a loan rather than covering tuition bills: He'll have some skin in the game.

"I've seen situations where parents pay the entire cost of professional school only to have the child decide halfway through — or shortly after graduation — that they no longer want to practice in that profession," he says. "Having some financial responsibility helps ensure everyone remains committed to the plan."

Friedman says that if you're going to lend your son money, it's important to make it a part of your estate plan.

"In the event that you choose to lend out the cash, be sure to document it, charge a realistic interest rate, and set up an appropriate repayment schedule according to your kid's career plans," he says. "One of the most frequent errors I see is parents unofficially loaning money, which slowly morphs into an impromptu gift."

Make sure to keep things equitable for your other children

The fact that you've managed to give all your children debt-free educations thus far is commendable. But if you're now considering $180,000 in aid for your son, it's important to make sure you're being fair to your other children, Simasko says.

"If this child receives substantial financial help from you for law school, will their other siblings expect the same assistance in return? Many families either document the assistance as a loan or treat it as an advance on that child's future inheritance to avoid misunderstandings later," he explains.

If you decide not to lend out the money and instead pay your son's tuition directly for the tax advantages, make sure to document that and be transparent with your other children about it. If you talk things through and make it clear that you're willing to offer similar assistance to your remaining children, there should be no need for resentment.

A word from Wealth Wise

There are additional reasons the couple may want to tread carefully as they consider how to support their child's law school ambitions.

First, they should estimate their son's actual earnings and ability to repay a loan after law school. Georgetown University provides a searchable database of median earnings of graduates of over 100 U.S. law schools. Then they should take into account their son's desire to go into public-interest law, which typically pays less than private practice.

Finally, the job market for law school graduates is in flux, so there's no way to predict whether or how quickly their son might secure a public-interest legal position. With rising applications to law school and AI disrupting entry-level positions for new graduates, their son may find fewer entry-level legal jobs just as he starts his career. In that case, the parents may have to accept that the $180,000 loan is really a family gift.

Read More

• We Want to Give Our Daughter $200K for a Home. We Already Paid for Her Wedding, and Our Sons Say We Are Being Unfair.
• I Have Two Homes, But Three Kids. Can My Estate Plan Be Fair?
• We're 54 With $1.8 Million. My Wife Wants to Start a College Fund for Our Grandson, but I Think We Should Keep Funding Our Retirement.

Editor's note: This article is the first in a three-part series on the benefits of taking a more thoughtful and proactive approach to financial planning.

For decades, wealth planning has revolved around obvious life milestones, such as marriage, birth, retirement and death. These moments trigger conversations, necessitate action and carry a sense of urgency.

But the most complex planning challenges rarely begin with these milestones. In fact, they begin in the quieter moments well before the event takes place. I would even argue that these milestones are often the period at the end of a sentence, as opposed to the start of one.

This three-part series focuses on those quieter moments — the transitions that happen gradually, often without a clear starting point, and have lasting consequences if they are not addressed early. The first of these moments is when children transition into adulthood and become financially aware.

The knowledge problem

Many families treat wealth education as something that begins at the time of an asset transfer. Often, real conversations only happen when a significant monetary event is about to occur, such as the termination of an UGMA account, a distribution from a trust, or an unexpected inheritance.

By that point, families are often trying to rush a single conversation about wealth that should have been done gradually.

Meanwhile, children often create their own narrative in the absence of knowledge. They may assume that the existence of wealth means future financial guarantees. The opposite can also be true: They may develop resentment for well-meaning parents who worry that wealth will spoil them.

In the absence of communication and guidance, children fill in their own blank space with what they think they know. Once those expectations and sentiments harden, they can be difficult to change.

Unfortunately, many young adults have never had the chance to practice decision-making around money in a meaningful way. We often say we want the next generation to be responsible, but responsibility is not taught through one conversation or one podcast — it is learned and developed over time.

Responsibility comes from exposure, repetition and the chance to make choices while the consequences are still manageable. It also includes making mistakes when the stakes are low and parents are still around to help course-adjust if necessary.

Learning by doing

Families can begin by giving the next generation something concrete to engage with —something small but real. That can mean involving children in the discussion around family philanthropy, where they can learn to evaluate causes, priorities and trade-offs.

A donor-advised fund can be a particularly useful training ground for both financial management and philanthropy.

Alternatively, it might mean letting them sit in on an investment review meeting with the family adviser, so they can see how decisions are discussed and made. It may make sense to include a child as a non-voting participant in the next family investment.

Other families may prefer to give children a small sum of money to manage, not necessarily to seek a certain return, but for the experience itself.

A simple investment account that the child can access with an app can be a good way to learn about investing and the markets.

All these experiences create meaningful opportunities to learn by doing.

The family trust

In the right circumstances, an adult child may even serve as a co-trustee of a trust alongside a more experienced individual or institution. All these create meaningful opportunities to learn by doing.

A trust can be more dynamic than people assume. Historically, many families thought of a trust as a static legal vehicle. It held assets, imposed guardrails and produced distributions. Increasingly, families are recognizing that a trust can do more. It can also support development.

If drafted thoughtfully, a trust can create structure around the use of funds for purposes the grantor values, such as education, entrepreneurship or the purchase of a first home.

It can also create a framework where a beneficiary becomes familiar with the process, accountability and responsibility over this stewardship of wealth.

Depending on the structure of the trust, the beneficiaries may include future generations. The trust then becomes not just a wealth transfer tool, but a teaching tool for a family legacy.

However, a lack of understanding of roles and responsibilities within a trust structure can lead to surprises.

For example, beneficiaries are often surprised by how much discretion a trustee actually has, and the conditions attached to the assets imposed by the grantor in the trust agreement. They often also lack the appreciation of the fiduciary responsibility that a trustee has.

This is why families need to talk not only about the "what," but also about the "who" and the "how."

• Who will play what role in the family structure?
• How will decisions be made?
• How should a beneficiary think about access versus ownership?
• If one child is expected to take on more responsibility, is that because of geography, expertise, availability or family dynamics?

If not explained, role assignments can easily be misinterpreted as judgments about love, trust or fairness.

Advisers have an important role to play here as well. Information is more accessible than ever, but information is not the same as understanding or judgment.

Families do not just need someone to explain what a trust is — they need someone who can help translate the purpose of a structure, think through the behavioral implications, and coordinate the legal, fiduciary and educational aspects of the plan.

In many cases, the adviser also serves as a neutral voice, helping parents discuss difficult topics with children in a way that is objective.

Shaping the next generation

A child's transition from financial dependence to awareness does not show up in a single defining moment. It is one of the hardest shifts a family will navigate. Every child is different, even within the same family.

By the time assets actually change hands, the mindset, habits and expectations of the next generation are already taking shape. Getting ahead of this early, and adopting a "growth mindset" on the parents' part is critical — some conversation, even if not perfect, is better than no conversation at all.

In the next article, I will turn to another quiet transition: The period when parents are still healthy, but planning for old age has not yet begun. Like this transition, it is far easier to address before it becomes urgent.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

At a time when college costs are spiraling out of control for many families, city, state and federal governments are offering relief. In the latest example, New York City has a proposal that would give kindergarteners $1,000 into a college savings account, with some families qualifying for up to $3,000.

Who qualifies for the maximum benefit? Jack Lobel, press secretary of the New York City Council, told Kiplinger, "Any participant who is already eligible for Human Resources Administration (HRA) benefits receives an additional $2,000 on top of the $1,000." The HRA is NYC's social service agency serving families by providing food, housing, child support and other services.

The measure would have to be approved by Mayor Zohran Mamdani, who excluded the proposal from his executive budget in May, per the New York Times, although budget negotiations are ongoing. He has expressed interest in expanding contributions into children's savings accounts.

The NYC proposal is one of the latest government initiatives designed to jumpstart college savings. These programs, which offer free funding, represent the most pertinent news for families seeking college relief. Here's a look at other government-backed funds you may qualify for.

Which states offer college aid for families?

Here's a look at states providing some incentives to help you save for college:

• California: Through the CalKIDS program, children can earn scholarships of up to $1,500 if enrolled in low-income public schools.
• Connecticut: The Baby Bond program helps parents by providing up to $3,200 for low-income families with children to attend college, buy a home or start a business.
• Pennsylvania: Thanks to the Keystone Scholars initiative, every child born in the state receives $100 into a PA 529 education savings account.

Along with these, other states offering incentives include Texas, Indiana, Maine, Nebraska, Rhode Island and Nevada. If you live in one of these states, check out their programs and what you would need to do to qualify.

Meanwhile, there's a new national program about to roll out that benefits all qualified families.

Trump Accounts are bringing the concept nationwide

As part of the One Big Beautiful Bill Act of 2025, the federal government will open tax-advantaged college savings accounts for U.S. citizens born between January 1, 2025, and December 31, 2028. These accounts feature a $1,000 contribution to help jumpstart your college savings.

From here, families can make annual contributions of up to $5,000 into U.S. equity funds — think the S&P 500. Employers can also make contributions, but they're capped at $2,500 annually.

You can open one by filling out Form 4547. Next, download the Trump Accounts app on the Apple App Store or Google Play. This allows you to monitor the account and make additional deposits. Once registered, you'll wait for an invite. These will come out in a few weeks as the Trump Accounts officially launch on July 4.

With this in mind, there are a few limitations to using these accounts. One, you won't be able to make any more contributions after your child reaches 18. Withdrawals are also not tax-free like they would be with 529 plans, and you have a narrower window of investment options. Still, even with the limitations, having $1,000 is a great start for families that need a boost with college savings.

In addition to using these programs, there are other options you can fund yourself that help you reach your savings goals, so you minimize how much debt you or your child needs to take on.

How do child savings accounts work, and what are my options?

While those are programs and proposals where the government funds savings, there are many options for savings or investment vehicles funded by yourself, designed to help parents (or grandparents) save for higher educational expenses. Some programs also allow children to use the money to open a business or to make a down payment on a home.

Plans, such as 529 and Roth IRA, also offer tax savings advantages as long as you use the earnings for college expenses. Here's a breakdown of some of the most popular options:

529 plans

This is a tax-advantaged investment account, where you invest after-tax earnings in ETFs, mutual funds or age-based portfolios. The benefit of this approach is that earnings grow tax-deferred, and as long as you withdraw funds for educational expenses, you won't pay federal tax on them.

This is the best option as you receive federal tax breaks (many states offer them too), and your child can use this money for trade schools, graduate programs and some college expenses overseas. Single filers can contribute up to $19,000, while married filing jointly couples can contribute up to $38,000 annually. You can do more in either instance, but it will go against your lifetime gift and estate tax exclusion.

Read more: 529 Plans: Everything You Need to Know

Roth IRA

While this is primarily a vehicle for retirement savings, you can also use it wisely to fund your child's education. Withdraw your contributions tax-free and your earnings tax-free, provided they're used for higher education expenses. The only thing to consider is that annual contributions are capped at $7,500. Meanwhile, with 529 plans, you don't have annual limits.

Read more: Why Every Grandparent Should Consider a Custodial Roth IRA Now + Where to Save Your Kids' Cash

Coverdell Education Savings Account

These accounts work similarly to Roth IRAs in that you contribute post-tax money into self-directed investments like bonds, stocks and more. Unlike Roth IRAs, Coverdell caps maximum annual deposits at $2,000.

There are also income restrictions with these accounts. Single filers have to earn less than $95,000 to $110,000 or more, whereas if you're married filing jointly, you won't qualify if you earn between $190,000 to $220,000 or more.

There's also a new college savings program that all qualified parents should use.

Read more: Coverdell ESAs vs 529 Plans: Which Should You Choose?

What's the best way to save for my child's college education?

I recommended a blended approach. Definitely open a Trump Account if you qualify because it's a free $1,000. Even if that doesn't become your main account for saving for college, over time, that money can grow, giving your child more funds to use when the time arrives.

I also suggest a 529 plan. They're among the best savings vehicles for college due to their flexible investment choices and tax savings. To determine long-term goals and monthly savings targets, consult with your spouse, a trusted friend or a financial advisor, who can guide you on specific savings measurables. And don't forget to take advantage of any local programs, as they can make saving for college more within reach.

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As the Class of 2026 are handed their diplomas this spring, the outlook is bleak. They're facing not only one of the worst job markets in years, but also — and perhaps more devastatingly — the realization that the promise of higher education they've been sold their entire lives was a lie.

It's a broken promise for graduates, but also for the rest of us. The college-first mindset is ruining the job prospects of our young people and wrecking the economy.

It's time for America to grapple with what its college-first mindset has wrought. And it isn't pretty.

What went wrong?

For years, America sold young people a simple promise: Work hard, go to college, get a degree, and opportunity will follow.

That promise was rooted in something real. College opened doors for millions of people, building careers, widening horizons and helping families gain social mobility. But over time, what was a good path for some became something more rigid.

The four-year degree stopped being one strong option among several and became, for many parents, educators and policymakers, the only fully respectable route to success.

That belief shaped more than culture. It shaped how we spend money, how schools advise students and how the country defines ambition. Now the labor market is exposing how narrow that view has become.

Many young college graduates are finding that the old path into white-collar life no longer works the way it once did.

Just 30% of last year's college graduates were able to find positions in their chosen field, as entry-level jobs continue to be wiped out, and a tenuous economy pushes employers to do more with fewer people.

Growing shortage of skilled workers

College still has value, of course. For many professions, it remains an essential stepping stone. But the larger assumption that a bachelor's degree is the safest default path for nearly everyone now looks less like wisdom and more like habit.

While college graduates are struggling, the U.S. is in desperate need of the skilled, well-paid workers who have been seriously undervalued in our public imagination.

Contractors need electricians, plumbers, welders and HVAC technicians; manufacturers need machinists, maintenance specialists and advanced technicians; healthcare systems, logistics networks, public infrastructure and public safety all depend on people with real skills that do not fit neatly inside the old, four-year college ladder.

These jobs are not fallback options; they are central to the functioning of modern life — and the AI revolution is only making these jobs all the more valuable. The explosive growth of data centers, which require their own fleet of skilled laborers, from construction to plumbing, has increased the demand for certain positions by over 100%.

And they're well-paying jobs, making anywhere from $80,000 to $250,000.

According to a study by the Bipartisan Policy Center, the U.S. is projected to face a shortage of 6 million workers by 2032, even as 70% of jobs will require education or training beyond high school. In construction alone, there are nearly two job openings for every unemployed worker.

Compare that with the unemployment rate for recent college graduates, which is a point and a half higher than the national average.

Yet, across the American education system, college is still spoken about as if it were the only honorable route into adulthood. High schools speak fluently about college preparedness while treating readiness for anything else as a lesser goal. Parents and public policy reflect the same bias.

The path towards traditional degrees is heavily subsidized, while many shorter, job-connected routes remain thin, scattered or culturally discounted. Meanwhile, the success of the four-year path is far from guaranteed; nationally, only about 60% of students complete a bachelor's degree within six years.

Students are being disenfranchised, while the talent shortage for employers only continues to grow.

How to break out of the college-first mindset

Across every level of education and policy, the U.S. needs to extricate itself from this college-first mindset. A healthy society does not organize opportunity around a single script. It builds multiple credible paths to economic security, adult dignity and useful contribution.

A quality education at a top-level university is right for some, yes, but for many others, the path to success looks like an excellent apprenticeship program, a modern community college pathway, employer-led training, or short-term credentials that are tied to real labor market demand.

These aren't side doors for those who couldn't rough it; they're part of a national talent strategy that more closely links the education system with private industry. On a state level, it means partnering with business groups to shape curriculum and state licensing requirements.

On a federal level, it means rethinking how — and what programs — we subsidize.

The Education Department's proposed Workforce Pell rule changes are a start. Updated rules would allow students to use Pell Grants for eligible short-term workforce programs beginning in July 2026, including programs as short as eight weeks.

It's a critical first step, but one that must continue to grow: one new funding stream will not fix a system that remains fragmented, uneven and culturally biased toward one route over the rest.

America does not need to turn against college. It needs to stop acting as if college is the only serious path for serious people. That idea has distorted our education system for years. Now it is starting to fail the people it was supposed to serve.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For many well‑intentioned parents, saving for college through a 529 plan feels like doing everything right. Contributions grow tax‑free, withdrawals can be tax‑free when used properly, and the account is designed specifically for education.

Yet when college finally arrives, some families discover that the balance falls short of the full cost. Rising tuition, housing expenses and education inflation have turned college planning into a moving target, even for disciplined savers.

The good news is that a 529 plan can still play a meaningful role, even when it does not fully fund four years of school. The key is how the money is used, when it is distributed and how it coordinates with other resources.

Thoughtful strategies can help parents maximize tax benefits, avoid costly mistakes and stretch limited savings further.

Qualified expenses

The primary advantage of a 529 plan is tax‑free withdrawals, but only when distributions are used for qualified education expenses.

At the college level, these expenses include tuition, mandatory fees, books, required supplies, computers, internet access and room and board for students enrolled at least half‑time.

Room and board is subject to limits based on the school's published cost of attendance, especially for students living off campus.

When funds are limited, it is often best to reserve 529 dollars for clearly qualified expenses such as tuition and required fees. These expenses are straightforward to document and provide the strongest tax benefit.

Using 529 money for non‑qualified costs can trigger income tax and penalties on the earnings portion of the withdrawal, reducing the effectiveness of the account.

Timing

One of the most common 529 mistakes involves the timing of the distributions. Distributions must occur in the same tax year that qualified expenses are paid. Paying tuition in January while taking a distribution in December, or the reverse, can unintentionally result in a taxable withdrawal.

Academic calendars can complicate this further. Spring semester tuition bills are often issued in December for a semester that begins in January. Families should coordinate payments and withdrawals so that both occur within the same calendar year. This helps ensure consistency between Form 1098‑T from the school and Form 1099‑Q from the 529 plan administrator.

Careful recordkeeping is essential. Retaining tuition statements, housing invoices and receipts provides clarity at tax time and helps support the tax‑free nature of the withdrawal if questions ever arise.

Other timing considerations

When a 529 balance will not cover all costs, it is rarely optimal to spend it all in the freshman year. College expenses often increase over time, and families may benefit from spreading withdrawals over all four years.

Some parents intentionally preserve 529 funds for later years, when scholarships may decrease or housing costs rise. Others use the account primarily for room and board once grants and discounts reduce tuition expenses.

There is no single correct approach, but the guiding principle is to avoid exhausting the account too early unless there is a clear tax or cash‑flow reason to do so.

Let the 529 complement other funding sources

When college costs exceed 529 savings, the account should be viewed as one part of a broader funding strategy. Most families rely on a combination of current income, savings, financial aid, scholarships and loans.

In many cases, limited student borrowing, particularly through federal student loans, can be a reasonable choice when it allows the 529 to be used efficiently and helps parents preserve retirement assets. Paying some expenses from cash flow can also allow remaining 529 funds to continue growing tax‑free for future years.

Parents should be cautious about draining their retirement accounts or sacrificing long‑term financial security in order to fully fund college. Education is important, but it should not come at the expense of financial stability later in life.

Be mindful of financial aid considerations

Parent‑owned 529 plans are treated relatively favorably in the financial aid process and are generally assessed as parental assets. However, distributions can affect aid eligibility depending on account ownership and timing.

While recent Free Application for Federal Student Aid (FAFSA) changes have reduced penalties related to certain distributions, families should still coordinate withdrawals thoughtfully, especially when 529 accounts are owned by grandparents or other relatives.

Understanding how distributions may interact with financial aid calculations helps avoid unintended reductions in eligibility.

Take advantage of expanded flexibility

529 plans are more flexible than many families realize. In addition to traditional college expenses, funds can be used for certain vocational programs, apprenticeships, certification costs and limited student loan repayment.

If a balance remains after undergraduate education, the account does not need to be hurriedly spent. Funds can be used for graduate school, reassigned to another family member or potentially rolled to a Roth IRA for the beneficiary under current rules and limitations. This flexibility reduces pressure to over‑distribute funds during the college years.

A failure? No way!

An underfunded 529 plan is not a failure. When used thoughtfully, it can still significantly reduce the cost of higher education. The value comes from strategic timing, careful coordination with tax credits and intentional use of qualified expenses.

Families who approach 529 distributions with a plan, rather than reacting to tuition bills, often find that their savings go further than expected. Viewing the 529 as part of a broader financial strategy allows parents to support education goals while still protecting their long‑term financial health.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

By the time May ends, many parents feel completely drained. Between school concerts, field trips, sports banquets, graduation celebrations, spirit weeks and summer planning, late spring can feel just as hectic and expensive as the holiday season.

That's why the term Maycember has struck a chord with so many parents online. Much like December, May often brings a nonstop stream of obligations, emotional labor and unexpected expenses that leave families exhausted before summer even begins.

After months of managing schedules, coordinating activities and taking care of everyone else, many parents enter summer running on empty. But the season can also offer an opportunity to shift some of that focus inward and make time for their own well-being.

Why parents feel financially and emotionally depleted by late May

For many families, May brings a steady stream of expenses that seem to arrive all at once. Teacher appreciation gifts, yearbook orders, team banquets, graduation celebrations, camp deposits, summer wardrobes and vacation planning can quickly strain the budget.

At the same time, parents often carry an invisible mental load behind the scenes. They're coordinating schedules, tracking deadlines, arranging childcare and helping their children navigate the emotions that come with the end of the school year and the start of summer.

By the time the final school bell rings, many parents aren't heading into summer feeling refreshed. They're heading into it already exhausted.

There's also an emotional contradiction that comes with this season. Summer is supposed to feel relaxing and carefree, yet many parents immediately shift into planning activities, creating memorable experiences and keeping kids engaged. Rather than slowing down, the work often takes on a different form.

Splurging doesn't have to mean irresponsible spending

Treating yourself after Maycember doesn't have to mean blowing your budget or abandoning your financial goals.

Thoughtful splurges can sometimes improve your quality of life, reduce stress and help you reclaim some of the time and energy you've spent caring for everyone else during a demanding season.

The most worthwhile purchases aren't always luxury items. Often, they're the conveniences, experiences and small upgrades that make daily life easier, more enjoyable or a little less overwhelming.

Here are a few ways parents can treat themselves this summer after making it through Maycember.

1. Outsource your stress

One of the biggest sources of burnout for parents is the endless stream of small tasks that seem to multiply during busy seasons.

Summer can be a good time to give yourself a little breathing room by outsourcing some of those responsibilities. For some families, that might mean paying for grocery delivery once a week, scheduling a regular takeout night or signing up for a car wash membership so cleaning the car doesn't become another weekend obligation.

Even hiring someone to mow the lawn once or twice during a particularly hectic stretch can provide a sense of relief.

"One of the best investments we've made during the summer is hiring a landscaper to handle mowing and weed control," says Carla Ayers, Personal Finance Editor at Kiplinger.com. "Outsourcing that task gives us one less thing to worry about and helps us avoid the stress of coming home to an overgrown yard."

Larger splurges might include a monthly house cleaner, a laundry service or a mother's helper or babysitter for a few hours each week so you can work, rest or enjoy some uninterrupted quiet time.

The value of these purchases goes beyond convenience. They can help reduce mental load and free up time for the things that matter most. For many parents, buying back a few hours of their week feels far more rewarding than buying more stuff.

2. Upgrade your summer mornings

Summer mornings often feel different. There’s usually a little more daylight, a slightly slower pace and more opportunities to enjoy quiet moments before the day gets busy. Instead of rushing through mornings, some parents might want to create a small ritual they look forward to.

That could be as simple as trying a fancy cold brew setup at home, buying better coffee creamer, picking up pastries from a local bakery once a week or replacing the chipped coffee mug you’ve been using for years. Others might enjoy sitting outside for 15 minutes with a journal, book or playlist before everyone else wakes up.

For bigger upgrades, parents might consider investing in an espresso machine, upgrading patio furniture or creating a small outdoor retreat space in the backyard with comfortable seating and lighting.

Sometimes a small change to the start of your day can improve your mood far more than a major purchase.

3. Take the solo afternoon you keep postponing

Many parents struggle to justify spending time or money on themselves. But after a demanding school year, a few uninterrupted hours can feel refreshing.

That might mean browsing a bookstore at your own pace, lingering in a coffee shop without interruptions, catching a matinee movie or enjoying lunch at a favorite restaurant. The activity itself matters less than having the freedom to spend a few hours doing something you enjoy.

Others might opt for a more intentional form of self-care, such as a massage, spa treatment or wellness day. Some even book a solo hotel stay nearby to enjoy uninterrupted sleep, quiet and a chance to recharge.

4. Spend money on convenience this summer

Summer schedules can become surprisingly chaotic with camps, sports, vacations and constantly shifting routines. During especially busy seasons, convenience can be a worthwhile investment rather than an unnecessary luxury.

Small upgrades such as buying precut produce, keeping extra freezer meals on hand, using grocery pickup or occasionally ordering delivery can make daily life run more smoothly.

Families with packed calendars may also benefit from meal kit subscriptions such as Marley Spoon, HelloFresh or Home Chef, which can simplify dinner planning and reduce the number of last-minute trips to the grocery store. Others might find value in prepared meal services or temporary cleaning help during the busiest weeks of summer.

Convenience spending is often criticized in budgeting conversations, but there's a difference between mindless spending and intentionally paying for support during demanding seasons of life. If a purchase helps reduce stress, prevent family conflicts or ease exhaustion, it might deliver more value than its price tag suggests.

5. Buy something that makes summer easier

Sometimes the best splurges are the practical purchases that make everyday life more comfortable all season long. That might mean investing in supportive walking shoes, upgrading your water bottle, buying a beach tote that fits everything or picking up a portable fan for long afternoons at outdoor sports events.

For parents spending hours on their feet at tournaments, amusement parks, festivals and family outings, comfortable footwear can be a worthwhile investment. Tom's Guide highlighted several popular options, including Hoka Skyward Laceless, OOFOS OOmg+ recovery shoes and Skechers Slip-ins Max Cushioning, all designed to provide comfort and support during long days of walking.

Other quality-of-life upgrades might include a pool membership, patio furniture, an outdoor speaker system or a high-end cooler for road trips, picnics and park days. Some parents are also investing in fitness trackers or e-bikes to make movement more enjoyable and encourage healthy habits throughout the summer.

The best summer splurges aren't always the most exciting purchases. Often, they're the ones that make everyday activities easier, more comfortable and a little more enjoyable.

6. Book the small trip instead of waiting for the perfect vacation

Not every family can afford an elaborate summer vacation, especially after the financial demands of spring activities and rising travel costs.

That doesn't mean summer has to feel disappointing. Instead of waiting for the "perfect" trip, many families choose smaller, lower-pressure getaways. A weekend at a nearby lake, a scenic road trip, a one-night hotel stay or a day trip to a neighboring town can create meaningful memories without requiring months of planning or a hefty price tag.

Families looking to splurge a bit more might consider renting a cabin at a state park, booking a nearby resort stay or planning a short regional getaway that doesn't require expensive flights. Shorter trips can often be less stressful, more affordable and easier to enjoy than highly planned vacations packed with activities and rigid itineraries.

"Patience and flexibility are your best friends when traveling with children," says Sean Jackson, personal finance writer for Kiplinger.com.

"Keep your schedule open enough to account for naps, unexpected delays and the occasional mishap. Pack plenty of snacks and cleaning wipes, and if you have younger children, it can help to have someone sit in the back seat with them during longer drives. We've taken multiple trips with our daughter and found that the more flexible you are, the smoother the experience tends to be and the more likely everyone is to enjoy the trip."

7. Create one adults-only summer ritual

Summer often revolves around children's schedules and activities, but parents benefit from having traditions of their own as well. That could be something as simple as a Friday takeout night after the kids go to bed, backyard gatherings with neighbors or evening walks accompanied by a favorite podcast or playlist.

Others might choose bigger splurges, such as creating a backyard firepit area, purchasing tickets to an outdoor concert series or investing in a date-night membership that encourages regular time together.

Having a recurring adults-only ritual can provide a welcome break from the logistics of family life and create something to look forward to throughout the summer.

8. Give yourself permission to stop optimizing everything

Many parents spend the summer trying to make every moment count by planning educational outings, organizing activities, scheduling camps and creating the "perfect" summer experience.

But constantly optimizing family life can be exhausting. Sometimes the most valuable summer splurge isn't something you buy. It's giving yourself permission to do less.

That might mean picking up a store-bought dessert instead of baking from scratch, skipping an event that feels more stressful than enjoyable, letting the kids entertain themselves for an afternoon or relying on simple meals more often.

After the chaos of Maycember, many parents head into summer already feeling stretched thin financially, mentally and emotionally. While it’s easy to focus every dollar and every ounce of energy on everyone else, summer can also be an opportunity to make life a little easier and more enjoyable for yourself, too.

Whether it’s paying for convenience, simplifying your schedule or finally taking a break you’ve been postponing, intentional splurges don’t have to derail your finances. Sometimes, the right purchase is the one that gives you more rest, more time or a little more peace during a busy season of life.

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Youth sports used to be a relatively simple line item in the family budget. Parents might pay a registration fee, buy a pair of cleats and celebrate the end of the season with pizza. That’s no longer the case.

Today, youth sports have evolved into a sprawling, multibillion-dollar industry fueled by travel leagues, private coaching, tournament circuits and a growing ecosystem of apps and specialized services.

According to recent data from Project Play, family spending on a child’s primary sport has surged by roughly 46% in the past five years, reflecting a broader shift toward year-round, highly structured competition.

For many families, the rising cost of youth sports is straining household budgets and raising questions about whether the price tag is still worth it. Understanding what's driving these higher costs, and where families can realistically cut back, can make it easier to find a balance that works.

Youth sports have become big business

For many families, youth sports used to be relatively simple and affordable. Parents would pay a reasonable, one-time fee to sign their child up for a six- to eight-week league through a local park district or the YMCA.

That fee typically covered the basics: a jersey, shared equipment and a set schedule of games, plus one or two practices a week. Teams were formed, kids played, and the season wrapped up without much fanfare or financial strain.

Those options still exist, and for many families, they remain an affordable way for kids to stay active and involved.

But alongside that traditional model, a more complex and expensive version of youth sports has emerged. Retailers such as Dick's Sporting Goods are investing in youth sports platforms and experiences, while private-equity firms are backing large-scale tournament operators, training facilities and multisport complexes.

Add streaming services for games, recruiting platforms and scheduling apps, and it’s clear that youth sports now extend far beyond the field.

The shift toward year-round play has also created recurring revenue streams. Instead of participating for a few months, many young athletes now compete, train and travel nearly year-round. What was once a seasonal expense has increasingly become an ongoing financial commitment for families.

Travel teams and specialization are driving costs higher

One of the biggest cost drivers of youth sports today is the rise of travel teams and early specialization.

Families are increasingly expected to commit to one sport and commit fully. That often includes:

• Club or travel team fees that can run into the thousands
• Tournament entry fees and long-distance travel
• Hotel stays and rising transportation costs
• Frequent equipment upgrades
• Private coaching, strength training or clinics

Even sports once considered affordable, such as soccer or basketball, can quickly become expensive at competitive levels. Baseball, hockey and gymnastics often come with even higher price tags due to gear and facility costs.

While specialization can help athletes develop skills, it also increases financial pressure. Opting out or even scaling back can feel like putting your child at a disadvantage.

Technology is adding convenience — and more fees

Technology has made youth sports more organized and accessible. It’s also quietly adding to the bill.

Families now encounter a growing list of subscriptions and add-ons, including:

• Registration and team management platforms
• Video analysis and performance tracking apps
• Recruiting highlight services
• Livestream access for out-of-town relatives

Individually, these costs might seem manageable. Together, they create "subscription creep" that's a steady accumulation of monthly and annual fees that can rival the cost of participation itself.

What families are spending on youth sports

The rising cost of youth sports is no longer limited to elite travel teams or specialty programs. According to the Aspen Institute’s (PDF) latest parent survey conducted with Utah State University and Louisiana Tech University, the average U.S. family spent $1,016 on one child’s primary sport in 2024, a 46% increase from 2019.

Parents also reported spending another $475 on additional sports and activities for the same child. Altogether, families spent nearly $1,500 annually per child on sports participation in 2024.

Those figures can climb quickly for households with multiple children participating in sports, especially as athletes get older. The survey found spending increased significantly by age, with families spending nearly $2,000 annually on teens ages 15 to 18.

Certain sports have also become notably more expensive. Since 2019, average annual family spending on baseball climbed from $660 to $1,113, while soccer rose from $537 to $910, and basketball increased from $427 to $876.

Why do parents keep paying despite rising costs?

Even as costs climb, many families continue investing heavily in youth sports, and not just because of the possibility of a college scholarship.

For parents and grandparents, sports can provide structure and routine in a child’s schedule, along with physical and mental health benefits. There’s nothing inherently wrong with wanting children to stay active, spend time with other kids, learn teamwork and develop new skills. Youth sports can also create a strong sense of community and shared purpose.

There’s also a psychological factor at play. As youth sports become increasingly competitive, some families worry that opting out, scaling back or choosing a lower-cost path could leave their child behind. While the financial pressure might strain household budgets, parents might still hesitate to take a season off or encourage their child to rotate sports out of concern they could miss valuable opportunities to develop skills or gain exposure.

But the reality is that only a small percentage of youth athletes go on to receive athletic scholarships, and even fewer become professional athletes. That makes it even more important for families to weigh the financial trade-offs and decide what level of investment makes sense for their budget and goals.

How families can keep youth sports spending under control

The rising cost of youth sports doesn’t mean families must opt out altogether. In many cases, there’s a practical middle ground that allows kids to enjoy the benefits of sports without stretching the family budget too thin.

It starts with being intentional about what you sign up for. Before committing to a new season or travel team, step back and create a realistic annual budget for sports-related expenses. That includes not just registration fees, but also travel, equipment, training costs and the smaller add-on expenses that can quietly pile up over time.

Consider local or recreational leagues

Not every child needs a travel schedule to enjoy sports or develop skills. Community leagues can offer strong coaching and competition at a fraction of the cost. Some families also choose a hybrid approach, mixing one competitive season with lower-cost options during the off-season.

Buy secondhand whenever possible

From cleats to bats to uniforms, gently used equipment can significantly reduce expenses, especially for fast-growing kids.

Limit year-round specialization

Encouraging kids to play multiple sports can reduce burnout and lower costs tied to constant training and travel in a single sport. When it comes to extras such as private coaching or additional tournaments, it’s worth asking whether those investments are truly adding value or just adding pressure.

Revisit why you initially got involved (and let that guide future decisions)

Keep the focus on what matters most: your child’s enjoyment and development. Not every athlete needs a year-round schedule or elite-level training to benefit from sports. Giving kids space to explore different activities or have an off-season, can be just as valuable.

Finding the right balance for your family

Youth sports can still be one of the most rewarding investments a family makes, but they've also become one of the most expensive.

For parents and grandparents supporting young athletes, it’s important to create an experience that fits both your child’s interests and your financial reality. At the end of the day, the value of youth sports isn’t measured by how much you spend, but by what your child gains from the experience.

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For the past several years, Jody King and Jim Vozar have made it their practice to give their four adult children a sum of money annually to help with their expenses.

The "kids" — the couple each have a son and daughter from their first marriages, ranging in age from 25 to 38 — all have jobs and can cover essential bills on their own. But the financial assistance from Mom and Dad makes a meaningful difference.

"Everything is more expensive these days, from groceries to rent to cars; it's harder to buy a house, harder to save money," says Vozar, 56, who owns a real estate development and construction company in Nazareth, Pennsylvania. "We're happy we have the means to help our children, to create a good foundation for them moving forward, so they're not sweating every payment."

The couple hasn't placed any strings on how the children use the money. "There are really no ground rules, other than our encouragement that they buy something they've wanted but maybe couldn't easily afford and to invest the rest wisely," says King, 58, a commercial real estate broker with CBRE in Allentown, Pennsylvania.

So far, the kids' purchases have included a computer, a treadmill, professional coaching services and new windows for the oldest child's home. All four have invested some, as well — money that Vozar expects one day will help them buy a car or house and build long-term savings.

"We'd know if one of them put it all on black or was driving a Porsche," says Vozar, who adds he has warned his kids not to spend the money on anything stupid.

If that happened, the couple say, their no-rules philosophy on gifting would change — although they make it clear that the children all work hard and want to forge their own ways. Vozar says, "I'm a firm believer in a hand up, not a handout."

A growing number of parents these days are following a similar path, helping their adult children with money in greater amounts and for longer periods than previous generations, research shows. More than six in 10 parents in an Ameriprise survey last year, for example, said they were covering some ongoing expenses for a child 21 or older, from phone bills to everyday living costs. (Participants in the survey had, on average, more than $500,000 in assets.)

More than three-fourths were helping to pay for a big one-time goal, such as a wedding or the down payment on a home.

The average amount of cash support to children 18 and older, according to a 2025 AARP study, is about $7,000 a year, with higher-income households that earn $75,000 or more giving over $10,000 annually.

Studies show that ongoing assistance drops sharply once adult children hit their late twenties, but it doesn't end entirely for many families.

About one-third of Americans ages 30 to 34 still get some financial help from their parents, a 2024 Pew Research Center study found, most commonly for household expenses such as groceries and utility bills, and for rent or mortgage payments.

"Younger generations today are in a very difficult situation in terms of affordability," says certified financial planner Mary Clements Evans, author of Emotionally Invested and founder of Evans Wealth Strategies in Emmaus, Pennsylvania.

"It's not just about the price of eggs and gas for them; it's the price of education, housing, health insurance, childcare, you name it. A lot of boomers have the financial means, and these kids really need the help."

Still, many parents helping adult children with money are feeling the strain. Studies also show that for some, lending a financial hand to kids in their twenties and thirties has cut into their ability to save for retirement, pushed back the timeline for when they can stop working or necessitated belt-tightening their own lifestyle.

Meanwhile, many parents, whether the help they're giving is comfortably affordable or not, worry they might be inadvertently hurting their child by fostering dependence. They might worry that people judge them as helicopter parents, concierge parents, snowplow parents (forever clearing the path of obstacles for their child) or whatever trendy but vaguely disparaging label observers bestow these days.

If you're helping an adult child with money and wondering whether you're doing the right thing for both your child and your own financial health or simply looking to close the Bank of Mom and Dad for good, these insights and moves can help.

Consider the circumstances

Trend data going back at least 50 years from the Institute for Social Research at the University of Michigan confirms that parents today are providing more financial support for adult children than previous generations of moms and dads.

Parents themselves agree: Six out of 10 people helping an adult child with money are providing more support than they received at the same age, the AARP survey found, and nearly half are giving larger amounts than they anticipated they'd need to provide.

That many of these kids really need a helping hand is evident too, with recent economic data documenting the financial strain on young adults compared with what their parents and grandparents experienced in their early grown-up years.

The typical student borrower now graduates from college with more than $35,000 in loans, more than double the average amount that new grads owed 25 years ago, according to the Education Data Initiative. More young people are also getting degrees, which delays their launch as wage-earning employees who can support themselves.

When they do get jobs, the salary isn't what it used to be, with wages for young workers eroding in real terms, especially for those who don't have a college degree — that is, if a young worker can find a job, given that the unemployment rate for college graduates ages 22 to 27 recently hit 5.6%, according to the Federal Reserve Bank of New York.

That's the highest rate in a decade, outside of a brief pandemic-era spike, and a reversal of the longstanding trend of young grads being able to land jobs more easily than workers overall.

Meanwhile, good luck to many young people hoping to buy a home on their own, with housing prices up 50% since the pandemic, according to the S&P CoreLogic Case-Shiller National Home Price Index.

"The helicopter/snowplow parent analogy is way overblown," says Monica Johnson, a sociology professor at Washington State University who studies the transition to adulthood. "What's happening is driven by history and a shifting economy. It's not a personality fault of either the kids or the parents."

That said, Johnson notes, a shift in family dynamics, marked by what she calls the growth of “intensive parenting,” is a contributing factor. "We have fewer children, and we're very invested in them," she says. "We know they're hitting this new economy, this new world, in a way we didn't and our grandparents didn't, so the stakes feel higher."

She adds, "It does mean that some young adults are delayed in learning some of the independence that earlier generations may have gotten."

Understanding the impact of ongoing support

The good news, says Johnson, is that there's no sign that a helping hand from parents generally breeds long-term dependence. The trend data show ongoing support drops sharply by the time most young adults hit their late twenties (keeping your kid on your family cellphone plan doesn't really count).

The research also shows that most parents feel the level of assistance they're currently providing feels right to them, given their child's circumstances. Meanwhile, the economic benefits are clear. Young adults who get financial support from Mom or Dad are more likely, for example, to graduate from college and earn a livable wage later.

Moreover, Johnson says, there's evidence of a strong reciprocity norm in families, so that parents who help young adults with money when they need it are more likely to get help from those kids later on — not necessarily financial aid, but perhaps a hand navigating health care needs, filling out government forms or arranging for home repairs. "It helps keep family bonds strong. There's a lot of give and take," she says.

Where parents are more apt to have concern: "They may be fine with the level of support right now, but worry about what will happen in the future," Johnson says.

"Most important, though, parents worry about what other people think of them, because we tend to judge parents a lot, and partly by how well their kids are doing," Johnson says. "It's less about what the parents are actually doing and more about how it will be perceived by others."

An even more pressing problem is the potential impact on some parents' long-term financial security.

More than one-third of the parents in the Ameriprise survey, for instance, said that supporting their adult children financially could affect whether they'll have enough money to live comfortably in retirement, and 40% of the parents in the AARP study with at least one child 23 or older said it has given them some degree of financial stress.

"We see it with student loans, when parents take out parent PLUS loans or co-sign for private loans that will lead to debt that they are likely to carry into retirement. We see it when parents pay for credit cards or auto loans for their children," says Lori Trawinski, senior director of finance and employment at AARP.

"It is understandable that parents want to help, but they should consider whether they can truly afford it," said Trawinski.

Determine the best path forward

To help figure out what's right for your family, experts suggest asking yourself a few key questions about the kind of monetary help your child needs, what's affordable for you, the implications for your security in retirement, and your son's or daughter's ability to close their account at the Bank of Mom and Dad and forge an independent life.

How much can you truly afford to help?

Financial advisers like to use the oxygen-mask analogy when it comes to helping adult kids with money — you know, the one from airline safety briefings that tells you, in the event of an emergency, to put on your own mask first before you help others.

If subsidizing your kid's rent or paying for auto insurance or helping with the utility or grocery bills strains your budget or hurts your ability to save what you need for retirement, don't provide a cash infusion, planners say. Instead, let your young adult go about the business of adulting and figuring out how to manage those expenses on their own.

Applying logic to the emotional tug of your child needing your help, though, doesn't always work in real life.

Consider the results of a survey last year of consumers with investable assets of at least $150,000 by LIMRA (PDF), a financial services trade group.

Among the 17% of respondents who were providing financial support to an adult child 26 or older, more than half said that doing so has affected their retirement savings.

Yet when asked what trade-offs they'd be open to making to stretch those savings, only 15% were willing to stop giving money to their kids or another family member who needed their help — dead last among the options given — compared with 58% who were willing to adopt a lower standard of living and 54% who were willing to return to work, either full-or part-time.

"Parents are used to making sacrifices for their children, putting themselves secondary to their kids' needs," says Kayla Fernandez, a CFP with California Financial Advisors in San Ramon, California. "Using math to evaluate such an emotional situation may not work."

Still, advisers say that running the numbers to evaluate whether you can truly afford to help your adult kids, considering both your current cash flow needs and the potential impact on your long-term retirement savings, can be an eye-opening exercise.

If you work with a financial adviser or have access to one through your workplace retirement-savings plan or financial services provider, you can run simulations to assess how various levels of support for your kids will affect the likelihood of your savings lasting through retirement. Do-it-yourselfers can use financial planning software such as Boldin (free for the basic version or $12 monthly for more advanced features) or Empower (free) to test different scenarios.

Then tackle the emotional part of the equation. Fernandez asks clients to think about what would happen if they hit an unanticipated setback or the money they're giving now causes their savings to dwindle so much that they end up needing a financial hand from their son or daughter when they're older.

"Think about how you'd feel," says Fernandez. "Ask yourself whether helping now could end up hurting your child more in the long run."

One other aspect to think about: "Parents underestimate the financial compounding effect of ongoing support," says Rick Kahler, a CFP, certified financial therapist and founder of Kahler Financial Group in Rapid City, South Dakota. "Even small subsidies over 10 or 20 years materially reduce retirement assets."

The bottom line, says Kahler: "You cannot fund your child's 30-year-old self at the expense of your 85-year-old self."

Are you helping or enabling?

Kahler says that the most critical question often isn't whether you can afford to help, but rather, will providing support increase or decrease your child's growth toward independence?

Kahler has a simple litmus test. "Helping after a layoff, a health crisis, or during education can be stabilizing and wise," he says. "Helping fund a lifestyle beyond what someone can sustain on their own income shifts from bridge to bailout."

Focus your assistance on essential expenses, not such lifestyle upgrades, says Evans. You might, for example, lend a hand with the deposit on a first apartment and some basic furnishings to launch your baby bird from the nest (think IKEA or Wayfair, not Crate & Barrel or Pottery Barn), but only if your child can manage the rent on their own after that.

Assisting with anything that helps build wealth can also be a good use of your money if you can afford it, whether that's one-time help with a home down payment, say, or offering to match savings in an emergency fund or for other long-term goals.

Ongoing help that makes life a little cushier than they could otherwise afford? Not so much, advisers say.

"Learning to be fiscally responsible when you're young can be uncomfortable — and that's OK," says Fernandez. "If your child never feels the pain of telling her friends that she can't go out to dinner and drinks this week or buy those concert tickets because it's not in her budget, she's not going to learn to live within her means. That is productive pain, in my opinion."

Also, think twice about helping them out of a jam of their own making, such as racking up a boatload of credit card debt not related to a layoff or healthcare bills. If your child is otherwise typically responsible, you might match their monthly card payments to expedite getting the balance to zero. But if it happens again, offer your counsel, not your wallet.

"Be careful if a ‘one-time' situation continues to repeat itself," Kahler says. Besides the potential impact on your own finances, he says, "Repeated rescuing can quietly build entitlement, resentment and shame, and it lowers the child's confidence."

Have you set parameters for support?

Ideally, you will have worked out the basic details about the assistance you're prepared to give before the first dollar exchanges hands. That includes laying out the specific expenses you will help with, the amount you're prepared to pay, how long you'll provide support, and if there's any question about it, whether the money is intended as a gift or a loan.

If not, have the conversation now, so there's no miscommunication and no surprise or hurt feelings on your child's part when you're ready to wind down the family aid plan.

In figuring out what kind of assistance to provide, invite your child into the process, rather than just informing him of your intentions.

"Ask, ‘How would you like us to help you? What would do the most good?' " says CFP Bobbi Rebell, author of Launching Financial Grownups and CEO of Financial Wellness Strategies, a financial education consulting company. "Give them agency. One of the mistakes we sometimes make as parents is treating our adult children as children, not adults."

One practical tool Kahler recommends to parents who anticipate needing to help their child with future expenses is setting up what he calls a child benevolent fund. Parents decide in advance how much they can allocate monthly without harming their own financial plan and regularly shift that money into an account earmarked for that purpose. When the child needs help, the balance in the fund sets the limit for aid.

"It removes guilt-based, in-the-moment decisions and protects long-term security," Kahler says.

Have you constructed an exit ramp?

Ongoing financial support for an adult child should generally be temporary, advisers say. One exception: If your child has a physical or mental health condition — true for about 30% of the parents providing financial support in the AARP survey — that might interfere with their ability to entirely make their own way.

Let your child know your intended end date well in advance so they have time to prepare. Experts also recommend tapering off gradually — say, reducing the amount you provide by 25% a quarter over the course of a year.

If you're looking to end support because it's no longer affordable or you're concerned about your long-term financial security, it's OK to let your child know that. The idea is not to pile on guilt (take care to keep the temperature low there) but to ensure they better understand the circumstances, which lessens the likelihood they'll feel hurt or resentful that they can no longer rely on you for money.

“Your children may feel very differently if they realize that helping them is a strain for you, because children love their parents and want to do right by them,” Rebell says.

Think about other ways to help that don't involve dispensing cold, hard cash — either to show you're still there for them after you've ended direct financial aid or as an alternative or supplement to giving money outright.

If, for instance, they're struggling with credit card debt, you might suggest seeing a debt counselor or allow them to move back home for a while to free up cash to pay down those balances.

Maybe you can help them set up a budget to get a better handle on their cash flow. If they're struggling with childcare costs, and you're retired, live nearby and are so inclined, perhaps you can babysit one day a week to alleviate the strain. "You don't necessarily have to write a check to help," says Rebell.

Adds Kahler, "Often what adult children need most is confidence, guidance and belief — not a subsidy."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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I never thought I'd be a financial adviser, but I always knew I wanted to be a mom.

Now I'm both — and both are my dream jobs. And because I love what I do, I'm never really turning off one role for another but rather leaning into both.

At work, I think about helping families make thoughtful, values-driven decisions about their money so they can live the lives they envision.

At home, I think about raising my two children to be financially responsible and independent and to have strong values.

Here's the thing: What I want for my children is what I want for my clients and vice versa. In fact, here are six lessons I am striving to teach my children about money — and that I hope my clients will embrace and impart to their next generations, too.

1. Strive to always be financially independent

This one comes from my mom, who was one of the first female branch bank managers in the Carolinas. Know your expenses and know that you can earn enough income on your own to cover them. Don't rely on anyone else to meet your financial needs and always save for a rainy day.

I appreciate this advice because you never know what life may bring. My parents have been happily married for 54 years, and my husband, Luke, and I aspire for such marital longevity, too. But it never hurts to be able to stand on your own two feet — and relationships can be even stronger for it.

No matter your life stage or relationship status, having a level of financial independence is empowering. It's not about doing everything on your own — it's about knowing you could if you needed to.

I want my children to understand their finances, have access to their accounts and build confidence in managing money so they are never in a position where they feel stuck or without options.

2. Prioritize saving, starting now

The earlier you start saving, the more powerful your money can become. Time is one of the greatest advantages you have when it comes to building wealth. I want my children to understand that saving isn't something you do "later" and that instead it's a habit you build from the very beginning, even in small amounts. Consistency matters more than perfection.

So, yes, when Mary Lauren and Miles operate their lemonade stand, they know they need to save some of their proceeds before they get too "spendy."

I'm not getting hardcore with math — yet, because they're still in elementary school — but I'm laying the groundwork for an appreciation for the power of compound interest.

3. Pay it forward

Money isn't just a means for personal security; it's a way to lift others. Whether it's putting some cash in the collection plate at church or supporting a cause they care about, I want my children to see generosity as part of their financial calling.

Giving, especially when we have enough or more than enough (we don't label people as rich or poor in my house), should be intentional. Giving reminds us that money isn't the end goal, but rather a way to do good in the world.

So, yes, some of my children's lemonade stand money — and later their babysitting and dog walking money — will also be shared with causes that are important to them. If I do my job well, this will carry forward into how they allocate the money they earn from their careers. And that leads me to…

4. Develop and listen to your values

There will always be competing messages about how to spend, save and invest — your time and money, for that matter. I want my children to be grounded enough to make decisions based on what matters to them, not what everyone else is doing or FOMO.

When your financial choices align with your values, you're far more likely to feel confident and content.

I believe that living a big, beautiful life means giving back some of our time, talents and treasure. If we can make time for sports and family fun, then my family of four can make time to give back to our community.

Likewise, giving some of our money to worthy causes should be a line item in our budgets, not an afterthought based on whatever is left over at the end of each month.

I believe intentionality is what makes us successful in everything we do — and helps us to lift up those who need help.

5. Know and appreciate where — and who — you come from

I wouldn't be here and have the opportunities I have if not for those who came before me, especially my grandmothers, Lillian and Jessie, who worked hard and had humble lives.

My mom's mom, Lillian, was an orphan at 13 and a widow at 46. She wasn't raised to have a career, but she figured out how to manage three separate businesses. Maybe that's where my entrepreneurial spirit comes from.

My dad's mom, Jessie, had a high school education and taught me that initiative can be just as valuable as formal credentials. She taught me the value of saying "Yes!" when she shared stories of her work at Sears — as a makeup counter lady who became the department head and then pivoted to manager of the tire department.

Income from her work, combined with my grandfather's work as a postal service employee, put my dad through college. My dad, in turn, made sure I could afford to go to college and, together with my mother, paid for my graduate school tuition.

When you know your family history, it changes your whole relationship with money.

Financial literacy isn't just about numbers; it's about perspective. I want my children to understand the work, sacrifices and decisions that came before them — the foundation that allows them to have opportunities today.

Gratitude and awareness can shape smarter decisions and a deeper respect for what they have.

6. Always remember knowledge is power

Confidence with money starts with understanding it — and even having a curiosity about it. In fact, that's how it all began for me. While I didn't expect to be a financial adviser, I followed my natural curiosity about money.

After graduating college and landing a bank job, I wanted to know how to make the best decisions about my very first 401(k), which led me to take a community college class about women and money. I was so captivated and asked so many questions that the teacher suggested I become a financial adviser.

After the course ended, I started down that path, entering the financial adviser training program at my bank. Two decades later here I am in one of my two dream jobs.

As a mother who happens to be a financial adviser, I want my children to ask questions, stay curious and never feel intimidated by financial concepts.

The more you learn, the more control you have — and the better equipped you are to make smart, informed decisions throughout your life. I want this for my clients, too.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Once tax season comes to an end, most families shift their focus away from planning. This year, that may be a mistake.

A new federally backed savings account for children, known as a Trump Account, is set to launch this summer, offering a $1,000 government-funded starting balance and tax-deferred growth. For families already thinking about 529 plans and long-term wealth transfer, the question isn't whether to pay attention — it's how to use this new tool effectively.

For families with children and grandchildren under age 18, the first step to participate can be taken now by filling out IRS Form 4547 on the official Trump Accounts site. While simple in execution, this decision has the potential to become a meaningful building block within a broader, long-term financial plan.

How Trump Accounts work

Created under the One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, Trump Accounts introduce a new way to build wealth for minors. Structurally similar to a traditional IRA, the accounts offer tax-deferred growth, meaning contributions are made with after-tax dollars, but investment gains compound without annual taxation.

From a planning perspective, this creates another avenue to extend tax-efficient growth across generations.

What makes the program particularly compelling is the built-in starting point. Eligible children — those born between January 1, 2025, and December 21, 2028, who are U.S. citizens with valid Social Security numbers — receive a $1,000 federal seed contribution.

While modest on its own, when viewed through the lens of long-term planning, that initial investment represents something more powerful: Time in the market.

The importance of starting early cannot be overstated. When capital is invested early and allowed to compound, even relatively small contributions can grow meaningfully.

For example, a family contributing $5,000 annually through age 18, alongside the $1,000 federal seed and a 6% return, could accumulate roughly $190,000 by adulthood — and more than $2 million by retirement if left untouched. While hypothetical, the scenario underscores how early contributions, not just large ones, drive long-term outcomes.

Trump Accounts are intentionally structured to reinforce that discipline. Investments are limited to low-cost U.S. equity index funds or ETFs, with expense ratios that do not exceed 0.10%.

Contributions are capped at $5,000 annually (indexed for inflation), and assets are locked until age 18. Together, these features create a framework designed for consistency and long-term growth without the burden of short-term decision-making.

Eligibility is broad, which allows for coordinated family planning. Parents or legal guardians typically open the account, but grandparents and others can contribute. This creates an opportunity to align gifting strategies across generations and to begin introducing younger family members to long-term investing in a tangible way.

Trump Accounts and 529 plans

For many families, the question is how Trump Accounts fit alongside existing strategies, particularly 529 plans. In our view, this is not an either-or decision. Each serves a distinct purpose.

For many families, 529 plans remain an effective tool for education-specific savings, offering tax-free growth when used for qualified expenses. Trump Accounts, by contrast, are not limited to education. They provide flexibility beyond college, allowing assets to continue compounding into adulthood.

This means they can be used to support broader financial independence, while also instilling a lifelong habit of regular, incremental investment over time.

Used together, these tools can help families take a more comprehensive approach — funding education needs while also building long-term wealth. The addition of the $1,000 federal contribution further strengthens the case for early participation, particularly when integrated into an overall plan.

How to get started

Getting started is straightforward. While it was possible to include IRS Form 4547 with your 2025 tax return, it is now available on the Trump Accounts website, allowing you to complete the process online if you missed the opportunity.

Ultimately, Trump Accounts are not just a new savings vehicle – they are a new planning consideration. For families focused on generational wealth, they offer a structured way to start earlier, invest consistently and align financial decisions with long-term intent.

For families focused on building wealth for future generations, the real advantage of Trump Accounts isn't just tax deferral — it's time.

Starting earlier, even with modest amounts, can meaningfully change long-term outcomes. This is a rare opportunity to get a head start on putting that principle into practice.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Like many moms, my mother has always been our family's CFO. I grew up watching her fill in Quicken workbooks, write and document checks and keep us all accountable for our own spending.

As an adult, I recognize now how valuable it was for my sisters and me to watch our mother manage money. It's only in more recent history that it's become socially acceptable for women to manage finances, even within the family, and many women have become financially disadvantaged because a husband mismanaged funds and kept them in the dark.

It was especially valuable watching her because she had good wisdom and tools to impart. As we celebrate Mother's Day, I'm sharing some of the key money lessons I learned from her.

1. Balance your own books

I'm not exaggerating that some of my oldest memories are of my mother tapping away at a big desktop computer, filling in spreadsheets. She wasn't formally an accountant, but she acted like one for our family, making sure that our spending didn't exceed what was coming in and that she had an eye on where every dollar was going.

There's a reason why most financial advice starts with "track your spending." You can't know how to trim your budget if you don't know what makes up your budget. On a broad level, "balancing your own budget" means you can understand it better and thus manage it better.

On a more minute, practical level, it also means that your money is literally in the right place. You avoid overdrawing an account, for example, if you know that a bill is coming up on a certain date to be drawn from a certain checking account, so you know to hold cash there. As another example, you might see that you're holding more cash than you need, so you can set some aside for investing.

2. Keep your files organized

But all that tracking and monitoring can be rendered useless if your files are not organized. As I was growing up, my mother was meticulous about her filing. She always had folders on hand to add to her filing cabinets so she could easily find whatever document she needed when it became relevant.

There's a mix of files you need to keep organized. There are financial documents like bank statements, investment records including savings bonds (especially from the pre-digital-age), and tax records you need to keep. There are practical items like house deeds, car registrations and insurance agreements. Then there are the family documents: Birth and death certificates, Social Security cards, and health records, especially as you get older or face a serious illness.

Each of these can and should be stored differently. Some are better kept in a home safe and some things can be kept in a safe deposit box, while others can fairly safely be in a filing cabinet, and still others, like certain estate planning documents, should be kept in an accessible space in case of emergency. The point is, you do have to do the work of organizing your documents, and I'm frequently grateful my mother did.

Read more: How to Store Your Financial Documents the Right Way

3. Look at multiple options, and negotiate where you can

My mother is the daughter of a contractor, and as such, she's comfortable talking to contractors and other home professionals. I regularly watched her ask questions and press for information, both to make sure she understood what they proposed and to ensure she was paying an appropriate price.

From that, I learned that it's not impolite to ask: Ask for clarification, for discounts with certain concessions (like making a lump-sum payment or putting off a project till a less busy season), for second and third opinions to compare pricing. As she tells my sisters and me, the worst thing someone can do if you ask for something is say "no," which isn't that harsh an outcome.

Since I became a homeowner, I've been working on channeling her voice, recognizing that I don't have to accept every contractor proposal and that, sometimes, there is room for negotiation.

4. Stay informed and up-to-date on the financial landscape

The way my mom operates, you'd think she was a Kiplinger editor (and not just a longtime reader). She is constantly reading up on tools and trends, making sure she's making the smartest possible money decisions — and recognizing you need to adapt.

Some examples:

• She bought one of the first hybrid car models to hit the market while the wider world was still questioning the concept. That trusty Prius stayed in the family a good 15 years and saved us a ridiculous amount on gas.
• She downloaded the Robinhood app before I did because she was so curious about how it worked.
• When I-bonds were having a heyday in the wake of the pandemic, she invested in them and urged her daughters to do the same.
• And my ego is still recovering from her telling me how much better a rate she was getting in a money market account she'd found than I was getting in my high-yield savings account last fall.

Now, this doesn't mean changing your financial strategy every week, it just means staying aware of what's out there and how it could improve your finances.

5. Empower yourself to manage your finances

I'm grateful to my mother for these and many other lessons I've learned from her. It's very possible she was faking it till she made it and learning along the way, but what I saw was a confidence in managing money. She didn't shy away from making decisions, and she educated herself to take care of our family finances.

From that, I understood that I could do the same. It's easy to let someone else take the wheel of your money and to assume finance is too complicated and let your cash languish in a basic checking account. But thanks to her, I grew up feeling empowered to direct my financial destiny, and I'm sure there are many other people out there feeling the same about their moms.

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Most of us know the power of compound interest, often followed by the wish that we had started saving and investing decades earlier. By opening a custodial Roth IRA for a grandchild, you are giving them the one asset money usually can't buy: time. If your grandchild has a summer job or a part-time gig, they hold the 'golden ticket' of earned income needed to open an account. Matching their earnings today does more than teach the value of a dollar — it plants a seed that grows into a tax-free fortune by the time they reach their own retirement.

Roth IRA rules for 2026 allow for a generous contribution of up to $7,500, provided the amount doesn’t exceed the child’s total earnings. As you look at your estate planning and gifting strategies this year, consider sitting down with your grandchild to explain the magic of the "Roth match." It’s a conversation that can change the trajectory of their financial life — and a legacy that will continue to grow long after your initial gift has been made.

Here are the rules for opening and managing custodial Roth IRA accounts in 2026.

General custodial IRA rules

A custodial IRA is an effective way to jump-start a minor's retirement savings, leveraging decades of compound growth. The primary 'golden rule' is that the minor must have earned income, meaning wages, tips, or self-employment, to contribute. The minor isn't required to have a formal W-2. The money can come from babysitting, dog walking, mowing lawns, or any other odd job.

If your grandchild is self-employed, be sure they keep detailed records of the work performed, the dates worked and payments earned. The IRS will require documentation of earned income if it ever audits the account's eligibility.

The IRS doesn't have a minimum age requirement for having a custodial Roth IRA. As such, even very young children can have a custodial Roth IRA as long as they meet the earned income criteria.

• Ownership and control: A custodial account is opened under the minor's name and Social Security number, but an adult (the custodian) manages the investments until the minor reaches the "age of majority," usually 18 -25, depending on the state.
• Contribution limits: For 2026, the IRA contribution limit is $7,500 (in line with overall contribution limits) or the total of the minor’s earned income for the year, whichever is less. For instance, if a child earns $2,000 babysitting, the maximum contribution allowed is $2,000.
• Funding sources: While the minor must have earned income to qualify, the money doesn't have to come from their paycheck. A parent or grandparent can "match" the child's earnings by gifting the contribution, provided it doesn't exceed the child's earnings.
• Transition: Once the minor reaches the legal age in their state, the account must be converted to a standard (non-custodial) IRA in their name alone.

How to set up a custodial Roth IRA

Setting up a custodial Roth IRA is a straightforward process. You'll need your grandchild's Social Security number to open the account, and while many providers have no minimum balance requirements, be sure to check the fine print for account fees, fund expenses and brokerage commissions before committing.

• Choose a provider: Find a reputable financial institution that offers custodial Roth IRAs. Pick one with low fees and diverse investment options. 
• Gather documents: You’ll need your grandchild’s Social Security number, proof of earned income, and identification for both the custodian (you) and the minor (grandchild). 
• Open the account: Depending on the institution, you can complete the application online or in person, designating the custodian and minor. 
• Fund the account: Lastly, make contributions based on the child’s earned income.

Contribution deadline: It's the same as if you were the account beneficiary. You can make contributions up to April 15 of the following calendar year. Contributions for the 2026 tax year can be made up until April 15, 2027.

Why a Roth IRA is usually preferred for minors

For most kids, a Roth IRA is the clear winner vs. a traditional IRA for two reasons:

• Low tax bracket: Since most minors earn very little, the tax deduction of a traditional IRA has little value. It is better to pay the small amount of tax owed now (in a 0% or 10% tax bracket) to ensure any growth in the account is entirely tax-free later.
• Education/home flexibility: While these are designed for retirement, Roth IRAs have flexibility: you can withdraw earnings penalty-free for qualified education expenses or up to $10,000 for a first-time home purchase (assuming the account has been open for 5 years).

Why a custodial Roth IRA makes sense

Opening a custodial IRA for a grandchild is a savvy move that combines estate planning with a massive head start on wealth building. For grandparents, it’s often more efficient than a traditional savings account or even a 529 plan, depending on the goal. For grandchildren, it can be invaluable, especially if they graduate from college during a bad economy.

The modern workforce is very different than what baby boomers experienced. Gen Z is expected to hold up to 17 jobs across 7 different careers, while millennials are anticipated to change jobs every three years. Changing jobs frequently can cut into retirement savings. "The median job switcher sees a 10% increase in pay but a 0.7 percentage point decline in their retirement saving rate when they switch employers," according to Vanguard.

"Having money already invested and growing can make a future change less painful in terms of both the emotion and the math," Michael Conrath, Chief Retirement Strategist at J.P. Morgan Asset Management, told Kiplinger.

He noted that one benefit of the custodial IRA is that it won't lose ground when times are tough "...starting early can help hedge against a future 'what-if' scenario — such as a job loss or unexpected expense — that could cause someone to cut back on contributions."

Here are five reasons why a custodial IRA is such a powerful tool for grandparents to give to their grandkids:

1. The "multiplier effect" of time

The most compelling reason is the sheer length of the "compounding runway." A grandchild has 50+ years for that money to grow before retirement.

• The Math: A single $2,000 contribution made when a grandchild is 15 could grow to over $65,000 by the time they are 65 (50 years assuming a 7% average return).
• By "matching" your grandchild’s summer job earnings, you aren't just giving them cash; you are giving them a future fortune that they likely couldn't fund on their own.

2. Estate planning and tax efficiency

Contributing to a custodial IRA helps you move assets out of your estate while ensuring the money is used productively.

• Gift tax exclusion: In 2026, the annual gift tax exclusion is $19,000 per recipient ($38,000 for married couples). Since the maximum IRA contribution is $7,500, your gift will fall well within these limits, requiring no IRS paperwork and leaving your lifetime exemption untouched.
• Generation-skipping efficiency: A custodial IRA is a direct way to transfer wealth to a grandchild (known technically as a 'skip person') by putting it immediately into a tax-sheltered account. Unlike a standard brokerage account, where taxes on dividends and capital gains drag on growth, the assets in this account are protected from that 'tax drag.'

3. Financial "incentive" (The matching strategy)

Many grandparents use the custodial IRA as a teaching tool by matching what the grandchild earns. This rewards their work ethic while introducing them to the concepts of investing and compound interest early on.

The Pitch: "For every dollar you earn as a lifeguard at the pool this summer and save, I will put an equal amount into your Roth IRA."

This is critical as the world grows more complicated and expensive. "People with higher financial literacy have more wealth not just because they are able to plan and save more but also because they get better returns on their savings, even via basic financial instruments." Better financial literacy is also linked to stock market participation, portfolio diversification, portfolio returns and retirement saving behavior, according to a recent study.

4. Better flexibility than a 529 plan

While 529 plans are great for college, they can be restrictive if the child gets a full scholarship or decides not to attend university.

• Roth IRA versatility: With a custodial Roth IRA, the original contributions can be withdrawn at any time, for any reason, penalty-free.
• Flexibility: After five years, your grandchild will be allowed to withdraw up to $10,000 in earnings tax- and penalty-free to use for a first-time home purchase. It’s a powerful 'first-home' fund and a retirement fund rolled into one.

Once the money has been deposited, you should encourage your grandchild and his/her parents to let it grow. "While there are exceptions that allow for early withdrawals free of penalties or taxes, the custodial Roth’s primary purpose should be to jump-start retirement savings for young earners," said Conrath. This factor reminds parents and grandparents that the real benefit comes over time, as it's "not just about the early start or ongoing contributions, but it’s also important to remember that those funds grow tax deferred and compound over years or decades."

5. Minimal impact on financial aid

Assets held in a retirement account (like an IRA) are generally not counted as "available assets" on the FAFSA (Free Application for Federal Student Aid). This means your gift to your grandchild's future retirement likely won't hurt their eligibility for college grants or loans. However, a standard savings or brokerage account in the child's name would be heavily weighted against them.

While a custodial Roth IRA balance won't impact financial aid eligibility, distributions from the accounts will be counted, Conrath said.

"That same preferential treatment applies to the parents’ retirement accounts as well. This means that during the accumulation or growth phase, the IRA won’t adversely impact federal financial aid," Conrath said.

A financial head start

If you’re looking for a way to reward a grandchild’s work ethic while making a meaningful impact on their financial future, the custodial Roth IRA is a tool you can’t ignore. Unlike a standard savings account, this strategy allows you to 'match' their hard-earned wages, effectively doubling their efforts while sheltering the growth from the IRS. It is a powerful way to transfer wealth that prioritizes self-reliance and long-term security over immediate spending.

While we often think of IRAs strictly for retirement, the beauty of the custodial Roth lies in its flexibility. Whether the funds eventually help your grandchild buy a first home, pay for graduate school, or have a more secure retirement 50 years down the line, you are providing a versatile financial foundation. By acting now, you ensure that every lawn mowed or shift worked this year becomes a permanent building block in your grandchild's future wealth.

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Every April, Financial Literacy Month prompts a familiar question: "Are we doing enough to teach the next generation about money?"

Schools roll out curricula. Nonprofits launch campaigns. Workplaces share budgeting tips. All of it matters.

But after years of research and practice at the intersection of financial planning and human behavior, I'd argue we're ignoring the most powerful classroom of all — the one happening inside your home, whether you're consciously teaching or not.

Children don't wait for a formal lesson to start learning about money. They absorb it — from the tension in a parent's voice when a bill arrives, an offhand comment about a neighbor's spending, perhaps watching a parent swipe a card without a second thought or agonize over every purchase.

Long before a child opens a bank account or files a first tax return, their financial worldview is already taking shape.

I was reminded of this not long ago, sitting in church, when the pastor spoke about how the coping mechanisms children develop in response to fear or instability often become the blueprint for their adult lives. It struck me immediately, because it's exactly what I see in my work as a financial planner and educator.

The most consequential financial decisions adults make are rarely just about money. They also involve childhood memories.

Parents are the primary influence

There's a well-established body of research on what academics call financial socialization, the process by which we develop the financial attitudes, skills, and behaviors that follow us through life.

Studies published in the Family and Consumer Sciences Research Journal, as well as the Journal of Youth and Adolescence, identify parents as the single most influential source of children's financial learning, more than schools, peers or media.

More recent research published in the Journal of Family and Economic Issues finds that responsible financial behaviors modeled by parents are associated with measurably higher financial literacy in their children — not just knowledge, but real-world decision-making and long-term well-being.

This influence flows through two channels.

• Implicit. Children observe and overhear how their parents engage with money, even in unguarded moments.
• Explicit. Deliberate, purposeful teaching, such as an allowance with expectations attached, a conversation about saving toward a goal or a family budget discussed openly at the kitchen table.

Both channels matter. But here's what stops most parents: They assume the implicit channel is turned off when they're not actively teaching. It never is.

One of my clients learned this firsthand. She shared that her father took away her mother's credit card because he thought she spent too much. The memory was decades old. Yet it still influences my client's adult financial behavior.

Although she is the primary earner in her household, she makes a conscious effort to make all financial decisions jointly with her husband. The client is very careful about not behaving as her father did, because she doesn't want to repeat what she saw as a child.

Five things you can do right now

Financial Literacy Month is the perfect time to pause and ask not just what you're teaching your children about money, but what they're already learning. Here's where to start:

• Listen to yourself before they do. The anxiety you express at the dinner table about rising prices, the offhand remark about credit card debt, the relief in your voice when a bonus comes through; these are financial lessons landing in real time. Be intentional about the narrative you're creating.
• Talk about money out loud and make it normal. Age-appropriate transparency builds financial confidence in children. You don't have to share every account balance. But explaining trade-offs ("we're saving for a trip instead of buying that right now") teaches children that money involves choices, not just limits.
• Give them something real with which to practice. An allowance isn't just pocket money, it's a laboratory. Let your children make small financial mistakes while the stakes are manageable. A child who exhausts an allowance by midweek and learns to wait it out is building a discipline that compound interest can't replicate.
• Model the behaviors you want them to develop. Delayed gratification, thoughtful spending, consistent saving — children don't absorb these lessons from a worksheet. They absorb them from watching the adults they trust most.
• Bring your financial planner into the conversation. A skilled planner can help you clarify the financial values you want to pass on, identify any gaps between what you say you believe about money and how you behave, and build a deliberate strategy for both. Multigenerational financial planning — thinking beyond your own retirement to the financial foundation you're building for your children — is one of the most underutilized and highest-impact services available to families today.

The most enduring investment you'll make

This Financial Literacy Month, open an account, download an app, sign your teenager up for a personal finance course. Those steps have real value. But don't overlook the less visible work: The daily modeling, the honest conversations, the willingness to let your kids see that even adults are still learning.

Financial wellness is not purely a math problem. It's a psychological one, shaped by the relationships and money messages absorbed long before adulthood.

The planners, researchers and educators working at the front edge of financial psychology understand that the most powerful planning conversation isn't always about a portfolio. Sometimes it's about a pattern, one that started in childhood and is quietly shaping decisions decades later.

Your financial plan is more than a collection of accounts. It's a set of values and behaviors passed down in real time.

This April, the most important question to ask isn't whether your children are financially literate. It's whether the lessons they're already absorbing from you are the ones you meant to teach.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Not long after mastering sleep and feeding schedules, new parents will inevitably turn their attention to saving for their child's education and future.

From 529 accounts to Roth IRAs, parents can choose from several options to help their children enter the world on strong financial footing, and starting this year, they'll have another tool in their arsenal: Trump Accounts.

Starting in July, parents or guardians of children who have not turned 18 by the end of the year can open and contribute to a tax-deferred investment plan that resembles a traditional retirement or education account, with some important differences.

Like a traditional IRA, a Trump Account grows tax-deferred, with earnings taxed upon withdrawal and early penalties before the age of 59½.

So far, the biggest benefit of opening a Trump Account is for new and expectant parents. Children born from January 1, 2025, through December 31, 2028, might be eligible for a $1,000 federal grant to seed their new account.

A complement, not a replacement

While Trump Accounts might be helpful to parents as they begin helping their children build their retirement nest egg, they aren't necessarily a replacement for educational funds such as 529 accounts or traditional IRAs. There are several important differences between these types of accounts.

Unlike 529s, which grow tax-free, Trump Accounts are taxable upon withdrawal. Additionally, parents and other contributors are limited both in how much they can give — contributions are capped at $5,000 per year, per child (indexed to inflation), which is less than traditional IRA maximums — and in the types of investments you can make.

Investments in Trump Accounts must be used only for certain broadly diversified, low-cost investments such as index funds, exchange-traded funds (ETFs) and other investment vehicles that track broad-based U.S. equities.

With Trump Accounts, withdrawals are permitted only once the account's "growth period" ends on December 31 of the year the child turns 18. Withdrawals are subject to taxes and penalties. At that time, the account can be rolled into an existing IRA.

Prepare but maintain perspective

Despite many unknowns, new parents whose children would be eligible for the $1,000 federal grant can sign up by filling out IRS Form 4547 as part of their 2025 tax returns (even if you're planning on filing an extension, you still need to file the form by April 15).

While it's smart to take advantage of a potential government grant, we don't expect that Trump Accounts will displace other types of investment vehicles. We continue to believe that traditional education vehicles are the best way to save for a child's education, since they provide tax-free growth.

Additionally, with the passage of the SECURE 2.0 Act in 2022, parents who invest in a 529 account can overfund those accounts and roll over up to $35,000 into a Roth IRA, which will grow tax-free upon withdrawal at retirement.

Outside of 529 plans, most working-age children and their parents fund their retirement through a Roth IRA because of the significant tax advantages.

Do your due diligence

In these early stages, as we learn more about Trump Accounts, we don't see much downside to filing the initial paperwork and being prepared.

There are still a lot of unknowns related to custodial procedures, so while awaiting regulatory guidance, we urge families to take the time to compare plans, understand the tax implications, educate family members or employers who have expressed interest in supporting these efforts and begin creating a contribution strategy.

The elephant in the room (pun intended) might be the political factor, given the naming of these accounts and the numbering of the IRS form.

Regardless of your political leanings, it can't hurt to get your ducks in a row and prepare, especially if you're a new parent or an expectant parent who would qualify for the $1,000 government grant.

Ultimately, any new vehicle that will help parents build a nest egg for their children is a good thing. Consider Trump accounts to be a potential new savings option for parents of young children that we can add to a growing list of accounts.

Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax adviser.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: We're 68-year-old retirees with $6.8 million. Our two adult kids never ask for money, but I give each of them $1,000/month to make their lives easier and to help with daycare and summer camp. My husband thinks it's silly. They earn a good living. Should I stop?

Answer: If you retired with $6.8 million, it's fair to say that you're probably in a pretty good position. Last year, 25% of retired Americans lost sleep over money worries, according to the Schroders 2025 US Retirement Survey.

But with $6.8 million saved, you probably have enough money to not only cover your own needs, but share the wealth. That could mean giving your grown kids $1,000 a month each, even if they don't need it.

If your kids are grappling with high costs like daycare and summer camp, they can probably put the money to great use, even if they technically earn enough to swing those bills themselves. But why force them to stretch their budgets when you have money to spare?

Your husband may see things differently, though. He might think that such support for grown kids who have good incomes is mollycoddling.

The reality is that there's nothing wrong with helping your kids out financially, even if they can make it on their own. The key is to make sure you're not sacrificing your own needs along the way or sending the wrong message.

Your kids could probably use the money now more so than later

Many people with large nest eggs spend their money and leave whatever's left over to their kids. But your approach may be a better way to do things, says Tyler Qualio, JD, CFP, and managing director and partner at Rothschild Wealth Partners.

"Most adult children are unlikely to receive their inheritance [until] well into their 60s and perhaps even their 70s," he says. "Gifting during your lifetime can allow you to see your children and grandchildren enjoy the money." And, Qualio says, gifts given earlier may be more impactful.

Of course, Qualio cautions that being overly generous has its risks.

"This, in turn, brings up concerns of not demotivating your children by giving them too much too early," he says.

But if your kids are functional adults with good jobs and a solid handle on their finances, and the purpose of your monthly gifts is to allow them some breathing room, then there's nothing wrong with it. Your children are unlikely to quit their jobs or suddenly become careless with spending over $12,000 a year you send their way.

Giving incrementally makes sense from a tax perspective

You may not realize it, but giving your grown kids $1,000 a month is actually a smart move from a tax perspective, says Joseph Fresard, attorney at Simasko Law.

"As to whether you continue or stop is entirely up to you, but there is actually a possible tax advantage to gifting this way," he explains. "Currently, the federal annual gift tax exclusion is $19,000 per recipient, so these gifts you are giving do not need to be reported to the IRS."

As Fresard explains, gifts exceeding the annual exclusion reduce the lifetime exemption for estate taxes. But this isn't the case here. And, it offers some protection in case estate tax exemption rules change.

"At $6.8 million currently, it is not very likely that your estate will need to pay taxes, as currently a married couple can leave $30 million before they set in," Fresard says. "However, you never know if this number will be lower in the future. Leaving it in small increments during your lifetime can be a good way to make sure more money goes to [your children]."

Make sure your gifts don't offend

Many people with young kids would be thrilled to receive a $ 1,000-per-month gift, even if there's no urgent need for the money. But Steven Conners, founder and president of Conners Wealth Management, says it's important to ensure your money is truly well-received.

"I think it depends if they are going to get upset or angry at you for giving them $1,000 a month," he says. "If it’s not a personal issue with a son or daughter, you are essentially gifting them the $12,000 a year, and it’s allowed according to tax rules."

You may, however, want to make it clear that the money isn't a sign that you lack faith in their ability to manage their finances, but rather, that you're simply trying to help take a load off. Explaining this to your husband might help him get on board with the gifts, too, even if they technically aren't necessary.

Make sure you're not putting your retirement at risk

With $6.8 million in savings, you have far above what the average retiree has saved, and you have a lot of leeway to give generously. But Qualio cautions that you shouldn't just hand out money without thinking things through.

"The other side of the coin, of course, is making sure you and your own retirement are not compromised by over-gifting too early," he says.

Qualio says it's a good idea to assess your annual spending needs and compare that to your various income streams. You may have money coming in from sources other than retirement plan withdrawals, such as Social Security benefits, that give you even more leeway to be generous.

On the other hand, you may have certain unanticipated needs, such as home repairs or long-term care. If you decide to continue or increase your giving, make sure to keep these potential costs in mind.

Qualio says you can easily give more than what you're giving now without exceeding the annual gift tax exclusion. And you can probably increase your gifts without risking your own financial stability. But it's important to run the numbers to make sure.

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I grew up in a small town in western Oklahoma, the youngest of three kids, raised by a single mom. We were poor. Really poor for a stretch. No car. No house. For a little while, we even lived in a tent.

But as a little kid, I didn't process that as trauma. I just remember riding in a red wagon while my mom took my brother and sister to school. I thought it was fun.

Then my mom did something remarkable. While raising three kids and working full time, she earned her master's degree. She got her dream job.

We moved into our first real home — a tiny white shotgun house near a church. Two bedrooms, one bath, around 700 square feet. It was a small place, but to us, it felt like we'd finally made it.

A few years later, I came home and found my mom on the couch crying. She'd been laid off that day.

Ironically, that was the first time I felt financial fear in my bones. Are we going to lose the house? Are we going to be OK? That moment never left me. It still drives how I help people today.

I find that many folks think retirement risk is mostly market risk. Markets do matter. But in my experience, the bigger risk is fragility: A plan that works only if nothing goes wrong.

If one market drop, one tax surprise or one health event can force you into deciding between bad and worse, the plan is probably too brittle.

I say this all the time in workshops: At any stage of life, and especially in retirement, it's not just about what you bring in. It's about what you keep and whether your plan can keep you standing when life brings a test.

Here are the three questions every retirement plan should answer clearly.

• If (and when) markets drop, can we still pay bills without panic selling?
• Are future taxes quietly shrinking our choices?
• Do our income, investments, taxes, health care and legacy decisions actually work together?

If those answers are fuzzy, you don't have a planning problem. You have a planning opportunity. Fear loses its edge when you already know how you'd address whatever could happen. Diffusing that fear starts with helping protect your cash flow.

Here's how to approach each question:

1. Cash flow resilience: Can you cover bills without selling when times are bad?

In retirement, the first job of the plan isn't chasing returns. It's making sure the lights stay on. I demonstrate this with three buckets: Safety, income and growth.

The safety bucket is your stability money. This is where short-term spending and reserves live, so you don't feel forced to sell long-term investments in a down market.

The income bucket is for dependable cash flow, things like Social Security, pensions and other reliable income sources that help cover monthly essentials.

The growth bucket is long-horizon money. It's there because inflation doesn't retire when you do, and your plan still has to grow over time.

Here's a quick stress test: Say a household needs $8,000 a month, and their reliable income stream covers $5,000. That leaves a $3,000 gap. If the market drops hard and stays down for 18 months, can that gap be covered without selling growth assets at a discount?

If the answer is no, that's not an investment failure. It's a cash flow design issue.

Action step this week: Split spending into "essential" and "flexible." Then calculate how many months of essential expenses you can cover without selling growth assets. If you can't bridge 12 to 24 months, your plan may benefit from more shock absorbers.

Returns matter. But resilience comes first.

2. Tax shock control: Are you defusing the future tax bomb?

The second fragility point is taxes people haven't thought through yet.

Many retirees did exactly what they were told for years: Save consistently in tax-deferred accounts. That discipline is good. But those balances are pre-tax dollars. The statement balance isn't always what you actually keep.

It's common for people to get hurt waiting too long to coordinate withdrawals. Required distributions, Social Security taxation and Medicare premium impacts can stack up in ways that squeeze flexibility later.

That's why I'm big on proactive tax windows. Some years, income is temporarily lower. Those can be opportunities to reposition money intentionally — including measured Roth conversions — rather than being cornered by larger taxable withdrawals later.

You don't need a complicated strategy to improve outcomes. You need a forward-looking map and a team that talks to each other.

Action step this week: With your adviser and CPA, map the next five years of planned income sources: Taxable, tax-deferred and tax-free. Then ask, "Which years give us our best tax window, and what should we do while it's open?"

A plan that ignores future tax pressure can look fine on paper and still feel restrictive in real life.

3. Coordination over accounts: Do all five planning areas talk to each other?

This is the gap I see most often: People have accounts, products and documents. But they don't have coordination.

You might have a portfolio manager, a tax preparer, insurance policies and estate documents. If each piece is handled in a silo, one "good" decision can quietly create a new problem somewhere else.

That's why our framework works to coordinate five areas: Income planning, investments, tax strategy, health care and legacy.

In real life, decisions overlap. A withdrawal choice can affect taxes, Medicare premiums, sequence risk and what you leave behind. Claiming strategies, one-time expenses and gifting decisions all carry cross-effects, too.

When those areas are coordinated, people make fewer reactive moves. They feel less boxed in. They make better decisions because they can finally see how the pieces fit.

Action step this week: Make a one-page household map with five rows: Income, investments, tax strategy, health care and legacy.

For each row, list your current strategy, biggest risk and who is accountable. If nobody can explain how all five rows connect, coordination is missing.

One-page household stress test

Want to pressure-test your plan in 15 minutes? Start here:

• What are our essential monthly expenses?
• How much of that is covered by reliable income right now?
• How many months can we fund essentials without selling growth assets?
• What's our withdrawal order, and why?
• Where is our biggest future tax exposure?
• What is our plan for a major health event or long-term care shock?
• Do beneficiary designations and estate documents still match current goals?
• Who is coordinating income, investments, tax strategy, health care and legacy in one integrated plan?

If those answers aren't easy to find, the issue usually isn't effort. It's structure.

Final thoughts

I can still picture my mom on that couch, trying to hold it together after a layoff she never saw coming. That memory shaped my definition of a good retirement plan.

Retirement isn't just about how much you made. It's about whether your plan keeps you standing when life throws a punch.

If your current plan can't answer the stress-test questions on one page, you don't necessarily need more products. It's probably time for better coordination and clearer leadership.

Sit down with an experienced adviser — not just experienced in finance, but in life, too — and your CPA, and build a plan designed to protect your footing, not just project a return.

I can tell you with my whole heart, it's the reason I'm standing tall today.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

For decades we have argued about where kids should learn about money. Schools? Parents? Somewhere in between? Here's the uncomfortable truth: Financial literacy is not a school subject. It's a family subject.

You can teach algebra in a classroom. You can teach history in a lecture hall. But money? Financial literacy is not about raising kids who know what a mutual fund is. It's about raising adults who understand choices, consequences and responsibility.

And those lessons don't start in a classroom. They start at home… around the dinner table, in the grocery store aisle, and during conversations about work, saving, generosity and goals.

Every family passes something to the next generation — habits, values, stories. Money wisdom should be one of them, because when families talk openly about money, they don't just build smarter kids. They build stronger futures.

And increasingly, those adults include not just parents, but grandparents. In today's complicated financial world, money education must become something that flows through generations.

Kids learn money the way they learn language

No one sits a toddler down with a grammar textbook and says, "Today we're learning verbs." Children learn language by hearing it used every day. Money works the same way.

If kids hear conversations about family finances, they absorb those lessons naturally. If money is treated as a mysterious, secretive or stressful topic that adults avoid discussing, children grow up equally uncomfortable talking about it.

When parents say, "We can't afford that," they miss an opportunity, and may be lying. A better phrase is: "We're choosing to spend our money on something else." That simple shift teaches a powerful lesson: Money is about choices.

The quest to raise financially literate children has been my life's work. I pioneered the concept back in the '80s, and my book Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children was a trailblazer.

In it, I wrote that children should learn four things early: Earning, saving, spending and sharing. These are not abstract ideas. They are habits. And habits should start young. Parents celebrated the topic by making the book a New York Times No. 1 bestseller.

Parents set the tone

Parents are the first and most influential teachers of money. Yet many parents feel unprepared for the job. They assume financial education requires sophisticated knowledge of investments, taxes or markets. It doesn't. What children need most is transparency and example.

Let them see you compare prices at the store. Explain why you save for vacations or emergencies. Talk openly about goals like paying off a mortgage or saving for college. Kids don't need lectures. They need context.

The first context around money is: The only way you get money is to earn it. Kids should do chores to earn money. There are two types of chores within any household: Citizen of the Household Chores, where they pitch in and help the family without pay, and Work-for-Pay Chores, where they receive pay (allowance) for doing work around the house.

After kids earn their money, they learn the habit of budgeting. When children divide their money this way, they begin to understand the flow of money through their lives. It's simple. It's visual. And it works.

My four-jar budget system

• The first jar is for charity. Ten percent comes off the top to give to others who need it. It's not just money that you will teach your kids to give — it's also their time, through volunteer work, as well.
• The second jar, or 30%, is for instant gratification — I call it quick cash. They worked hard for their money and should get to spend that each week on what they want.
• The third jar, 30%, is for medium-term savings. You are teaching kids to set a goal of a few weeks or months, depending on their age, and learning to push off instant gratification to save for something greater in cost.
• The fourth jar, 30%, is for long-term savings, such as college, a home or even retirement. Does a five-year-old understand the concept of long-term savings? No. Do the adults in America understand the concept of long-term savings? No. But it will become a habit if you start young.

The grandparent factor

Today, a powerful new teacher has entered the financial literacy conversation: Grandparents. Grandparents often have something parents don't — time and perspective. They have lived through recessions, market crashes, inflation spikes and economic cycles.

They have stories about mistakes and lessons learned. And children love stories.

Grandparents also have an opportunity to model generosity and long-term thinking. Whether it's contributing to a college savings plan, helping a grandchild start a small business, or simply talking about how they earned their first dollar, these conversations carry enormous weight.

I often tell grandparents: Don't just give money — give wisdom with it. If you give a grandchild $100 for a birthday, use it as a teaching moment. Ask how they plan to divide it between saving, spending and giving. Suddenly, a gift becomes a lesson.

Why schools can't do it alone

There has been growing enthusiasm for financial literacy classes in schools, and that's a good thing. Many states now require personal finance courses for graduation. But schools cannot carry the burden alone.

A semester-long class cannot compete with 18 years of observing how adults behave with money. If a child learns about budgeting in school but sees financial stress, secrecy or impulsive spending at home, the home lesson wins every time. Financial literacy sticks when it becomes part of everyday life.

The family money conversation

Families don't need complicated curricula to teach money. They need conversations. Talk about how you make financial decisions. Discuss the difference between wants and needs. Share stories about jobs, entrepreneurship and mistakes.

In fact, some of the most valuable financial lessons come from mistakes. In Get Off Your Assets, I wrote about how important it is — especially for women — to understand their financial lives and take control of them by planning for things that can happen down the road. That lesson applies across generations. Confidence with money begins with familiarity. And familiarity comes from talking about it.

Start with these simple habits:

• Talk about money decisions out loud. Let kids hear how you decide between spending, saving and delaying purchases
• Use my four-jar system. Saving, spending and giving. Children understand money best when they can see where it goes
• Share your money stories. Tell kids about your first job, your biggest financial mistake and your proudest financial achievement
• Let kids make small financial choices. Whether it's allowance or gift money, learning comes from making decisions and seeing the results
• Involve grandparents. Grandparents bring experience and perspective that can make financial lessons memorable

A skill that travels through generations

When families share financial wisdom, something powerful happens: Knowledge compounds.

Children who grow up understanding money become adults who manage money wisely. When they have families of their own, those lessons pass forward again. Financial literacy stops being a one-time lesson and becomes a family culture.

And that may be the most important investment any family can make, because money doesn't just shape our bank accounts. It shapes our choices, our opportunities and the future we pass on to the next generation.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Ask a teenager what financial worries they have, and the answers come fast: Having enough money to hang out with their friends, affording a car, paying for life after graduation ― whether that's working or going to college.

These aren't abstract concerns. They shape how young people see themselves, their options and their futures. Financial stress shows up early, and can affect confidence, relationships and long-term opportunity.

Yet, most students still graduate without a practical understanding of how to manage money or how to handle the emotions that come with it.

Moreover, many young people unconsciously inherit financial habits and money messages from their surroundings. That conclusion is based on a study published in July 2025 by researchers at Opportunity Insights, a Harvard-based institute that studies how to improve social mobility.

It also concludes that financial behavior is shaped in childhood. That makes high school a uniquely powerful moment to demystify money and teach conscious, healthy financial habits.

It's when we can still reach nearly every young person right before they begin earning paychecks, opening bank accounts, using credit and making financial decisions that shape their future.

Financial wellness, not just financial literacy

Financial habits form early. Anyone who's tried to undo a costly impulse purchase or get out from under high-interest debt knows how difficult those habits are to break.

Teaching the mechanics of money, about wants vs needs and what a credit score is, matters. But information alone doesn't prepare students for real-life situations.

Today's teens are navigating a financial landscape that's more complex than ever. They're exposed to frictionless spending, buy-now-pay-later offers and financial products designed to feel painless — until they're not. They absorb financial stress at home, often without understanding or knowing how to process it.

At the same time, many are facing rising mental health challenges and a constant stream of financial advice and misinformation on social media, where money tips are often oversimplified, conflicting or driven by hype rather than context.

That's where a broader definition of financial wellness comes in. It connects knowledge to lived experience, helping students understand not just how money works, but how it feels.

• Why does a low balance trigger anxiety?
• How do money disagreements strain relationships?
• What should you do when a financial plan falls apart?

When students learn to pause, reflect and talk through financial decisions, they're building the same self-management skills that support mental well-being.

Also, by discussing money openly among peers, the topic often becomes less taboo, and students learn that how we respond to money is relative and deeply personal.

I have heard students from different backgrounds who were presented with the same financial facts make cogent arguments for opposite decisions, and neither were wrong. These skills and transparency are just as critical as knowing how interest accrues.

Why high school is the right starting point

By the time young adults reach college or the workforce, many financial patterns are already set. Avoidance, overspending and fear around money don't appear overnight, they develop quietly, often during the teenage years.

High school offers a rare window for intervention. Students are old enough to practice real world decisions, but still supported by educators, families and communities.

Done well, financial education at this stage can reduce future risk. It can set young people up to thrive financially, emotionally, and socially. It helps them build confidence, resilience and healthy habits around money, strengthening their ability to manage stress, navigate relationships and make thoughtful choices long after graduation.

Encouragingly, momentum is building. Thirty-five out of 50 states now require personal finance instruction in high school — that's up by 52% since 2022, according to a study conducted by the Council for Economic Education.

Districts are beginning to move beyond "check-the-box" literacy toward programs that reflect how financial decisions actually show up in daily life. The challenge is ensuring that content keeps pace with reality.

What works in the classroom

Effective financial education isn't about lectures, it's about relevance.

First, it meets students where they are. Some teens are saving for college. Others are helping with household expenses. The curriculum should reflect those diverse realities and offer multiple paths forward.

Second, it acknowledges emotions. Naming stress, uncertainty or shame around money, and offering simple strategies to manage it, helps students build confidence. Even brief practices, like reflecting on a financial worry before learning a new concept, can make lessons stick.

Third, it prioritizes practical tools. Students benefit from scripts and scenarios they can use immediately: Setting up automatic savings, comparing loans offers, or starting a conversation about shared expenses. Role-playing and short challenges help turn abstract ideas into habits.

A growing example of what's possible

Across the country, educators and community partners are experimenting with approaches that blend financial concepts with social emotional skill building.

One example is Minding Your Money, a free digital curriculum developed through Guardian's partnership with Everfi, which focuses on real decisions teens face, including money-related stress and financial conversations.

Programs like this reflect a broader shift, recognizing that confidence, communication and coping skills are essential parts of financial capability — not extras.

What you can do

For educators, treat financial wellness as a throughline, not a one-off unit. Even short, recurring conversations can reinforce healthy habits.

For parents and caregivers, it starts at home. Talk openly about money — mistakes included. Invite questions. Share how you make decisions, not just the outcomes.

For community leaders and advocates, support schools with resources that reflect the cultures and realities of the students they serve.

And for students, the message is simple: your financial journey starts now. Try small habits. Ask for help. Learn from missteps. The goal isn't perfection — it's progress.

The bigger picture

Financial wellness isn't separate from mental or physical health. It's part of the same system. When students understand not only how money works, but how it connects to their values, stress, relationships and goals, we do more than prepare them for adulthood.

When young people understand money early, they gain something far more valuable than knowledge — the confidence to shape their future on their own terms.

Related Content

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

According to projections from Cerulli Associates, more than $84 trillion will be transferred through 2045. Nearly $73 trillion in assets is expected to be transferred to heirs, and around $12 trillion will be given to charities.

While determining how much gets left to whom is important, the timing of when an inheritance is received is crucial.

Americans are living longer, and that's changed the way wealth is being transferred. It's not uncommon for beneficiaries to be in their upper 50s and 60s — long after many key life decisions have been made.

At this point in their lives, wealth is usually less impactful, and sometimes, it's not even necessary.

Longer lifespans have unintentionally moved inheritances from a life-changing event into a late-in-life supplement.

Conversely, inheriting a significant amount of wealth at a younger age can be dangerous. It can alter motivation, distort work ethics and career aspirations, and potentially create a false sense of security.

Younger beneficiaries also lack the maturity and life experience to wisely manage assets. In lieu of empowering growth and independence, premature wealth can impede it.

Is there an optimal age?

Not necessarily. The key is flexibility. Most estate plans tend to focus solely on tax efficiency and asset transfer once the owner dies. Many assume "later is better," neglecting to think about the human consequences of receiving an inheritance later in life.

For example, carefully built financial plans can be disrupted, tax and retirement planning complications can increase, such as IRMAA surcharges on Medicare premiums, and older adults might feel forced to make faster decisions, which can lead to poor investment choices and emotional decision-making.

A change in strategy

Instead of altering beneficiaries or the amount that's being gifted, consider altering the way your wealth is transferred.

One method is through lifetime gifting. This allows you to transfer assets while you're still alive rather than waiting until you pass. Instead of receiving one lump sum, assets are distributed to heirs gradually.

There are a couple of ways to approach lifetime gifting. For example, individuals can choose to give annual exclusion gifts.

According to the IRS, loved ones can give a set amount per person per year without triggering gift taxes or reporting requirements. These gifts are often used to fund living expenses, provide emergency cushions or cover education-related costs.

Other families might choose to take a more structured approach by establishing trusts or implementing phased distributions.

Both options allow you to transfer wealth at your own pace and purpose. Asset distribution can be timed with major life milestones such as buying a first home, funding or contributing to a marriage or starting a business. The choice is ultimately yours.

The bottom line

A properly planned estate utilizes these tools to ensure your wealth transfer is intentional and impactful. You want it to serve as a developmental tool for loved ones, not an enabler of dependency.

If you're developing an estate plan or reviewing it this year, start by discussing values, goals and life stages with your loved ones and your estate planning attorney. Considering when financial support might be most meaningful can help shape your selected distribution method.

Arranging estate plans and distribution with lifetime strategies can create flexibility, relevance and timing that transforms the inheritance from a delayed gift into a living legacy to create the impact you want.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

How did you first get started with investing? My dad taught us kids by example. He opened custodial brokerage accounts, bought us stocks, regularly invested, and — most important held onto them.

It took me well into my adulthood to appreciate just how lucky — and unusual — it was to be taught sound investment principles at such a young age. My dad's influence shaped how I approach investing today.

Teens and investing

The good news is that teens are interested in investing. At Vanguard, we've seen a 56% increase in custodial brokerage accounts from 2020 to 2025.

The not-so-good news is that the lines between investing and gambling are blurred as never before. It's never been easier to speculate on a penny stock or the next men's college basketball winner — all from the same "brokerage" app. More often, short-term bets are long-term losers.

How can you teach teens the difference between gambling and investing? In our family, it starts with three simple steps.

1. Open an account in your child's name

I opened a custodial brokerage account for each of my children — but you can also open one for a niece, nephew or grandchild. Once the minor comes of age (typically from 18 to 21, depending on the state), the account transfers to them, and they gain full control.

In a Vanguard custodial brokerage account, families can access a broad lineup of investments, including mutual funds, stocks, bonds and ETFs (exchange-traded funds).

If education savings is your primary goal, opening a 529 account on behalf of your child might be a better fit. These state-sponsored plans offer investment line-ups with potential tax benefits.

Additionally, with Trump accounts set to launch in July, consider enrolling your child, as qualifying children might be eligible for free money from the government and/or other sources.

If you're not sure which type of account to open, resources such as Vanguard research can lend a hand.

2. Give the gift of investments

My sister is a buyer for a teen clothing store, so she's always on top of the latest fashions and often gives my kids merchandise samples. But when it comes to gifting for my kids' birthdays and milestones, "Zia" ("Aunt" in Italian) follows the family tradition our dad started: She gifts them investments.

A newborn outfit is adorable — but it will be outgrown quickly. Investment gifts endure. Over time, they tend to grow and create a lasting emotional connection.

According to Vanguard research, children who received investments as gifts reported feeling more like investors, more confident in their financial knowledge and more open to passing that knowledge on to future generations.

It's also easier than ever to get started. Many brokerages, including Vanguard, offer the ability to purchase ETFs for as little as $1 through fractional shares/dollar-based investing.

3. Teach them about investing

Vanguard's principles for investing success — set a goal, maintain balance, mind your costs and stay disciplined — provide a helpful framework for investors of any age.

I start by explaining to my kids that they have a long time horizon, which means they can afford to take more risk (set a goal).

I also show them that the stock ETFs they own hold thousands of companies (maintain balance and mind costs). Those companies make the phones they use, the clothes they wear and the shows they watch. That connection makes investing feel real.

We also talk about volatility. Stocks tend to grow over the long-term, but they don't move in a straight line. When markets fall, it doesn't necessarily mean it's time to sell. If your long-term goals haven't changed, your investments probably don't need to, either (stay disciplined).

Most important, keep these conversations a no judgment zone. Let teens ask questions. Starting these discussions early helps remove the stigma around talking about money and builds lasting confidence.

Leaving a legacy

Our dad passed away more than 20 years ago, but his legacy of sound investing habits lives on through my sister and me — and now through our children. Consider giving gifts of investments — and knowledge — to start your family's investing legacy today.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Most parents assume that if something unexpected happens to them, a family member can automatically step in and take care of their children when they can't. While that may be true for day-to-day life, it may not be true in an emergency.

When parents become unavailable to care for their children due to illness, injury or legal concerns, schools and medical providers require written legal authority before allowing another adult to act on a child's behalf.

Without legal authorization in place, even trusted relatives may be unable to help. In some situations, agencies such as Child Protective Services, may intervene and place children into temporary foster care.

What many parents don't realize is this outcome can be avoided with proper planning. There is a simple estate planning tool that allows you to designate a trusted adult to care for your child while you're unavailable. It's known as a Delegation of Parental Authority.

What can a Delegation of Parental Authority do — and what can't it do?

A Delegation of Parental Authority is essentially the equivalent of a durable power of attorney. It allows you to appoint a trusted adult to make decisions on your child's behalf when it comes to medical care, school enrollment and day-to-day needs and supervision.

With this document, designations are temporary and revocable. It does not transfer custody, void parental rights or require court involvement. However, many parents are unaware that this document even exists.

Like other estate planning tools, a Delegation of Parental Authority is only effective if it's properly prepared and in place. The next course of action is figuring out how to implement it.

Deciding who to appoint

Start by having a conversation with your spouse about who you would trust to care for your children temporarily in an emergency, for example a grandparent, adult sibling, an aunt or uncle, or a family friend.

When determining who to designate, parents must consider whether this person is actually capable and willing to serve in this role. Some questions to ask are:

• Can this individual be available on short notice, manage school schedules and handle transportation and meals?
• Are they able to confidently and effectively communicate with medical professionals and school administrators on your child's behalf?
• Will they maintain consistency, emotional support and stability if you're temporarily unavailable?

Preparing the document

Once you've identified an individual to delegate, meet with an estate planning attorney. Since delegation requirements vary by state, working with an estate planning attorney can ensure the document is prepared correctly and complies with the law.

They can also help you understand how long a delegation can remain in effect, be modified or revoked when circumstances change.

For this document to be effective, it needs to be signed and completed according to state requirements. This may require notarization or witnesses to be present. Informal letters or verbal agreements won't cut it.

Once the document is completed, parents should keep copies in a secure and accessible place. To prevent delays during an emergency, consider providing a copy to the designated caregiver, school administrators and medical professionals.

Ensuring everyone is on the same page is crucial in times of crisis. If family dynamics change, parents should review their delegation to make sure it still aligns with their current wishes. If not, the document needs to be updated promptly.

Maintaining stability

No parent wants to think about a time where they may be separated from their children. But putting a plan in place isn't about expecting the worst, it's about ensuring your child's life remains as stable and normal as possible if you can't be there.

A Delegation of Parental Authority gives families the opportunity to ensure their children are cared for when the unexpected happens.

Pat Simasko is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Simasko Law and CoreCap Advisors are separate and unaffiliated entities. This article is for informational purposes only, please contact legal counsel for specific legal advice.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

You just retired and are sitting on a pile of cash in your retirement accounts, thanks to a decades-long bull run in the stock market.

It's only natural to want to spread the wealth and give some of that nest egg to the kids or grandkids; 69% of retirees do, according to a recent MetLife study.

But gifting some of your 401(k) right out the gate might cause more harm than good. Here's why and how to be generous without putting your retirement at risk.

What could go wrong with gifting from a 401(k)?

Few people think about taxes when they’re helping a child with a down payment on a home, contributing to a college fund, or taking the family on a once-in-a-lifetime vacation. But not preparing for tax consequences is one of the biggest risks in taking a 401(k) lump sum at retirement.

"If that defined contribution asset is pretax money, you can have a tax consequence," says John Jones, an investment adviser representative at Heritage Financial. "The person has to be mindful if they withdraw and spend in whatever way, it might trigger another tax bracket or IRMAA."

Bracket creep occurs when a large withdrawal pushes your total income into a higher tax tier. For example, if you're retired in the 22% bracket and withdraw an extra $100,000, that money is taxed as ordinary income. This can push a portion of your distributions into the 24% or 32% range, significantly increasing your tax bill for the year.

Retirees should also be mindful of the IRMAA (Income-Related Monthly Adjustment Amount), a Medicare surtax that often catches people by surprise. Because Medicare Part B and D premiums are calculated based on your modified adjusted gross income (MAGI) from two years prior, a large lump-sum withdrawal today could trigger a collision course with higher costs down the road.

If a withdrawal spikes your income this year, you might face an IRMAA surcharge two years later. For 2026, the monthly surcharges are projected to fall in the following ranges:

• Medicare Part B: $81.20 to $487.00
• Medicare Part D: $14.50 to $91.00

Running out of money is a risk

Beyond taxes, using your 401(k) for gifting could impact the type of retirement you have later. Even if you think you have enough saved, removing a big chunk of your portfolio early in retirement means it can no longer grow and compound.

You should also consider sequence-of-returns risk. If the market dips shortly after a large withdrawal, your remaining balance has to work significantly harder to recover. This double hit — losing value from both the withdrawal and the market decline — greatly increases the likelihood that you'll outlive your savings.

Be smart if you're doing it anyway

If you're aware of the risks and still committed to gifting from your 401(k), there are steps you can take to mitigate them.

For starters, spread the withdrawal across two tax years. If you want to gift $100,000, withdraw $50,000 in December and the remaining $50,000 in January. By splitting it across two years, you might prevent bracket creep or avoid triggering the IRMAA.

Another option: Figure out how much you can withdraw to stay in your current tax bracket and only give that amount each year. If you have the choice between a traditional 401(k) and a Roth 401(k), opt for the latter. Withdrawals are tax-free in a Roth and won't impact your tax bracket or your Medicare premiums at all.

To protect yourself from sequence-of-returns risk, ensure you have a cash buffer of 18 to 24 months of living expenses in a high-yield savings account or money market fund.

That will prevent you from dipping into your retirement accounts, potentially when the market is down. Setting guardrails on your giving can also protect your retirement. For instance, pledge to give a certain amount if your retirement account increases 10%, but if it drops more than 10%, agree not to give anything at all.

Give with intention

Helping your family is one of the most rewarding parts of retiring, but it shouldn't come at the cost of your own financial independence.

Whether you spread out gifting to prevent a tax hit or set guardrails to preserve your retirement savings, the key is to understand the risk and have a plan.

By being strategic about how and when you pull from your 401(k), you can give with confidence.

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Most parents want their kids to grow up financially confident. But between allowance, birthday checks and the occasional, "Why can't we buy a pony?" conversation, it's easy to miss key opportunities to teach them how investing actually works.

"Getting kids investing early helps normalize money as a tool rather than something mysterious or stressful," says Jessica Andrews, general manager of Lenora Family Office, Multi-Family Office and Impact at Brighton Jones in Seattle. "It builds familiarity with how money grows over time and introduces the idea that patience and consistency matter more than quick wins."

It also creates a foundation for healthy conversations about values and long-term thinking.

The good news is that you don't need a finance degree or a color-coded lesson plan to teach your kids about investing. A few simple hands-on habits can make investing part of daily life. Whether your child is curious, cautious or convinced money comes from the Tooth Fairy, these five strategies can help them start investing with confidence in no time.

1. Talk early and openly about money

Perhaps the best financial foundation you can build for your kids is one that doesn't make money feel taboo. Making money part of everyday conversation helps normalize it in daily life.

"I like to suggest families talk about 'money moments' at the dinner table," says Mike McCracken, president and founder of Wealth Guide Financial in Maple Grove, Minnesota. Each person shares one thing they learned about saving, spending or a stock pick that might be engaging to talk about.

"Anything just to keep the conversation flowing about money," McCracken says. "This will plant the seed that talking about money is normal and a positive part of life."

The trick is to keep the topics age-appropriate.

"It's never too early to start talking about money, but investing concepts tend to land best once kids can understand cause and effect," Andrews says.

For many families, she feels that's probably around ages seven to 10. This is "when children can grasp ideas like saving, growth, and delayed gratification." At younger ages, focus on awareness, curiosity and confidence, she says.

You can use age-appropriate analogies to help concepts land. For younger kids, McCracken likes: "Money is like a seed; if you plant it and wait, then it grows into a (big) tree."

As teens, when you might want to introduce the concept of a Roth IRA, this can evolve into: Now that we've planted all those seeds and you know it's going to grow into a big tree, would you like to pay taxes on the seed or all the branches and leaves of the tree?"

2. Use paper trading apps to simulate the real thing

Once kids are old enough to understand investing — probably about the time delayed gratification starts to click— you can bring in more "fun" learning tools.

Investing simulation apps such as Investopedia's free Stock Market Simulator or The Stock Market Game by the SIFMA Foundation let kids practice buying and selling stocks with virtual money, using real market data. It's a safe way to experiment and let kids see how different choices play out without risking actual dollars.

"Kids like the interaction of apps that create virtual investing accounts," McCracken says. He recommends combining stock types for comparison. For instance, you could encourage them to invest in a dividend-paying stock such as Target (TGT) alongside a growth stock such as Alphabet (GOOGL).

These platforms also help kids connect the dots between news headlines and portfolio performance. When a company reports earnings or a big market swing hits the news, they can log in to see how their pretend holdings respond.

That said, it's important not to let the simulator turn into day trading or to gamify investing too much.

Kids might naturally want to react to every headline or market blip, but that's the perfect moment to reinforce the opposite lesson: Real investors think in years, not news cycles.

Help them notice how events that seem dramatic often fade quickly, and how companies with solid fundamentals tend to recover over time. The goal isn't to teach them to outguess the market; it's to show them that patience usually wins out over impulse.

3. Open a real brokerage account when they're ready

When your child has actual money to invest and seems comfortable with simulated investing, you can open a real brokerage account to start actually investing.

If your child has documented earned income, a custodial Roth IRA is a great option as it gives the best long-term tax advantages. The money grows tax-free and can be withdrawn without taxes in several situations, including retirement, a first-time home purchase or to cover certain medical expenses.

If your child doesn't have earned income, there are many other options, says Ronnie Gillikin, president and CEO of Capital Choice of the Carolinas in High Point, North Carolina. You can open a 529 plan for education or use standard UTMA or UGMA custodial accounts.

After July 4, 2026, "Trump Accounts" will be available for eligible children. "The $1,000 from the government won't be available to all, but most children between birth and age 18 will be allowed to put away $5,000 a year into the account," Gillikin says. "There are more details to come, but it is worth keeping in mind."

An actual investment account of any type gives kids their first experience with real ownership. They can buy fractional shares, invest in funds, track dividends and see how long-term investing actually works with real dollars at stake.

The amounts don't have to be large to matter. As McCracken puts it, "even $500 to $1,000 per year starting at age 12 can be life-changing income by age 65," thanks to the power of compounding.

The goal isn't to build a massive portfolio in middle school; it's to help them build the habit of saving and investing early, when time is on their side.

4. Let them invest in companies they know

One of the best ways to keep your kids engaged is to make investing as tangible as possible. A great way to do this is to let your kids own a piece of the companies they use every day. For example, they could buy small amounts of Disney (DIS), Apple (AAPL), Nike (NKE), even McDonald's (MCD), McCracken says.

"This kind of emotional connection turns investing into something personal and even fun," he says. "It even increases the chance of an early investor to stick with it for life."

More important, it helps them see that investing represents ownership in a real business, not just numbers on a screen, Andrews adds. "From there, the emphasis should be less on short-term gains and more on building good habits: Contributing regularly, staying invested, and giving time a chance to work."

It's also worth reminding kids that investing isn't only about buying their favorite brands. Familiar companies are a great entry point, but they're just the starting line.

The real lesson is understanding what makes a business worth owning, not just what makes a product fun to use. Helping kids look beyond logos and into things such as earnings, competition and long‑term prospects keeps the focus on thoughtful investing rather than impulse buys.

5. Match their contributions to build the habit

Kids respond to immediate feedback, and investing is famously slow. One way to speed the reward is with a simple match. You can match what they save either dollar to dollar or even 50 cents on the dollar. This gives them a quick win while reinforcing the long-term habit of saving.

As an added bonus, it also primes them to appreciate that employer 401(k) match at future jobs.

McCracken's own parents used this strategy when he was young. They matched any money he set aside in his brokerage account, with one rule: He couldn't touch it until college. "It served me well to teach the value of allowing compound interest to take effect," he says.

The point isn't the size of the match; it's helping kids feel the reward of consistency. When they see their contributions grow faster because of your boost, then grow again through compounding, the habit becomes sticky in a way lectures never could.

"The most impactful part of teaching kids to invest isn't the account itself, it's the relationship it creates around money," Andrews says. "When parents use investing as a shared learning experience, it builds trust, confidence and a sense of stewardship that carries into adulthood."

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Do you have a child under 18? If so, claiming their Trump Account just got a lot easier this month.

The U.S. Department of the Treasury recently launched the long-awaited mobile app for one of the most talked-about provisions of the 2025 Trump/GOP tax and spending law.

Trump Accounts are designed as a child-focused savings vehicle to provide a financial head start for a beneficiary's higher education, first-time homeownership or other qualified costs. For children born from 2025 to 2028, the federal government will seed the account with a $1,000 pilot contribution.

So far, more than 4 million children have been signed up for Trump Accounts, according to the IRS, with 1 million claiming the "free money" contribution program.

While the new app is officially rolling out and the first wave of government funds is scheduled to drop this summer, you might be wondering how to get started. Here's how to submit your paperwork, activate the app, and what comes next.

Related: New Trump Account Spinoff Launches in Only 23 States: Is Yours on the List?

Trump Account for kids: What it is, how to claim and the new app

Trump Accounts, also called 530A accounts, are tax-deferred investment savings designed to help save for future qualified expenses.

Although parents and employers can contribute a combined $5,000 per year to Trump Accounts, the biggest draw right now is the opportunity to claim a "free money" seed deposit from the federal match program.

The process starts with the IRS. By submitting Form 4547, taxpayers can elect to open an account and request a one-time $1,000 federal deposit for qualifying children. Once that form is processed and the account is opened, parents will be able to fully manage, track and build the investment using the newly released official Trump Accounts mobile app.

Note: The app is available for download on the Apple App Store and Google Play. It will serve as your primary digital dashboard for tracking the $1,000 deposit (if applicable), making contributions and watching the account's growth.

Trump Account Enrollment Steps

Step 1: File Form 4547

You can start the application process for a Trump Account by filing IRS Form 4547, Trump Account Election(s), only if you're the parent, legal guardian, grandparent, or adult sibling of a beneficiary, in that order).

When you're filling out the form, keep these key items in mind:

• There is no cost to open a Trump account.
• Parents, employers, charitable organizations and governments can contribute money to your child's Trump account (once the funding process is available).
• However, your child can only receive those contributions if you open an account.

If you want more information before opening a Trump Account, visit the official website at TrumpAccounts.gov.

Step 2: Check your email for a Trump Account letter

After you've signed your child up for a Trump Account, the federal government will contact you regarding account opening information.

• An email will arrive from no-reply@TrumpAccounts.Treasury.gov to confirm your election to open a Trump Account (emails started going out late last month).
• Follow the instructions in that email to complete your account activation.
• You can't make any contributions to your child's Trump Account until July 4, 2026.

Note: The Treasury also cautions taxpayers to remain vigilant against scams. Only the email address listed above will send information about Trump Accounts; the Treasury will not contact parents via text message or phone call regarding account activation.

Step 3: Download the official Trump Account app

Once the Treasury confirms your election to open a Trump Account, you can download the official mobile app. It's currently available on the Apple App Store and Google Play for both iOS and Android devices.

To avoid potential scammers, only access your child's Trump Account information via the official app or by typing "TrumpAccounts.gov" into your browser's URL. Customer support is also available through the official Trump Accounts app.

Employer contributions and what comes next

Although the federal government provides the initial $1,000 match for qualifying infants, some employers are expanding that deposit.

More than 25 companies have pledged an additional one-time $1,000 deposit for employees with qualifying children, including (but not limited to):

• Bank of America, Broadcom, Charles Schwab, Chipotle Mexican Grill,
• Coinbase, Comcast, Continental Resources, Dell, IBM,
• Intel, JPMorgan Chase & Co, Mastercard, NVIDIA, Robinhood Markets,
• Russell Investments, Steak 'n Shake, SoFi Technologies,
• Visa, Wells Fargo and Uber.

High-profile donors Michael and Susan Dell, Ray and Barbara Dalio, Nicki Minaj, and Brad Gerstner have also pledged additional, targeted contributions to fund some accounts, and each donation has different eligibility requirements. For example, the Dell donation is for children age 10 and under who live in ZIP codes with a median income of $150,000 or less.

So far, all philanthropic contributions are expected to approximate about $250 per qualifying child (except for Minaj's donation, which was not pledged on a per-child basis).

As 2026 rolls on, more companies might join this list, especially as the July 4 Trump Account activation date approaches. Stay tuned for updates.

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Like most people I talk to, when you ask yourself, "What's the maximum I can give to my kids this year?" you're probably thinking of a number like $10,000, $15,000 or $19,000.

But when it comes to the gift tax limit, the number you're probably thinking isn't actually the limit at all.

Today, we'll go through the rules, along with common questions and misconceptions, of the IRS gift tax system in 2026 so that you can give the amount you want to your kids without the fear of extra taxes or lengthy paperwork.

Before we learn how to optimize the gifts you give, you need to understand there's not just one limit, but two different levels to plan for:

• The lifetime exemption
• The annual gift tax exclusion (the number you're probably looking for when you think limit)

These numbers change each year, and for this article, we're talking about the 2026 numbers.

To start, just know that there is no limit to how much you can give to anyone at all. The IRS doesn't prevent you from giving your money away. It's your money — you can do what you want with it.

It's just that once you reach a certain dollar amount, you'll need to start paying taxes on what you give away. That level is called the lifetime exemption.

The lifetime exemption for 2026 is $15 million per person. You would have to give away more than $15 million over your entire lifetime before you pay any gift tax. If you're married, your total lifetime exemption is $30 million.

Then there's the annual exclusion. It's often thought of as the limit, but in reality, it's just the amount of money you can give to each person without having to report the gift to the IRS.

It is important to know and plan for, since it's nice to avoid having to do the paperwork to report it. We'll learn how to structure your gifts based on the annual exclusion shortly.

For 2026, the annual exclusion (meaning you don't have to report it to the IRS) is $19,000 per recipient.

You can give $19,000 to any person you want, and as many people as you want, in 2026 without having to report it to the IRS. Then, next year, you can gift the annual exclusion amount again to as many people as you want.

Your spouse can do the same thing, which effectively doubles the amount you can give without having to report it to the IRS.

Now, there are some specific rules that apply to very few people, like gifting to a non-citizen spouse, generation-skipping transfers and gifts of "future interest." You can read about those rules and instructions at the IRS website.

Most people are giving less than the $15 million lifetime exemption, but if you want to give away more than $19,000 in one year, it's helpful to structure your gifts to avoid IRS reporting requirements.

I have a client who told me late last year that they want to give a significant amount to each of their two children. Here's what I told them:

The husband could give $19,000 to their oldest and $19,000 to the youngest late in 2025, and then repeat the giving this year. The wife could do the same.

Between the two of them, that's eight total gifts of the annual exclusion amount ($19,000). Eight times $19,000 is $152,000 in gifting — without triggering the reporting requirements.

Both of their kids are married, so if they wanted to give even more, they could write checks to the spouses, which doubles the gifting to 16 times the annual exclusion. That's $304,000 in gifting without being required to tell the IRS or paying any gift tax at all.

Common questions and their answers

Q: Do my spouse and I need to write separate checks when gifting?

While it's not required, most tax preparers do suggest each spouse write a separate check. You would especially want to write separate checks for each tax year and give them to your kids in the corresponding tax year.

Also, write the word "gift" on the memo line and make a copy of each check for your own records.

Q: How much tax does my kid pay on the gift?

The person who receives the gift doesn't pay taxes on that money at all. The gift tax is assessed to the donor, not the one receiving money. Your kid will not need to pay tax and doesn't even need to report the gift.

Q: How do gifts of stock work?

When you give stock, you are also giving the cost basis (the price you paid for the stock). So if you bought a stock for $5,000, and it's now worth $10,000, when you give the stock directly to your kid, you won't owe taxes on the capital gains. Your child will owe taxes on the capital gains when they sell it, though.

Q: Can I give money from my IRA tax-free?

No. If you take money from your traditional IRA to give to your kids, the withdrawal from the IRA is still considered a taxable event.

The IRS doesn't care what you do with your IRA money — they care that you took it out of the IRA, and you're required to report that on your tax return.

Q: What happens if I give more than the annual exclusion?

You would have to file the IRS Form 709 Gift Tax Return. The point of the form is to track how much you give each year above the annual exclusion amount so that once you reach the lifetime exemption amount, you start paying the gift taxes you owe.

Remember that while you likely won't owe any taxes, it is still a separate tax return, and your tax preparer is likely to charge you for filing an additional tax return.

Q: Can I pay my kid's college tuition or medical bills without paying gift tax?

Paying for education or medical expenses are the two exceptions to the gift tax. You can pay any amount for anyone (they don't even have to be family), and it doesn't count toward the annual exclusion or the lifetime exemption.

You would have to pay the educational institution or medical provider directly, though. The amount could cover only tuition, not books or room and board, and a gift into a 529 plan still counts as a gift.

The medical care you pay for must also meet the IRS rules for deductible medical expenses.

The gift tax system is a lot less painful than most people realize. The majority of Americans can give what they want to whomever they want without ever paying taxes or even telling the IRS.

That doesn't mean you can write big checks without thinking about the rules. Before you write that check, first think about who you want to give money to, how much and whether splitting gifts between spouses, or tax years, would reduce your taxes or paperwork.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Question: I retired at 63 to enjoy my free time, but my grown kids constantly ask for help with childcare. I love my grandkids, but it's too much. What should I do?

Answer: The nice thing about being retired is getting to take back control of your time, as opposed to having to be on an employer’s schedule. That could mean spending your days working on projects at home, enjoying hobbies or spending time with the people you care about.

A recent Transamerica survey (PDF) of retirees found that 32% are prioritizing time with family, and 19% are taking care of grandchildren.

While you might find it fulfilling to look after your grandkids on occasion, there can come a point when it gets to be too much. Not only can being a constant babysitter get exhausting, but it could monopolize more of your time than you’re comfortable with.

If you’re a retiree who’s being pressured to babysit, you might need to speak up so it doesn’t become a point of stress or bitterness for you. Here’s how to have that conversation without sparking a war with your grown kids.

Pinpoint your specific triggers

Before you broach the topic of childcare (or too much of it) with your grown kids, it’s important to pinpoint the factors that bother you the most, says Cory Reid-Vanas, licensed marriage and family therapist (LMFT) and founder of Rocky Mountain Counseling Collective.

"In preparation for talking to the adult child, it’s important to identify what feels overwhelming," Reid-Vanas says. "Is it the frequency? The number of hours? The lack of notice? Or all of the above?"

Identifying your biggest sticking points could lead to a more productive conversation.

For example, if the issue is a lack of notice, it paves the way to a discussion along the lines of: “I enjoy watching the kids, but I need more of a heads-up so I can plan my own schedule.”

Lead with empathy

Childcare costs today are expensive. Care.com puts the average cost of an after-school babysitter for two children at $328 a week ($1,312 per month). For those needing day care or a nanny, the cost can be even more astronomical.

That’s why Andrew Kami, Ph.D. and marriage and family therapy professor at Pacific Oaks College, says it’s important to lead with empathy when having conversations with your grown kids.

"Let your children know you understand their stress, the financial pressures, and how hard it is to find trustworthy childcare," he says.

Reid-Vanas says that if you can afford to offer financial support to help your grown kids cover the cost of childcare (and shift some of the burden away from you), that's something to consider.

However, he says, "I recommend that it be a decision the grandparent makes on their own, with some potential guidance from a financial adviser to help them evaluate the feasibility."

You should not let your grown kids pressure you into chipping in for their kids’ day care, especially if that puts a strain on your own finances.

What to say: "I know it's challenging being a parent these days, especially when trying to find affordable childcare. I can see you are doing your best." Then clarify if you can [or cannot] help financially if the parent has asked for it.

Be honest about the physical toll

Your grown kids might not realize how difficult it is to provide frequent childcare at your age if you don’t loop them in. If they start to recognize that it’s physically exhausting, they might become more judicious about asking for help.

What to say: Kami suggests saying things along the lines of: "I love spending time with the kids, and I understand how tough childcare is right now. But the amount of babysitting I’ve been doing is becoming overwhelming for me."

Establish explicit, predictable boundaries

If you’re willing to continue watching your grandchildren but want to do so less frequently, it’s important to make that very clear to your grown kids.

"Setting boundaries is the healthiest way to preserve the relationship, but it has to be done thoughtfully," Kami says. He suggests defining what you can and cannot do so your own children understand what commitment you’re willing to make.

For example, Kami says, you can say something like, "Going forward, I can help on Fridays for a few hours, but I can’t commit beyond that."

Better yet, Kami says, be as specific as possible — for example, "I can help on Fridays from 3 pm to 6 pm."

"Predictability lowers stress for everyone and prevents misinterpretation," he explains.

That said, if you can’t commit to a predictable schedule, that’s OK, too. You could instead offer to watch your grandkids on occasion so their parents can enjoy a date night, Kami suggests.

You might start out with a set schedule that evolves over time, based on your needs and those of your grandchildren. Continue to revisit your arrangement to ensure that it’s working for everyone.

What to say: "I'd like to be clear on how and when I can help you. Here's the specific schedule that works for me." Include anything else that might cause friction if not clarified, such as who pays for diapers, whether it's OK to take the grandchild in the car, if you'd rather not take care of a sick child and similar issues.

Don’t let resentment fester

If you feel like you’ve become your grandkids’ default babysitter against your will, it’s important to share your concerns before resentment builds, Kami insists.

"[Your] children may have assumed you were available simply because you hadn’t said otherwise," he says. "Helping them understand that you need balance and boundaries is not hurtful; it’s honest."

Reid-Vanas agrees.

"Setting boundaries does not mean that you love your grandchildren less. Setting boundaries means that you’re ensuring you can be the best grandparent possible, and there are some limits to that," he says.

What to say: "I love my grandkids so much, but to give them the best care, I need some time to myself."

The grandparent boundary checklist

• Identify your limit (Hours? Days? Last-minute requests? Sick kids?)
• Acknowledge their stress (Lead with empathy regarding childcare costs).
• Offer an alternative (If a weekly schedule is too much, suggest a fixed date night instead).

Read More

• Our Children Want Us to Take Care of the Grandkids This Summer at Our Lake House. How Do We Say No?
• I Want to Help Pay for My Grandkids' College. Should I Make a Lump-Sum 529 Plan Contribution or Spread Funds out Through the Years?
• I Want to Retire, but I Have to Keep Working so My Adult Kids Have Insurance
• I'm a 76-Year-Old Widow and My Son Is Pushing Me Into Assisted Living. How Do I Convince Him I'm Fine Living on My Own?

Question: I want to help pay for my grandkids' college. Should I make a large lump-sum 529 plan contribution or spread the funds out evenly over the years?

Answer: A lot of people experience sticker shock when they sit down to look at college costs today. For the 2025-2026 academic year, U.S. News & World Report puts the average cost of tuition and fees at a four-year public in-state school at $11,371.

For a public out-of-state school, the average price tag is $25,415, and for private universities, it's $44,961. A top-notch school may even cost over $90,000 a year!

Meanwhile, an estimated 42.8 million people today owe federal student loan debt, according to the Education Data Initiative, which also reports that the average public university student borrows $31,960 to get a bachelor’s degree.

A late 2023 Bankrate survey found that 59% of student loan borrowers felt forced to delay key financial milestones because of their student debt, including building emergency and retirement savings.

Owing all that money can take a toll. Many student loan borrowers experience high levels of stress and delay major life milestones due to their student debt, according to a 2026 Fidelity Investments research (PDF) report. The study found that 67% of borrowers find their personal finances overwhelming and nearly one third (32%) have delayed purchasing a home due to their debt.

If you’re in a strong enough financial position to help pay for your grandchildren’s education, you might be eager to ease that burden — both for them and your grown children who might also be struggling to set aside money for college savings.

If so, a 592 plan is a good place to start. These plans offer tax-free gains and withdrawals, provided the money is used to cover qualifying educational expenses.

You might wonder if it’s better to make a large lump-sum contribution to a 529 plan now or spread those funds out evenly over the years. You could go either way. It’s important to understand the pros and cons of both options.

The case for megafunding a 529 up front

If you can afford to fund a 529 plan with a lot of money up front, it could pay to do so, says Jonathan Sparling, director at CollegeWell.

As he explains, “Contributions to 529 plans are excluded from an individual's taxable estate, even though the account owner retains control of those funds.”

Moreover, Sparling says, “529 plans are eligible for the super-funding provision, which allows individuals to front-load five years of contributions in one tax year. A married couple could contribute as much as $190,000 per beneficiary, thereby reducing their taxable estate by that amount of money.”

There’s also the benefit of time to consider from an investing standpoint.

“Contributions made to 529 investment plans when a child is very young have more time to accumulate growth and weather market fluctuations. The same is true for 529 prepaid plans, like ones provided by certain states and the Private College 529 Plan,” he says.

With the Private College 529 Plan, Sparling explains, contributions lock in a percentage of tuition and fees at nearly 300 member colleges across the country.

“Making a lump-sum contribution earlier on locks in more years of tuition at a lower rate, protecting against future tuition inflation,” he says.

The case for funding a 529 plan through the years

If you can afford to front-load 529 plan contributions, not only does it give your money that much more time to grow, but it’s also an expense you won’t have to think about year after year.

However, Brian Schmehil, CFP and managing director of Wealth Management at The Mather Group, points out that while you’re generally better off investing a lump sum of money, this approach increases your market-timing risk compared with dollar-cost averaging year after year.

Schmehil also points out that it’s important to consider the tax benefits your state might offer.

“Many states limit the amount you can deduct from your income each year,” says. “Spreading out your contributions can provide a guaranteed tax benefit to you and your family. In some cases, the value of this guaranteed tax benefit may outweigh the uncertainty of market returns.”

Schmehil also says that making contributions on a yearly basis gives you more flexibility if your circumstances, or those of your beneficiaries, change.

For example, you might end up in a situation in which your health care costs increase dramatically later in retirement. One of your grandchildren might decide that once they reach middle school, they’re interested in a specific trade and don’t wish to attend college.

Even though 529 plans give you some flexibility to switch beneficiaries, ultimately, you’ll get even more flexibility by having your money outside one of these accounts.

Any 529 plan contributions you make should go a long way

When it comes to funding a 529 plan, there’s really no right or wrong approach. Sparling also points out that not everyone can make a significant lump-sum contribution to a 529 plan, so for many people, spreading out contributions over time is the only feasible option.

No matter which option you choose, as Sparling says, “Regardless of when contributions are made, every dollar saved for college can help offset future costs and increase college options for their grandchildren.”

Next Steps for Funding Your Grandchild's College Tuition

• Start with the basics:
  • We're 75 With $3.2 Million. Our Grandchild Needs Help Paying for College
• If your grandchild has earned income:
  • How to Open a Custodial Roth IRA: A Guide for Grandparents
• Read up on 529 college savings plans:
  • Use the 529 Grandparent Loophole to Maximize College Savings
  • The Best 529 Plans of 2026

Younger Americans are getting a constant stream of news and information from social media — including financial and investing tips from influencers and other "experts."

But is the information they're getting credible? With this backdrop, as a parent, how do you discuss money and investing with your children while instilling a strong financial foundation?

In a new study from Ameriprise Financial, 72% of the about 3,000 parents surveyed said they personally take responsibility for teaching their children about money. Nearly all — an incredible 97% — said they talk with their kids about finances to some degree.

Many parents actively involve their children in family financial decisions as a way to teach money values and principles beginning at a young age.

The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.

If you're wondering how to have open, honest and age-appropriate conversations with your children, here are some tips segmented by age.

Young children through pre-teens

Even young children are watching and paying attention to where you invest your time and money. While you don't have to share details of your financial situation, consider involving your children in real-life money management scenarios early on.

Communicating the reasoning behind some of your purchasing decisions or spending habits can be a powerful way to impart financial values to your children.

You might consider helping them understand why you chose one product vs another at the store ("It's very similar but less expensive"), or why you aren't buying an item right now ("We're saving up for something special").

By getting children involved, you're setting the tone that it's OK to talk about money and creating the space for them to ask questions.

When appropriate, encourage your children to use their own money to make a purchase. Allowance or birthday money provides a great opportunity to help them think about how to save, spend or give to charity.

Teenage children through college-age

Starting conversations about money early helps lay the groundwork for bigger, more complex financial topics later. As children progress through their high school years, one of the biggest questions on their minds is whether — and how much — parents plan to contribute to their college costs.

Research revealed nearly 9 in 10 parents (89%) plan to pay for some portion of their children's college education. It's natural that parents want to set their children up for success.

However, it's critical that they don't jeopardize their own financial security to make it happen.

Regardless of how much you plan to contribute, it's important to clearly communicate your decision to children so they can make informed choices about taking on student loans or finding other ways to cover the bill.

This is an exciting age, but it's also an important time to get the right financial discipline and habits in place.

When you feel the timing is appropriate, help your children apply for a credit card to begin building credit and practice responsible money management under your supervision.

It's about teaching them to make their own tradeoff decisions between their goals for today and in the future.

Adult children

The need for ongoing money conversations doesn't end when a child has left the home. Research reveals the majority of parents (75%) plan to help their adult children fund goals and milestones such as a wedding, a down payment on a home and vacations.

While well-intentioned, such generosity can put parents' financial futures at risk if it means sacrificing retirement savings or other important long-term goals.

If you do choose to contribute financially, be clear about whether the money is a gift or a loan to avoid confusion or tension down the road. It's about finding the right balance between assisting your grown children and instilling financial independence.

Additionally, a first job post-college is the perfect opportunity to discuss steps children can take to establish a strong financial foundation.

Encourage children to take advantage of every employee benefit available to them, such as applying for health, life and disability insurance and maximizing their 401(k) match to ensure they're not leaving money on the table.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

Parents may also want to discuss the risks and opportunities that come with investing, or share their own experiences with market fluctuations. A parent's candidness can help children take advantage of market volatility, rather than fearing it.

Work with a financial adviser

Parents already have a lot on their plates when it comes to raising a family, and finances can be a source of stress in the best of times, let alone during periods of market volatility.

The good news is you don't have to initiate conversations alone: A financial adviser can help.

According to the Ameriprise study, nearly 9 in 10 parents (88%) working with a financial adviser say the advice was helpful in making financial decisions related to their children. The research reveals parents are seeking guidance on:

• Considerations for leaving an inheritance (34%)
• Educating children about investing (33%)
• How to pass down their financial values to children (30%)

A financial adviser can provide direction and accountability to help you take the important financial steps needed to protect your children's futures — and your own.

The Parents & Finances research was created by Ameriprise Financial and conducted online by Artemis Strategy Group from January 3-31, 2025, among 3,010 American parents with at least one child age newborn to 30. Parents were between ages 25 to 65+ and had on average more than $500,000 in investable assets. For further information and full methodology, including verification of data that may not be published as part of this report, contact Ameriprise or go to ameriprise.com/parents.

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• Give Now or Leave an Inheritance? How to Balance the Options

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

The One Big, Beautiful Bill Act, the legislative package formalizing most of President Donald Trump's second-term agenda, became law with the president's signature on July 4, 2025.

The bill is not without its controversies, of course. But one provision should be of interest to all current or expecting parents: The establishment of "Trump Accounts," a new type of tax-deferred retirement account for American kids.

The Trump Accounts share some similarities with traditional IRAs and others with 529 college savings accounts. But they also have some quirks that make them unique.

So, should you consider a Trump Account for your children? Let's take a look and compare them to some of the existing options out there.

Only a fool turns down free money

Let's cut to the most important part first. All children born between January 1, 2025, and December 31, 2028, will be eligible for a $1,000 seed payment directly from the U.S. Treasury.

There are no income limitations. The only requirements are that the child is a U.S. citizen with a valid Social Security number and that at least one parent must also have a valid Social Security number.

That's it.

So, if your child was born this year or last or if you have any new children born through 2028, yes, you should open a Trump Account for them. It costs you nothing to claim the $1,000, and there is no downside.

Even if you have no intention of ever adding another nickel to the account, you should open one to claim the payment. Assuming the account grows at the S&P 500's average compound return of around 10%, that $1,000 deposit would be worth over $490,000 by the time your kid hits retirement age.

And parents can contribute up to $5,000 per kid per year into a Trump Account. This figure will be indexed to inflation and will start adjusting in 2028. You can contribute annually up until the year they turn 18. And outside of a few extenuating circumstances, such as death or disability, the IRS stipulates that no withdrawals can be made until your child turns 18.

Once your child is 18, they are eligible to take money out of their Trump Accounts for a handful of qualified withdrawals that include higher education expenses and a first-time home purchase. Other withdrawals made prior to the beneficiary reaching the age 59 ½ will be subject to a 10% early distribution penalty.

As the bill is written now, the proceeds must be invested in certain mutual funds or exchange-traded funds (ETFs) tracking a major index such as the S&P 500. The index funds must have an expense ratio that's less than 0.1%.

It's unclear if Trump Accounts will allow more conservative blended investments in the future, but kids under 18 have the benefit of a longer timeline for investing, which means short-term fluctuations in the stock market will be less impactful on total returns.

As an added quirk, a parent's employer can contribute up to $2,500 of the $5,000 allowed annually, and it will not be counted as income for either the parent or the child. So, we could see Trump Accounts offered on the standard menu of employer benefits alongside 401(k) plans or HSAs in the years ahead.

As for whether the accounts make sense for your children born prior to 2025, that's a more complex answer. Let's dig into that now.

What is a Trump Account for a child born before 2025?

Parents with children born prior to 2025 might want to consider opening a Trump Account for their kids as well. While not eligible for the $1,000 seed payments, a $6.25 billion donation from Michael and Susan Dell will seed Trump Accounts for some kids 10 and under who were born prior to January 1, 2025.

The donation will provide an initial investment of $250 for 25 million children who live in zip codes with a median income of $150,000 or less. You can check your child's eligibility at TrumpAccountInfo.com.

Several other private donors, including Ray and Barbara Dalio, are making donations for seed money for children in certain areas. The Dalios, for instance, have pledged $250 to each eligible child under the age of 10 in Connecticut.

Though Trump Accounts are expected to look and feel like a traditional IRA account, there are a couple of important differences.

Trump Accounts vs traditional IRAs

To start, unlike IRAs, Trump Accounts have no earned income requirement. That's a key distinction. In order to invest in an IRA, your child would have to have earned income from work, even if it is something informal like mowing lawns or babysitting. A newborn infant obviously can't work, so your ability to fund an IRA for a young child is limited.

Unlike IRAs, contributions to a Trump Account are not tax-deductible. You get no tax break for contributing, though if your employer contributes, that is not counted as taxable income. And earnings from your child's investment account grow tax-free.

And similar to IRA distributions, it's expected that distributions from Trump Accounts will be taxed as ordinary income.

Trump Accounts vs other savings accounts

There are a few things to note.

Trump Accounts are not college savings accounts. If you're looking to specifically save for college, then a 529 plan is going to be better tailored to that purpose.

Maxing out your own 401(k) or IRA should also take precedence. It's great to give your kid a head start in life if you have the financial flexibility to do it. But it doesn't make sense to set your son or daughter on the path to early retirement until you've adequately provided for your own golden years.

If your child has earned income, then contributing to a Roth IRA is going to be a better option. The Roth IRA contribution limits are higher ($7,500 in 2026) and withdrawals in retirement are completely tax-free.

Finally, the core benefit of the Trump Account — tax-free compounding of returns — is already available in a regular everyday brokerage account. Simply buying and holding an S&P 500 index fund will allow your investment to compound without any taxable gains other than minuscule taxes on dividends paid, and you maintain the flexibility to take the funds out early if you need them.

Should you get a Trump Account for your child?

So, let's return to our original question: Should you consider a Trump Account for your child?

Under the right circumstances, absolutely.

If your child qualifies for the financial gift from Uncle Sam, you should at a bare minimum open an account to take advantage of it.

Beyond that, you should take care of your own retirement planning and your kid's college education planning first. But if you have those largely covered, then adding a Trump Account to the mix can't hurt.

Your son or daughter will thank you when they turn 18.

How can I sign my child up for a Trump Account?

To sign your child up for a Trump Account, you'll need to sign into your IRS account and fill out Form 4547. You'll need your ID.me account, your social security number and your child's social security number.

You can then download the recently launched Trump Accounts app to create an account on the Apple App Store and Google Play.

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Trump Accounts officially launch July 4, giving families a new way to save and invest for a child's future.

Created under President Donald Trump's One Big Beautiful Bill, the accounts are designed to support long-term wealth building and can be used for a variety of future goals, including higher education and homeownership.

At first glance, Trump Accounts and 529 college savings plans might seem similar. Both allow families to invest on behalf of a child, but they're designed for different purposes and come with different tax rules, contribution limits and withdrawal requirements. Here's how the two accounts compare.

Who can open a Trump Account?

Any child under age 18 with a valid Social Security number can have a Trump Account established on their behalf. Children born between Jan. 1, 2025, and Dec. 31, 2028 may qualify for the program's $1,000 federal contribution if they meet the program's eligibility requirements.

Children who don't qualify for the federal contribution might still have a Trump Account opened and funded by parents, grandparents, relatives or others.

Parents, legal guardians and other authorized individuals can establish a Trump Account for an eligible child by completing IRS Form 4547. The same form is also used to request the $1,000 pilot program contribution for eligible children.

After the election is submitted and processed, the Treasury Department will provide instructions to activate the account. Families can then manage the account through the Trump Accounts website or mobile app.

The adult who establishes the account serves as the responsible party while the child is a minor. Control of the account generally transfers to the beneficiary when the growth period ends and the account transitions to traditional IRA rules.

Trump Account: Tax implications

When opening a savings account for a child or grandchild, tax treatment is a major factor. One limitation of Trump Accounts is that contributions are not tax-deductible, similar to 529 plans at the federal level, though many states do offer tax incentives for 529 contributions.

Unlike 529 plans, which are specifically designed for education savings, Trump Accounts are intended as broader long-term investment accounts for children. Contributions are made with after-tax dollars, and investment earnings grow on a tax-deferred basis while the money remains in the account.

Under current IRS guidance, Trump Accounts eventually transition to treatment similar to a traditional IRA. At that point, distributions might be subject to ordinary income tax, and withdrawals taken before age 59½ could be subject to a 10% additional tax unless an IRA exception applies.

States might also tax Trump Account distributions, depending on local rules. Unlike 529 plans, which allow tax-free withdrawals for qualified education expenses, Trump Accounts don't offer tax-free treatment. Earnings withdrawn from a Trump Account are taxed as ordinary income, even when used for education expenses.

However, because the account is treated similarly to a traditional IRA, certain withdrawals, such as those for higher education expenses or a first-time home purchase, might qualify for penalty-free treatment, although they remain taxable.

For families whose primary goal is saving for college, this difference could be significant. While 529 plans generally reward education spending with tax-free withdrawals, Trump Accounts offer greater flexibility but might result in taxes being owed when money is withdrawn.

Trump Accounts vs other college savings

One of the best ways to determine if a Trump Account would be the right approach for your family is to compare it with other options:

Families focused primarily on paying for college might find a 529 plan the most attractive option because of its tax advantages and higher contribution limits.

Families who value flexibility or have a child eligible for the Trump Account's $1,000 federal contribution might choose to use a Trump Account alongside a 529 plan rather than rely on either account alone.

Coverdell ESAs remain an option for families who want greater investment control, although their lower contribution limits make them less practical for many households.

Trump Accounts: Pros and cons

Whether a Trump Account makes sense for your family depends on your goals, risk tolerance and need for flexibility. Consider the following pros and cons.

Pros:

• $1,000 federal contribution for eligible children born from January 1, 2025, to December 31, 2028
• Families can contribute up to $5,000 annually
• Because Trump Accounts eventually transition to treatment similar to a traditional IRA, certain IRA exceptions may allow penalty-free withdrawals for expenses such as higher education or a first-time home purchase, although taxes might still apply

Cons:

• Families cannot choose their investment options during the account's growth phase
• Withdrawals may be subject to federal and state income taxes
• Early withdrawals might be subject to a 10% penalty unless an IRA exception applies
• Tax and withdrawal rules are more complex than those associated with a typical 529 plan

Choosing the right account for your child's future

Trump Accounts offer eligible children a $1,000 federal contribution and a new way to build long-term savings. However, families focused primarily on college may find that a 529 plan remains the stronger option thanks to its higher contribution limits, broader investment choices and tax-free withdrawals for qualified education expenses.

That doesn't mean families have to choose one account over the other. For newborns eligible for the federal contribution, a Trump Account can provide a government-funded head start, while a 529 plan can remain the primary vehicle for college savings.

Related content

• Everything You Need to Know About 529 Plans
• How the One Big Beautiful Bill Act Could Reshape 529 Plans
• Coverdell ESAs vs. 529 Plans: Which Should You Choose?

Saving for a child’s future is an important part of every parent’s financial plan, but for many, the task can be daunting.

According to a recent LendingTree study*, raising a child to adulthood costs around $303,000. This total excludes college costs, job training, or future expenses your kid might need.

That's where Trump Accounts enter the fray — and the rollout is moving faster than anticipated.

Introduced in the 2025 Trump tax bill, so-called Trump Accounts will allow parents, relatives, and others to contribute up to $5,000 annually for a child’s future educational, homeownership, and other qualified expenses.

The federal government will also seed this tax-advantaged account with $1,000.

The savings then grow tax-deferred until the child reaches 18. At that point, there could be tens of thousands of invested dollars for your child’s use.

Now, the program is officially entering its next phase. The U.S. Department of the Treasury recently launched the official Trump Account mobile app ahead of the July 4 rollout date, and has begun sending out account activation instructions to millions of families who opted in during tax season.

But if the savings account idea sounds familiar, that’s because it is. Democrats have proposed "baby bonds" in the past, which would also offer $1,000 seed money to eligible children, but failed to gain bipartisan support.

How is a Trump savings account any different? And should you open one in 2026 and make contributions?

Read on.

*Note: LendingTree researchers used various data sources, incorporating multiple expenses related to rent, food, health insurance, etc., to calculate the cost of raising a child in a two-income household.

Trump kids account for newborns

Under the Trump tax bill, the GOP created a provision for Trump Accounts applicable to kids under age 18.

Overseen by the Treasury, these savings accounts are touted by supporters as a new way to help pay for higher education, homeownership, and other qualified expenses that account holders might incur.

Parents of eligible children can request to open an account today.

The sign-up process for a Trump Account starts by using Form 4547. After receiving the application, the U.S. Treasury Department will provide further instructions via email from no-reply@TrumpAccounts.Treasury.gov.

(However, funding the accounts, including the $1,000 federal seed money for eligible children, won't be open until at least July 4, 2026, per the official Trump account website.)

But while legal guardians have first say in opening a Trump Account for their child, the IRS proposed regulations outline the legal priority in which all authorized individuals may open an account:

1. Legal guardian
2. Parent
3. An adult sibling
4. Grandparent

One of these authorized individuals must open a Trump Account on or before December 31 in the year in which an eligible child turns 17. Only one account is allowed per child.

For more information on how to open a Trump Account, check out Kiplinger's report, Trump Account App Is Live: How to Claim Your Kid’s $1,000 in 3 Easy Steps.

Who is eligible for Trump Accounts for kids?

To be eligible for the proposed Trump Account, qualifying children will need to be:

• Under 18 years old
• U.S. citizen
• Have a Social Security number (SSN) with at least one parent with a valid SSN (or individual taxpayer identification number)

And, according to the IRS, the funds in Trump Accounts must be invested in certain mutual funds or exchange-traded funds, like those that track the S&P 500 or another index of primarily American equities.

How to contribute to a Trump child savings account

Several individuals can contribute to a child’s savings in the new Trump Account tax provision, including:

• Parents and legal guardians
• Family, friends
• Employers
• Governmental agencies and nonprofits

Employer contributions will be capped at $2,500 for Trump Accounts. Parents and relatives can contribute up to $5,000 of after-tax dollars annually. Government or nonprofit contributions will not count against the annual $5,000 limit, but the employer portion will count toward it. (Note: The proposed IRS regulations index the yearly limit for inflation after 2027.)

And there's another catch: Contributions can't be made into a Trump savings account after the child reaches age 18.

Trump Account distributions: Qualified expenses

Certain rules will govern account distributions depending on the account holder’s age and whether an expense is "qualified" or not. No distributions will be allowed until the child reaches 18 (see below for a few exceptions).

After that age, the account is treated akin to an individual retirement account (IRA).

According to the latest information provided by Congress.gov, here is a list of qualified withdrawals:

• Higher education expenses,
• First-time home purchases (up to $10,000),
• Personal emergency expenses (up to $1,000),
• Health insurance premiums during unemployment, or medical expenses that qualify for the medical expense deduction,
• Specific situations, like disaster-related costs or expenses related to the birth or adoption of a child (up to $5,000 in the year of the birth/adoption).

Other withdrawals will be subject to a 10% early distribution penalty (until the beneficiary of the Trump Account reaches age 59½). However, there are a few instances where a distribution from a Trump account will be allowed if a child has not yet reached age 18.

• Some rollovers to an Achieving a Better Life Experience (ABLE) account (though the child must be at least 17 and the entire account balance must be transferred).
• The rollover of the account to a different Trump Account.
• To correct an excess annual contribution.
• If the beneficiary has died, become totally and permanently disabled, or been diagnosed with a terminal illness.
• The beneficiary is called to active duty as a qualified reservist for at least 179 days.

Would Trump savings accounts for children get taxed?

Contributions to a Trump Account might be made with after-tax dollars. But withdrawal taxation might depend on the source and type of income.

• For instance, distributions for qualified expenses from funds received by an employer might be taxed at the ordinary income federal tax bracket rate when distributed.
• But distributions for qualified expenses from parents might not be taxable.

Any interest from the account grows tax-deferred and could be taxed as ordinary income when withdrawn. Some suggest that even the $1,000 seed money given by the government will be taxed when distributed.

Overall, the tax treatment of a Trump Account is expected to be similar to that of an IRA.

Yet, it's important to note that finalized guidance from the IRS on the taxability of these accounts is needed before implementation this year.

Trump Account for kids: $1,000 match

Under the federal pilot program, qualifying children can receive a $1,000 match deposited directly into their Trump Account. However, this specific incentive is reserved for children born between January 1, 2025, and December 31, 2028.

While early versions of the 2025 tax law suggested a universal, automatic rollout of Trump Accounts, the Treasury has since shifted to an "opt-in" approach. This means the responsibility now lies with parents to proactively enroll their children to secure the account and claim the $1,000 Trump Account match (if eligible).

Child savings accounts aren’t new

While the Trump savings account is new, it’s important to note that the idea behind the account isn’t the first of its kind.

Democrats have also pitched a similar notion about eight years ago, when Sen. Cory Booker (D-N.J.) proposed the creation of a savings account, baby bonds, with $1,000 seed money for newborns.

At the time, Booker posted on Twitter (now X): “We need to close the wealth gap and give every child born in the U.S. a fair shot at the American Dream — my baby bonds proposal is a clear path.”

However, Booker’s proposal struggled to gain bipartisan support.

There are also several key differences between a Trump Account vs. the baby bonds that Booker proposed:

• While Trump Accounts are to be contributor-funded (outside the pilot program), Booker’s baby bonds would've been funded by the federal government.
• Under Booker’s proposal, contributions would have been made based on family income, with potentially larger initial deposits for lower-income families, while Trump Accounts rely more on “who you know.”
• The baby bonds idea was designed to “substantially close the racial wealth gap,” while the Trump Accounts are formulated to “help produce new capitalists,” Sen. Ted Cruz (R-Texas), who initially proposed the savings account initiative, told Semafor.

“[Booker’s proposal] is just a government program,” Cruz said, “Where this [Trump Account] is very much designed to get the next generation to invest in the market.”

Interestingly, Cruz and Booker recently collaborated on a joint bipartisan letter sent to Fortune 1000 CEOs. The letter encouraged corporations to use Trump Accounts for corporate employee matching.

For a list of current companies that have pledged to match the new initiative, check out Kiplinger's report, How to Claim Your Kid's $1,000 Trump Account Match.

Stay tuned for more updates.

This article has been updated to reflect proposed IRS guidance and recent announcements by the U.S. Treasury.

Read More

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• How Much is the Child Tax Credit in 2026?
• The Most Tax-Friendly State for Middle-Class Families
• New Trump Account Spinoff Launches in Only 23 States: Is Yours on the List?

When planning your legacy, it's likely that one of your first concerns is ensuring your children or grandchildren inherit assets that enrich their lives. Unfortunately, certain inheritances can be a tremendous burden on your loved ones.

A recent survey by Empower found that 14% of Americans expect an inheritance, with higher expectations among Gen Z and younger Millennials (27%) compared to those between the ages of 35–54 (11%) and over 55 (7%).

A Choice Mutual survey (from 2025), focusing on younger Americans aged 18–44, showed that 68% of participants have either received or expect to receive an inheritance, with an average expected amount of $335,000. But let's face it, some assets are better than others to leave behind. Did you know your home could be a terrible inheritance for your kids?

The total value of an inheritance isn't just a dollar figure — what’s actually in an estate plan can matter significantly. Thanks to the Great Wealth Transfer, trillions of dollars will transfer from one generation to the next in the decades ahead, but not everyone will see their inheritance as a help; for some, it may be a headache.

Certain assets can cause arguments between family members or may have hidden costs. And sometimes, let’s face it, your kids just don’t want your stuff. With thoughtful estate planning, however, you can prevent these issues from happening.

“A lot of people leave estate planning to the last minute, or they don’t get to it,” said Neil V. Carbone, Partner at Farrell Fritz in New York. “For family harmony and efficiency, start your planning early with an attorney or other estate plan expert. They can get to know your assets and, in doing so, identify what might be an issue.”

Carbone finds that children and other young family members are more likely to respect a parent’s wishes if they hear them in person, even if it’s something they don’t like, versus finding out from a document when they’re also grieving. A professional can also help you start adjusting your assets to those that are more effective to leave.

“In my experience, the best asset to leave behind: cash,” said Michael Romero, president of Argent Trust Oklahoma. He said brokerage accounts are good too because they’re so easy to value and divide. Everything else gets a little more complicated.

Here are seven of the worst assets to inherit (as opposed to some of the best assets to inherit) and what you can do to help manage them before you are gone. Read on for advice on how to make sure your estate doesn't add to your heirs' grief and what to do if you inherit something you don't want.

A timeshare is a long-term contract where you agree to rent out an annual trip to a resort or vacation property. These contracts last for decades, sometimes for life, and are notoriously difficult to get out of. Even if you love your timeshare, think it’s a great deal and have had plenty of amazing memories, be very cautious about leaving it to the next generation.

“If you pass away and your kids inherit the timeshare, they’ll be on the hook for the ongoing — and ever-increasing — contract costs,” said Carbone. “Some sellers even encourage buyers to put their young family members on the deed when they sign up for that very reason.”

That’s a bad idea, Carbone said, and he advised that the decision should be left to the kids — after your death — whether they want to take over the contract. They can refuse to accept at this point, even if your will left them the property, by making a formal disclaimer of the timeshare. During probate, they will need to send a written document to the executor of your estate and to the timeshare company saying they do not accept the property.

If your heirs are on the fence, Carbone warned, they must be very cautious not to use the property after you’re gone, such as a last memorial trip, because this could prevent an effective disclaimer or count as taking over the timeshare contract.

If your family has decided they don’t want to inherit the timeshare and you no longer want it, you can try to get rid of it while you’re alive. How difficult this will be depends on the company. Some will simply buy you out and take it back. If not, you could also try to sell the contract to someone else or work with a timeshare exit company that specializes in getting people out of these arrangements.

Don’t try to hold out for much, advised T. Eric Reich, a Kiplinger contributor and president/founder of Reich Asset Management. He noted that there are also companies that resell timeshares. “I tell clients to sell it for basically nothing if they have to, just to get rid of it.”

If you simply decide to abandon your timeshare, the company might send letters threatening legal action, but in Carbone’s experience, they usually don’t follow through. “Most companies will not take legal action against elderly customers if the timeshare is paid off, and most elderly customers won’t be concerned about damage to their credit rating.”

Whether it’s gold coins, rare out-of-print books, or a fine piece of artwork, there’s something special about seeing your wealth in a beautiful physical form and then imagining handing it off to your loved ones so they can enjoy it too. Another advantage of leaving collectibles as an inheritance is that it can help with taxes.

The capital gains tax rate on collectibles can go up to a maximum of 28%, significantly higher than the maximum 20% long-term gains rate on other investments. When you die, your heirs receive a step-up in basis, meaning that when they sell the investment, they receive tax-free what the collectible is worth on the day you die.

Still, there are some substantial risks to leaving valuable collectibles as an inheritance. First, there’s a much higher chance that your heirs could overlook or lose these valuable assets, especially if you’ve hidden them. “If you’ve sewn diamonds in the couch cushions, you better let your heirs know so they don’t toss them out in a yard sale,” said Carbone.

Another problem with collectibles is that they’re tougher to value. It’s not like a bank or brokerage account where your heirs can just see the balance. Instead, they’ll need to go to a dealer, but if they meet up with the wrong person, they can be taken for a ride. You may also have items in your home you don't know are worth big bucks, like these ten old things in your home that can be worth a fortune.

Romero shared a story where he got caught off guard. “A client who passed away was a musician and had a collection of violins. I took a particularly impressive one to a dealer, thinking it might have value. The dealer said the violin itself was worthless, but the bow? $20,000.”

If you do have any valuable collectibles, be sure to let your heirs know where they are, what they’re worth (appraisals are best, but a rough estimate will do), and suggest dealers they should work with after you’re gone.

Guns can present considerable problems as an inheritance. They aren’t the kind of property you can just hand over to another person without, in certain cases, the proper registration or permit. The rules vary significantly depending on your state of residence and the type of firearm.

For example, in New York, when someone dies, their executor can possess their guns for up to 15 days without incurring criminal liability, a very short window, Carbone said. “At this point, the will probably hasn’t even gone through probate yet.”

What usually happens is the heirs or the executor will call the police to inventory and store the guns for up to a year during probate. The heirs can’t legally transport the guns themselves, so the police must come pick them up. If certain firearms, like fully automatic weapons and short-barreled rifles or shotguns, were not properly registered during the decedent’s lifetime, they can’t be registered after the fact or passed down to the heirs and will have to be abandoned.

If you’d like your kids or other family members to inherit guns, start that planning as soon as possible. The heir may need to set up the proper firearm permits for themselves to accept the property. You can check out gun laws by state through the Giffords Law Center to Prevent Gun Violence.

You could also work with a gun dealer so they could store your guns and then sell them after you pass away. The key is to plan early so you avoid a scenario where you’ve left guns in your car trunk or garage. That can complicate matters for your heirs. Not to mention, it's a safety risk.

Most business owners spend a good bit of time on their succession plans. But not all. You may have neglected planning the succession of your family business, assuming it can be passed on like a brokerage account or classic car. Bad idea, advised Connecticut attorney Marissa Dungey, a partner in Dungey Dougherty.

“It can be difficult for founders to let go,” Dungey acknowledged. But, “if they don’t, a business will often lose value and may even collapse in the wake of the founder’s death.”

If your family members can’t realistically be expected to carry on the business, she said, “It’s advisable to plan for the sale while the founder is alive and can provide the hands-on transition that’s important for the continued success of the business that will maximize the sale price.”

If you have partners in the business, you should have a “buy-sell or shareholders agreement to address what happens on the death of a partner,” Dungey added. “These are negotiated between business partners … often providing for an orderly buy-out funded at least in part from life insurance” upon the death of an owner.

But even if family members do seem willing to take over the business, that’s not the end of the conversation. “That does not necessarily avoid conflict,” Dungey said, “especially where some but not all family members are in the business and it is the predominant asset. There is an inherent conflict for those in the business who are compensated and may want to grow the business, and those who are passive owners and want to monetize.”

The bottom line, Dungey said, is that “planning ahead to address the issue can mitigate conflict.”

Inherited vacation properties are another potential financial and emotional landmine, especially if you’re leaving one to multiple family members. “Kids behave when the parents are still alive, but once they’re gone, that’s when the fighting really starts,” said Carbone. “I’ve seen siblings stop speaking to each other due to fights over an inherited vacation property.”

Disagreements can pop up over how often each can use the property, who owes what for the repairs, whether they should sell, and whether they should buy one of them out and at what value, especially if one heir lives far away and doesn’t want their share.

Even if everyone is on good terms, a vacation property does come with considerable expenses like maintenance, property taxes, insurance and any remaining mortgage. These costs could outweigh the value of the vacation property to your heirs. This is especially true if you’re leaving behind undeveloped land where they still need to build a home or a property with environmental problems, like a spill from an oil tank, or if you're leaving behind a property in a location prone to natural disasters, like floods and hurricanes.

If you have a vacation home, start the inheritance discussion early with your heirs. Do they even want the property? If they want it, can you get them to agree on the terms? You could put together and have them sign a written co-tenancy after death agreement, which would legally lay out the rights and responsibilities of each heir after they take ownership of the property when you pass away.

Dungey suggested leaving liquid assets to pay the ongoing costs associated with keeping the vacation property “so that no one is required to chip in. While this does not address all potential conflicts among family members, it helps when no one has to come out of pocket to keep a property they are not using.” This could include HOA fees, taxes, insurance, and maintenance costs, including landscaping, while no one is using the property.

If it’s starting to look complicated and they can’t agree, the solution may be to sell. Yes, you’d owe capital gains taxes on any appreciation (because it's not your primary residence), but that could be a worthwhile investment to avoid a big fight.

Fights don’t just happen over rare and valuable collectibles. When it comes to family arguments, Romero finds they can happen with any type of physical property. Household and personal items can carry more sentimental value than money does, which adds more emotion to disagreements. They’re also harder to divide. “Let’s say there are three kids,” Romero asked. “Who's going to end up with Mom’s wedding ring?”

Another problem with physical property is that it’s harder to tell what it’s worth. For jewelry and antiques, Romero finds that people tend to overestimate what they’re leaving behind, perhaps building up unreasonable expectations. “Jewelry is usually very expensive to buy, but loses its value quickly when you try to sell.” He also noted that antiques aren’t as popular as they used to be.

On the other hand, certain items might be unexpectedly worth a lot. He had another client with a wardrobe full of women’s designer suits that they were able to sell for a considerable amount. If Romero hadn’t thought to check, the client may have just given everything away to Goodwill.

To avoid trouble, start planning early on who will receive what to prevent arguments. If possible, try selling what you don’t need while you're alive. That way, you’ll be leaving more of the simplest, most effective inheritance of all: cash.

If you are a Crypto enthusiast, you may think passing along these holdings to your heirs is a good idea. However, if you die without a will or fail to give your heirs instructions on accessing these holdings, they may be lost forever. Vanished. Forever lost.

Data from 2025 studies from sources like Chainalysis and CoinLedger suggest that 3 to 4 million BTC, or about 15% to 20% of the current mined Bitcoin supply, may be permanently lost. At today’s price of about $74,000 per BTC, this represents a staggering value of $220 to $300 billion — a massive fortune.

Additionally, the IRS does not treat cryptocurrency like cash, so the process of inheriting crypto can be more complex. That’s because the government views crypto as digital assets and, more specifically, personal property, similar to stocks or tangible property. For this reason, your crypto holdings may be subject to capital gains taxes.

For instance, when the designated heirs of your crypto exchange them for currency or use the tokens as a payment method, it will often trigger a tax event. When that happens, they may need to calculate capital gains or losses. Crypto is also subject to different transfer and estate taxes. On the other hand, if you give crypto as a gift, it isn’t recognized as income until it's sold or exchanged.

How to ensure your beneficiaries' inheritance is appreciated

You want your beneficiaries to appreciate their inheritance, not feel burdened by it. How can you ensure that? While it’s tough to discuss death, leaving behind certain assets without a plan beforehand can add to your loved ones’ grief. As financial expert Robert Reich advises, open conversations about your estate plan are essential to ease their burden and honor your legacy.

“The best advice I can give is for the owners of any property they might want to pass on to their heirs is to have an honest conversation about it first,” he said. “Many times, the heirs will express that they simply don’t want the property and in those cases, the owner should sell it while they are still alive.”

Dungey has some additional suggestions. For one thing, reconsider selling your assets while you’re alive, she said.

“Rather than selling an asset during lifetime and triggering capital gain, where an asset is to be sold rather than inherited, in the interest of family harmony, I recommend including a direction to the executor or trustee to sell the asset in the course of the estate administration,” she said. “The property would benefit from the step-up in tax basis on the owner’s death, and directing the sale will allow the costs of sale to be administration expenses that may be tax deductible.”

She also suggested you anticipate disputes over the value of some property, noting that estate values are different from insurance values, which, of course, are different from sentimental value.

“In addition,” she said, “a non-cash asset is not going to have the practical value of the equivalent cash amount. I advise executors to get an appraisal for estate tax purposes from a reputable appraiser with experience valuing the type of asset.”

Finally, look beyond the specific terms of your will. “Leaving a letter of wishes can be very helpful in reducing conflict because loved ones are likely to honor a decedent’s wishes,” Dungey said. “In my experience, while beneficiaries may not want a particular asset, they do want the value associated with it and so are unlikely to walk away unless the asset is underwater or the costs of ownership exceed the sale value (e.g. a timeshare).”

What to do if you inherit something you don't want

Let’s say you’re the unlucky heir of someone who didn’t take this advice. Now you’ve got a timeshare in a place you’ll never visit, the German army pistol grandpa got in Europe, or Great Aunt Louise’s Bösendorfer (and you live in an apartment and don’t even play piano). You don't even have a yard big enough for Grandpa’s strangely valuable assortment of garden gnomes.

Do you have to accept your unwanted inheritance?

Well, no, although your refusal may create a headache for the executor of the estate. You could refuse an inheritance, also known as disclaiming it. Dungey said disclaiming “would cause the property to pass to the next taker in line and does not relieve the executor of the asset if probate has been initiated.”

Consequently, "a comprehensive will should give the executor the power to abandon any estate property, including the power to abstain from payment of associated fees and letting property be foreclosed upon or sold for nominal consideration.”

Reich said his advice “depends on the property, but in the past, I have had clients try to donate the asset in the case of property and in some cases, even collectibles. I try to get them to sell the collection as a whole to a dealer if possible.”

Reich pointed out that the price the collection fetches from a dealer “will be far less than the actual retail value.” But the seller would avoid the hassle of selling off each piece individually, especially if they’re not experts in the worth of the items.

Pass on a legacy without unnecessary complications

In the end, the goal of any inheritance isn’t just to pass on assets or wealth, but to pass on a legacy without unnecessary hardship. Assets timeshares, bitcoin and depreciating collectibles can turn a loving bequest into a costly burden for your heirs.

By taking the time now to simplify your estate, you protect your loved ones from financial stress and emotional strain during an already difficult time. A thoughtful inheritance reflects love and care, giving your kids and grandkids the freedom to grieve, heal and move forward.

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A 529 plan is one of the smartest ways to save for your grandkids’ college education. And thanks to recent changes, it's now easier than ever to pair it with financial aid. Thanks to the FAFSA Simplification Act, the notoriously frustrating process of applying for student aid is less frustrating and more streamlined due to the removal of more than two-thirds of the questions on the FAFSA form (PDF).

Better yet, the FAFSA now lets grandparents with 529 accounts take advantage of the grandparent loophole to fund a child's education without derailing their financial aid application.

Not many people are taking advantage of this powerful back-to-school savings strategy. The most recent data from a 2025 Edward Jones survey show that 52% of Americans say they're unfamiliar with 529 plans, and only 14% of survey respondents currently use or intend to use a 529 plan for education savings.

Unfortunately, as so many people don't know about these tax-advantaged savings options, it can hinder both college goals and bigger financial dreams down the road. Two of the many benefits you could be missing include tax-free growth and the opportunity to roll over unused funds into a Roth IRA.

You could also be missing out on the grandparent loophole to fund a grandchild’s education without impacting their financial aid eligibility.

What is the 529 grandparent loophole?

A 529 plan allows a contributor to prepay a beneficiary's qualified higher-education expenses at an eligible educational institution or to contribute to an account for paying those expenses. While 529 contributions must be made with after-tax money, the contributions grow free from federal or state tax.

How can the loophole benefit both you and your grandchildren?

Previously, distributions from a grandparent’s 529 plan were reported as untaxed student income, which could reduce a student's eligibility for aid by up to 50% of the distribution amount — a significant penalty. Under the old rules, a $10,000 529 plan distribution could reduce your grandchild’s aid eligibility by $5,000.

The good news is that with the new streamlined FAFSA (which took effect starting with the 2024-2025 award year), distributions from grandparent-owned 529 plans are no longer reported as student income, giving grandparents a welcome advantage.

What's different on the 2026-2027 FAFSA?

On the 2026-2027 FAFSA, students aren't required to report cash gifts from a grandparent or contributions from a grandparent-owned 529 savings plan. Grandparents can now use a 529 plan to fund a grandchild’s education without impacting that grandchild's financial aid eligibility.

With the new FAFSA form, a student’s total income is only based on data from federal income tax returns from the IRS. Any cash support, no matter the source, will not have a negative impact on financial aid eligibility on the FAFSA.

Instead of the FAFSA, more than 200-plus private institutions use the CSS Profile to award financial aid. These plans take a more complete picture of your financial circumstances than the FAFSA does, and grandparent-held 529 plans will still be considered.

Gift tax thresholds

Additionally, 529 plans are subject to gift taxes when they exceed certain thresholds.

For 2026, the annual gift tax limits are $19,000 for singles or $38,000 for married couples filing jointly, unchanged from 2025. These limits apply to each person who is receiving a gift in a year.

This means that you can donate these amounts per grandchild each year without owing federal gift tax. However, your 529 contributions might trigger gift tax consequences. If you exceed the annual exclusion, you might need to file a gift tax return.

For example, if you have two students and two 529 plans, and you're a single parent, this year, you can contribute $19,000 each or $38,000 total in a year without reporting these contributions to the IRS.

However, any contributions above $19,000 each (or $38,000 each if you're married and filing jointly) must be reported to the IRS and will count toward your lifetime gift tax exemption of $15 million (up from $13.99 million in 2025) for individuals or $30 million (up from $27.98 million in 2025) for couples in 2026.

Give more than that limit, and you could incur a flat gift tax of 40% for the excess amount.

Tax-free rollovers to Roth IRAs

If you put money in a 529 for your grandchild and he or she didn't attend college or only spent a portion of what you saved, you can roll over funds from your 529 plan tax-free into a Roth IRA, as long as certain conditions are met.

Rolling over unused funds from a 529 account into a Roth IRA can help individuals avoid tax penalties that occur when withdrawing funds for non-education expenses.

There's a limit on how much money can be rolled over throughout the beneficiary's lifetime, and these rollovers are subject to Roth IRA annual contribution limits.

IRA contribution limits for the 2026 tax year are $7,500 for people under age 50 (up from $7,000 in 2025) and an additional $1,100 catch-up contribution for those age 50 and older (up from $1,000 in 2025).

Before you get too excited, there are several additional limitations from the SECURE 2.0 Act worth keeping in mind:

• Your 529 savings account must be open for more than 15 years before funds can be rolled into a Roth IRA.
• If the 529 beneficiary is different from the 529 holder, the Roth IRA must be in the beneficiary’s name.
• 529 contributions made within the preceding five years cannot be rolled over.
• The beneficiary must have earned income for the year at least equal in amount to the Roth IRA contribution transferred from the 529 account.

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If you have never given a child shares in a publicly traded company as a gift, that's probably just as well. Presents are supposed to be fun. Investing in equities — as remunerative over the long haul as they have proven to be — isn't much fun a lot of the time.

That said, the desire to give stocks as a gift to a youngster is understandable, even noble. We want children to develop critical life skills around money as early as possible.

And the more they learn about saving and investing — to say nothing of compound interest, dividends and the economic cycle — the better. We know how important this will be for them in ways they can't yet imagine.

Stocks even have a singular appealing quality as a gift: they're dynamic. A child can follow a company and its stock. Hopefully, the stock's value will appreciate over time. Perhaps you and your grandchild will bond as you study corporate developments and stock charts together.

A gift that allows the two of you to spend time together, while learning something and maybe even making a little money, too? Sounds lovely.

Just be aware that if your only goal with this gift is for your grandchild's new investment to beat the market, you are almost certain to be sorely disappointed. Indeed, it's nearly impossible to beat the market every year, year after year.

Over the past 15 years, 93% of all U.S. actively managed domestic equity funds underperformed the S&P Composite 1500, according to Standard & Poor's SPIVA Scorecard. About 90% of all U.S. large-cap funds trailed the S&P 500 over the same time period.

Consider indexing vs buying stocks

The vast majority of full-time professional investors can't beat the market, so why should you?

The simple fact is that most pros can't beat the market because most stocks can't beat the market. Between 1990 and 2020, more than 55% of all U.S. stocks underperformed risk-free one-month U.S. Treasury bills, according to Hendrik Bessembinder, a finance professor at Arizona State University. These stocks didn't just fail to beat the market, they failed to beat cash.

Even more damning, the professor found that the entirety of the $76 trillion in net global stock market wealth created between 1990 and 2020 was generated solely by the top-performing 2.4% of stocks.

Finding winning stocks is like finding needles in haystacks. That's why Vanguard founder and indexing evangelist Jack Bogle always advised clients to "buy the haystack."

So if part of the purpose of giving stocks as a gift is to teach your grandkids about investing, you should probably start by discussing the advantages of indexing. You might also want to let them know about the miracle of compounding. Between the two, passive investors have done quite well for themselves over the years.

If you can achieve an annualized return — also known as a compound annual growth rate — of 7.18%, your initial investment will double every 10 years. Happily for all of us, the S&P 500 has generated an annualized return of at least 7.1% over the past 10, 15, 20 and 30 years — and that's after inflation. The market has basically been doubling our money or better in real terms for decades.

You could explain these facts to your grandchildren as you give them some shares of an S&P 500 ETF, such as the SPDR S&P 500 (SPY) or the Vanguard S&P 500 (VOO). An ETF is probably an even more disappointing present for a kid than stock (or underwear), so it's bound to make an impression. The important part is that the child learns that indexing is generally the best way to go for most retail investors.

The best stocks to buy your grandchildren

If the point of this gift, be it for a holiday, birthday or graduation, isn't to teach your grandchild about the wonders of indexing, then here are some general guidelines for picking equities.

If you give shares in a company to your grandkids as a gift, they probably don't care about dividend yields or price-to-earnings (P/E) multiples or trailing-12-months levered free cash flow. If you must buy individual stocks as a gift, be sure to invest in high-quality companies your grandchild recognizes and maybe cares about.

Blue chip stocks with fortress-like balance sheets and a decent chance of beating the market over the next, say, five to 10 years, are easy enough to screen for. Have a look at what industry analysts believe are buy-rated blue chips with interesting businesses.

Nvidia (NVDA), Amazon (AMZN), Microsoft (MSFT) and Apple (AAPL) are all Buy-rated Dow Jones stocks — and they can be fun (or at least fun-ish) to follow. Walt Disney (DIS) is a Buy-rated Dow stock that likely holds relevance for your grandkid, as is Walmart (WMT).

Wall Street also happens to be bullish on Dow stock McDonald's (MCD) these days. Perhaps your grandchild would like a side of fries with her shares in the Golden Arches?

If you really want to teach your grandkids about investing, it's best to start with indexing. If you want to have fun playing around with individual stocks, go ahead. Just know that you're going to have lots of ups and downs.

After all, volatility is the price of admission. If you put $1,000 into Nvidia stock 20 years ago, it would today be worth a small fortune. Take a look at the chipmaker's chart, however, and you'll see that buy-and-holders experienced plenty of sickening drawdowns along the way.

Bottom line: make sure the stocks you gift are relevant to the person receiving them. If you want this present to hold a kid's attention longer than most gifts do, that's the only hope you've got.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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Tax season is over for most, and summer is on the way. And as some know, it can be frustrating when your children are out of school and complain about having nothing to do.

So, why not hire your child or children to work for your business? Doing so can keep them productive, teach valuable skills, and potentially lower your tax bill.

However, as you would guess, there are important IRS rules to follow. Here’s what you need to know.

Tax benefits of hiring your child

• If you follow IRS rules, hiring your child to work for your business can lower your taxable income, as you can deduct their salaries from your business income.
• If your child is under 18, and depending on the type of business you have (more on that below,) you won’t have to take Social Security and Medicare taxes from their pay.
• Your child won’t have to pay taxes if their income for a given tax year is less than the standard deduction amount for that year (e.g., $15,750 for 2025).
• Because your child will have earned income, you can contribute to an IRA on their behalf, subject to applicable IRA contribution limits.

Hiring your child: IRS rules

Real Work for Real Wages. If you want to save on taxes by hiring your children to work for your business, their work must be genuine and paid fairly. Your child must truly be working for your business. (You don’t want to draw IRS scrutiny by pretending your child worked for you when they didn’t.)

It's also important to select appropriate work that is legitimate for your business. For instance, making beds at home, which you may think of as a family chore for your child, wouldn’t be considered legitimate work for your business.

• Provide work that is beneficial, fitting, and recognized in your industry. It doesn't have to be elaborate.
• Tasks that your child might consider easy to do like adding data to a spreadsheet or posting to social media accounts can be useful for your business.

The work involved must be age-appropriate. If your child is skilled in a particular area, it might be helpful to have them help with tasks related to that skill.

• For instance, if your 11-year-old excels at math and loves numbers, they might review expense calculations or verify invoices.
• However, if your 8-year-old doesn’t know the medical field, it wouldn't make sense for them to review medical claims for you.

On the other hand, if your 7-year-old loves to push a Swiffer and wipe keyboards or monitors with a microfiber cloth, hiring them to handle those tasks for your business office could be age-appropriate.

(Keep in mind, however, that from a tax perspective, it could be difficult to justify a really young child doing office work.)

Reasonable Compensation. When hiring your children to work for your business, it is important to compensate them fairly. Doing so can also help reduce your tax liability, since you are essentially shifting some of your business income to your kids.

• Paying your child a wage similar to what you would pay a worker who performs similar services is recommended.
• If you’re unsure about a fair wage for certain work, consulting with colleagues or staffing agencies might help. Websites that list comparable salaries can be useful as well.

However, it is important not to overpay your child for the work they perform for your business.

For example, the 7-year-old who helps dust your office wouldn’t realistically make $30 an hour.

But that $30/hour rate might be the industry standard for your 15-year-old who designs necklaces for your online accessory business.

Claiming an unrealistic wage for the work your child performs for your business could raise a red flag with the IRS.

Different tax rules for different business types

When you hire your child to work for your business, the applicable taxes may vary depending on your business type. Regardless of age, however, payments to your child for work are subject to income tax withholding.

* If your child is under the age of 21 when working for your business that is a sole proprietroship or a partnership where each partner is a parent of the child, your child's pay woudn't be subject to Federal Uncemployment Tax (FUTA).

Note: If your business is a corporation, partnership (not as described above), or estate, payments to your child are subject to income tax withholding, Social Security, Medicare, and FUTA taxes, regardless of the child’s age.

Follow laws and document everything

As a parent hiring your child, you are an employer and so must follow employment and labor laws. According to the Department of Labor, “children are generally permitted to work for businesses entirely owned by their parents.”

But still pay attention to Federal and state child labor laws. For example, Federal child labor laws prohibit children under certain ages from working in certain occupations and all children from working in hazardous conditions.

From a tax standpoint, fill out the necessary forms like the W4 with proper Social Security numbers and EINs (Employer Identification Numbers). Issue a Form W2 to document your child's pay. Also, document your child’s work hours and include dates and detailed descriptions of tasks performed.

If your child is over 18 and you are treating them as an independent contractor, have a signed contract that outlines their work responsibilities and issue a 1099-NEC as required.

And, if you are unsure about IRS requirements for hiring your kid to work for your business, consult a trusted finance or tax professional.

Related

• Child Tax Credit: How Much Is It for 2026?
• What's the New Standard Deduction?
• Does Your Child Need to File a Tax Return?
• Test Your Knowledge: How Your Child's 529 Funds Could Jumpstart an IRA

If you want to help your children buy a home, there are several ways to go about it, ranging from family loans to outright gifts. This is especially pertinent to consider as lofty home prices, rising mortgage rates, and a tight inventory of homes for sale have shut many young buyers out of the housing market.

The median age of all home buyers in 2025 was 59, according to the National Association of Realtors, representing a jump from 2024's already high median of 56. Overall, this indicates that first-time home buyers are delaying their purchases. The typical first-time buyer was 40, an all-time high.

With that in mind, parents (and grandparents) of would-be home buyers are often interested in helping out. Their options include gifting a down payment, co-signing a mortgage, jointly owning a home, making a loan and buying a home outright for their children or grandchildren. Each of these avenues of financial support has its own perks and pitfalls.

1. Provide an intra-family loan

One option that could benefit both parties is an intra-family loan. You may be able to offer your child a lower interest rate than a conventional mortgage lender would while still earning a higher interest rate than you could earn from a savings account.

For example, if you provide your child with a mortgage at a 4.83% interest rate, you’ll earn almost four percentage points more than the 0.6% average yield for a bank savings account. Your child, meanwhile, will pay significantly less than the national average for a 30-year fixed-rate mortgage.

An intra-family loan works especially well for well-off individuals who can afford to give their children the money but prefer the financial discipline that comes with a loan, said Tim Burke, chief executive officer of National Family Mortgage, a family lending agency.

"For many parents, the motivation to lend money over gifting it is just about personal accountability,” he said. "Parents feel the responsibilities that come with homeownership, and the satisfaction that comes with meeting these responsibilities builds character."

That was the case for Mary and Terry Shaffer of Pittsburgh, who lent money to both of their children to buy homes in that city. "Our son and our daughter do not like things handed to them, although they deserve to be helped,” said Mary, 68. "They have worked hard, and they both had accumulated savings for their closing costs."

If parents need assurance that their child can afford the monthly payments, they should ask the child to get preapproved for a conventional mortgage, Burke said. However, that could be difficult for some children, especially if they're self-employed borrowers. Even if a self-employed individual’s debt-to-income ratio — the amount of debt you owe as a percentage of your monthly income — may support a loan, a single year in which income declines may cause a bank to reject the application.

If your child can't get preapproval, it comes down to your judgment. "If you think your family member is not going to repay you, then don’t go through the exercise of setting up a loan that isn’t going to work," Burke said.

Put the terms of the intra-family loan in writing so they're clear and it's an arm's-length transaction, said Brian Lamborne, senior director of advanced planning at Northwestern Mutual. Putting the terms of the loan in writing can also help you deal with instances in which your children are unable to make payments. For example, you can agree ahead of time that should your child suffer financial hardship, payments will be deferred for a certain period of time — perhaps six months or up to a year — and moved to the end of the loan.

The loan agreement should contemplate worst-case scenarios as well. For example, you may want to state the conditions under which the parents could foreclose on the property so they can sell it and pay off the loan.

It's also important to understand the tax implications for intra-family loans. Borrowers who itemize can only deduct interest on a loan secured by a mortgage if the mortgage has been properly recorded. In order to do that, families need to obtain a deed of trust and file it with the borrower's local government authority, such as the registrar of deeds or country clerk's office. A real estate attorney can help you draw up these documents.

If the loan exceeds $10,000, the IRS requires you to charge an interest rate equal to or above the Applicable Federal Rate (AFR), which the IRS publishes monthly. The interest must be reported as income on your tax return.

If you don't want to act as the loan servicer, you could use National Family Mortgage to set up, document and service the loan. It will email payment reminders and monthly statements, collect and credit payments, and issue year-end IRS 1098 and 1099-INT tax forms. The cost is a one-time fee of $1,175 to $1,875, depending on the size of the loan, and optional loan servicing starting at $20 per month.

2. Give a gift

For some families, the easiest solution is to give children enough money to make a down payment or buy a house outright. Gifting spares families the hassle of a loan and damage to their relationships if a loan can’t be repaid.

Mortgage lenders generally allow a relative to supply the entire down payment, but they will require a "gift letter" that provides the name of the giver, the amount of the gift and a statement that the giver doesn't expect to be repaid.

As is the case with a loan, it's important to understand the tax implications of this transaction. In 2026, you can give up to $19,000 per person to as many people as you'd like without having to file a gift tax return. Married couples can give up to $38,000 per person.

Any amount over the annual limit will reduce your exemption from the federal estate and gift tax. This isn't a problem for most families because the federal estate tax exclusion is $15 million for 2026 or $30 million for married couples.

In any event, parents or grandparents should only give a gift they can afford without jeopardizing their own financial security. "There are no loans when it comes to your own retirement," said Jennifer Weber, a CFP in Lake Success, N.Y. "So only help in ways that you can afford now and in the future."

3. Co-sign or co-borrow

If your child can't qualify for a mortgage based on their own income and credit record but can afford monthly payments, co-signing a mortgage is one way to help them buy a home. However, it can be risky.

A co-signer acts as a guarantor for the primary borrower, promising to assume responsibility for repayment if the primary borrower doesn’t pay as required. The lender will review your sources of income and your credit to ensure your income is high enough and your credit strong enough to qualify for a mortgage.

If your child falls behind on monthly payments, your own credit could suffer. Plus, co-signing for a mortgage will increase your own debt-to-income ratio, which could make it more difficult for you to borrow for your own purposes. Also, some lenders don’t allow co-signers.

In another arrangement, a co-borrower or joint applicant shares ownership of the loan and assumes responsibility for payments from the start. In general, you and your child combined must put down at least 20%, and your child must cover the first 5% of the down payment from their own funds.

Otherwise, the property may qualify as an investment, in which case you'll be charged a higher interest rate for the loan and be required to have more financial reserves. But if your child fails to pay the mortgage, property taxes or insurance on time, that could ding your credit history or result in a lien against the property.

One extra consideration

You should make sure to consider how any assistance could affect family relationships. Your children or their spouses may be anxious or uncomfortable about accepting financial help from parents or in-laws. Siblings feelings matter, too.

"If you have multiple children, spend some time upfront to understand how giving or loaning to one child might affect family dynamics," said Mitchell Kraus, a certified financial planner based in Santa Monica, Calif. "We’ve seen years of resentment coming from a small loan to one family member when it was not available to another."

Read more

• Is Your Will 'Fair'? Estate Planning Is About More Than Money
• How to Leave Different Amounts to Adult Children Without Causing a Rift
• The Real Cost of Funding Adult Children: Postponing Retirement

If asked what they want as a gift, your grandkids will probably say they'd like a toy or bicycle, but their adult selves might prefer a financial gift with a long-term payoff. What's the best way to do that?

"The answer depends on what you want those funds to be used for," says Todd Soltow, co-founder and retirement planner at Frontier Wealth Management in Houston.

Cold hard cash is always an option but hardly one that pays off long term, particularly when interest rates are too meager to keep pace with inflation.

Because of the temptation to spend it, cash also makes it difficult to teach the next generation good financial habits.

"Young people need to learn the value of a dollar, and that comes from earning it," says Wilson Coffman, president of Coffman Retirement Group in Huntsville, Alabama. "If you just hand it to them, that defeats the purpose."

Taking into account usefulness, potential returns and taxes, here are five better financial gifts to give.

The average cost to attend an in-state public university was $11,950 in 2025, while private universities averaged $45,000, according to The College Board.

Any contributions, such as those to a 529 college savings plan, will certainly be appreciated. Investments in the account grow tax-free, and all the money stays tax-free if it's spent for college.

For 2026, you can contribute up to $19,000 per year per grandchild or even prepay five years — $95,000 — at once. The gift amounts double for married couples.

Another college savings plan — a Coverdell ESA — lets you spend the money on primary and secondary schools, too.

The catch? The gift can only be $2,000 per year per grandchild, and to contribute, your adjusted gross income can't exceed $110,000 per year if you're single or $220,000 if you're married.

These accounts are meant for educational spending. If your grandchild doesn't go to college, the balance can be transferred to another family member. Otherwise, withdrawals of investment gains not used for education are taxed as income and hit with a 10% penalty (PDF).

Carlos Dias, founder of Dias Wealth in Orlando, Florida, says a Roth IRA is a great gift for a grandchild with earned income from a job, such as a paper route or babysitting.

You can give up to the amount the child earns per year, subject to the annual IRA limit ($7,500 for 2025). "If you can kick-start your grandchild's retirement now, they'll have their whole life to see that money grow."

These accounts are a good way to teach a newcomer to invest. Although the investment is in your grandchild's name, you control the custodial account until your grandchild turns 18 or 21, depending on your state.

In 2026, the first $1,350 of the child's investment gains are free of tax and don't need to be reported. The next $1,350 of gains are taxed at the child's marginal tax rate and require filing a return.

Any gains above $2,700 are taxed at the child’s parents’ marginal income tax rate under the kiddie tax rules — not the child’s lower rate.

Soltow prefers municipal bonds to the classic financial gift of EE savings bonds. Not only are interest rates higher for muni bonds, but payments are free of federal income tax and, in some cases, state and local taxes, too.

Be sure to look for creditworthy bond issuers. Investment-grade bonds should be at least BBB, with AAA the safest rating.

Collectibles such as gold coins might catch your grandchild's eye, but Dias warns: "My Dad was big into buying collectibles like rare coins. A lot of them turned out to only be worth what he paid for or less."

Plus, the capital gains tax rate on collectibles is 28%; the highest rate for long-term gains on other investments is 20%.

A better option: Buy your grandchildren gold exchange-traded funds or stocks in gold-mining companies to avoid the higher taxes of physical collectibles.

Question: My 15-year-old son is doing landscaping this summer for neighbors, and it looks like he’ll earn about $1,500. Is there a minimum age to contribute to a Roth IRA, and must he have a W-2?

If my son can open a Roth, would he be able to contribute up to the $7,500 annual limit?

Answer: There’s no minimum age to contribute to a Roth IRA. Your son simply needs earned income from a job or self-employment (interest, dividends or investment income don’t count). If he earns $1,500 this year, he can contribute up to $1,500. If he earns more than the annual limit, he can contribute up to the 2026 maximum of $7,500.

Oh, and he doesn’t need a W-2 or 1099 to contribute. Informal work like babysitting, mowing lawns or gig jobs qualifies as long as he can show proof of earnings.

Because he’s likely receiving money from a variety of neighbors, he should keep a log of how much he is paid and when.

“Parents should help their child document the work done and compensation received and the dates to provide to the IRS if needed,” says Maura Cassidy, former vice president of retirement for Fidelity, now retired.

"Keep copies of any checks he receives as payment," Cassidy said. "It also helps to track earnings on a spreadsheet or in a notebook that you keep with your tax files as proof that he earned income from a job."

Give him a head start with a custodial Roth IRA

The maximum amount your son can contribute to a Roth for the year is based on his earnings, but he doesn’t need to contribute himself. You can give him the money to contribute, or you can match his contributions.

Because he’s a minor, he’ll need a custodial Roth IRA, which can be opened and managed by an adult on his behalf. Fidelity, which has no minimum investment requirement, allows parents, grandparents, aunts, uncles or even family friends to open and manage an account for a minor.

Opening a custodial Roth IRA has never been simpler than it is right now in 2026. Brokers are making it accessible with zero annual fees and no (or very low) minimum deposits. Fidelity and Charles Schwab(pdf) both offer $0 minimums with no account or maintenance fees, while Vanguard allows minors to open a brokerage IRA with no minimum.

More families than ever are taking advantage of the custodial Roth IRA, giving teens a powerful head start on tax-free compounding on their hard-earned money.

Contributing to a Roth IRA

Contributing to a Roth IRA can give your child a huge head start on future savings. He will be able to withdraw the contributions at any age and for any reason without taxes or penalties. Plus, he can withdraw the earnings tax-free after age 59½.

For example, a 15-year-old who contributes the maximum $7,500 per year until age 50, then continues contributing $7,500 (or more with catch-up contributions later) could easily save well over $2.5 million by age 65, assuming a conservative 7% average annual return.

And, even if he doesn’t earn enough to contribute the full $7,500 in the early years, he’ll still amass a significant amount of money he can withdraw tax-free in retirement.

Benefits for teens

• Tax-free growth for 50+ years.
• Contributions (not earnings) can be withdrawn penalty-free anytime for college, a car or a first home.
• Opening a Roth IRA teaches financial responsibility and investing habits early.
• No income limits for contributions when the teen’s own income is low.
• If your teen keeps contributing into their 20s and 30s, the numbers become life-changing — potentially $2 to $4 million or higher with continued growth according to US Bank.

How to open a Roth IRA

The process of opening a Roth IRA for your 15-year-old son (or any other teenager) is surprisingly easy.

Confirm earned income — This includes W-2 wages or self-employment income from babysitting, dog walking, lawn care, etc. Allowances and gifts don’t count.

Open a custodial Roth IRA — You, as your son's parent or guardian, will open and manage the account until he reaches the age of majority — the legal age when an individual is considered an adult and gains full rights and responsibilities under the law — usually 18–21, depending on the state.

Fund the account — Transfer money to the account based on the teen’s earnings.

Invest wisely — Choose low-cost index funds or target-date funds. The real magic happens through consistent, long-term investing, not necessarily stock picking.

Give your teen a big head start with a Custodial Roth IRA

Contributing to a Roth IRA can give your child a massive head start on building wealth, with bonuses that can't be ignored — they can withdraw their contributions at any time, for any reason, completely tax-free and penalty-free.

Then, once your child reaches age 59½ and the account has been open for at least five years, those earnings can also be withdrawn entirely tax-free. Open a Roth IRA for your child today and set them up for lifelong financial success. You’ll both be glad you did.

Related content

• How to Open a Custodial Roth IRA: A Guide for Grandparents
• Roth IRAs: What They Are and How They Work
• How — and Why — to Give to Your Grandkids
• Gift Like Buffett: Three Financial Gifts for Kids and Grandkids