Welcome Back, Future Funder!

Are you unsure of how to set your kids up for the best possible financial future?

There are so many different types of investment accounts out there you can get for your children.

From college savings to Roth IRAs, the options for your kids can get confusing—let alone for figuring out your own retirement on top of that.

But in reality, it is not that complicated. The different account options have clear pros and cons you can choose from.

And more importantly, the biggest decision you can make is not what type of account to get, but the choice to work hard and invest something into your child’s financial future. That’s why you’re here, and it’s why we’re here with information to help you.

So, inside today’s issue:

✅ Ideas for how to make extra cash to invest on your child’s behalf
✅ Why securing your OWN retirement is the best way to help your kid
✅The different types of investment accounts & their pros + cons

Let’s get cracking and set your kids up for success.

Bon a petit! 🧑‍🍳

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🍽️ Main Course: To Invest, You Must Earn

Let’s talk about how to even find money (or make enough money) to save or invest for your child. It’s tough in this economy right now—the stock market is printing new highs weekly, but everyday expenses just seem to keep going up and up. The following list of ideas isn’t extensive, but it includes some creative ways to save or make more money for your child’s future. Let us know if you want us to dedicate a whole newsletter to just this topic!

1. Start a side hustle

This option has the added potential to become your MAIN hustle if it goes well enough. The key here is to start with what you have and to make sure it’s manageable. For example, the type of idea we’d suggest looking into would be starting a lawn care business if you have lawn care equipment—not investing in years of beauty care school because you’ve always had a dream to be an esthetician. There’s a place for dreams, no doubt, but the name of the game here is making as much money as possible and spending as little as you can.

Ideas:

• Data Annotation: great if you’re good with expressing yourself in written word and at thinking analytically.

• Odd jobs: there are apps for this, or you can list your services on craigslist and Facebook Marketplace.

• Buying and Reselling: could be clothes from thrift stores, yard equipment, or any type of collectible you have knowledge about.

• DoorDash or UberEats Delivery: all you need is a car and some free time throughout the week.

2. Cut your costs

Do you eat out? Cut down on your restaurant visits. Those bills rack up quickly. Does your family mainly shop at the grocery store, but still buy premade food, frozen meals, or pricey snacks? Cooking your own food is the true way to maximize savings (and health!).

3. Seek a promotion (or find a higher-paying job)

If you want to make more, translate that drive into higher output and a standard of excellence in your job—and see if you can gun for a promotion (or at least a raise). Are you already putting in that level of work in your job, but feel like it’s not being recognized? You could seriously consider looking for a higher-paying job in the same field, or at least one with greater room for growth. We’re serious—this is the kind of mindset you need to adopt if you want to do everything you can to set your family up well.

💡 The #1 Secret to Setting Your Kids Up Well

So, contrary to popular belief… the first key/step/type of investment is actually to invest in yourself.

Seriously! It’s crucial that your retirement and needs are taken care of first—because you do not want to become a burden to your children when you’re older. Essentially, it won’t matter if you’ve set them up with a great investment account if you’re going to be scraping by for the final 30 years of your life. 

It might seem like kindness to prioritize your child’s future and retirement, but it’s not—it’s irresponsible. 

It might seem selfish to prioritize your own retirement first, but it’s not—it’s just smart.

Set up your own IRA if you haven’t. Max out your 401(k) contributions with matching from your employer if they do that. Start investing your money in smart ways.

🤸 4 Different Types of Investment Accounts for Your Kids

Now let’s get into the different types of accounts you can get for your children’s financial futures.

Individual Trust Accounts (AKA “Trump Accounts”)

Not that these accounts won’t be available until July 2026—but we want to educate you about them beforehand so you’re ready to jump on the opportunity immediately if you want to.

The rundown: A Trump Account is a special tax-advantaged account from the US government for children. Any parent will be able to get one of these for each of his or her children—and the kicker is that the government will seed that account with $1,000 to start off your child’s savings journey, no strings attached.

The other big deal about these accounts is that everything you put into them for your child will be able to grow “tax-exempt” until your child turns 18.

Also, you as the parents (and also your family members) can contribute up to $5,000 to the account each year for your child. Some employers (like Dell, Goldman Sachs, and Robinhood) will match the government’s contribution of $1,000 to the account. Employer contributions cap out at $2,500 per year (and they count as part of the annual $5,000 total contribution limit).

Here are the terms and conditions you need to know about Trump accounts:

• Your child can’t withdraw any money from the account until he or she is 18.

• These accounts can only hold low-cost US index funds until your child reaches the age of 18.

• Contributions are taxed on the front end, like with Roth IRAs. Unlike with Roth IRAs, your children will have to pay capital gains taxes on withdrawals (which they can make after they’re 59 ½ years old).

• Once your child turns 18, the account is treated like a normal Roth IRA.

• NOTE: any contribution made by a parent will not be taxed when withdrawn from the account.

Source: kiplinger.com

Custodial Brokerage Account (UTMA/UGMA)

Custodial brokerage accounts are parent- or guardian-managed accounts where you can put money into stocks, ETFs, or mutual funds. Like the Trump accounts, Custodial Brokerage Accounts offer a way for you to begin investing for your child immediately—no need for your kid to have a job.

• The pros: 

  • Unlike Trump accounts, you can put various assets into UTMA accounts: stocks, ETFs, bonds, mutual funds, and sometimes even crypto, depending.

  • No annual contribution limit—you can put in as much money as you want each year.

• The cons:

  • UTMA accounts are not tax advantaged like Trump accounts or Roth IRAs. You have to pay a yearly tax on them, whereas Trump accounts and Roth IRAs only face a capital gains tax on withdrawal.

  • No $1,000 seed investment from the government.

  • No employer matching.

Overall, this account has higher potential than a Trump account, but also higher cost of maintenance (in the form of yearly taxes).

529 (College Savings Plan)

A 529 is specifically a tax-advantaged savings account for the purpose of helping your child pay for many types of schooling. 

When you open one, you choose from a portfolio of mutual funds to invest in for your child (you cannot choose what specific ETFs or stocks you invest in with a 529). You can contribute as much as $95,000 a year to the account ($190,000 per married couple).

But before you save for their college education—make sure you’re certain you want them to go to college. The statistics recently are rather bleak regarding the employment status of college grads vs. non-college grads:

• The unemployment rate among college grads is now 6.6%, which is higher than the average national unemployment rate. That’s a huge deal. 

• More concerning, young male college grads and non-college grads have the same unemployment rate.

An aside about college: 

Are we trying to convince you to think college is a bad idea in every regard? Absolutely not, but we want to make this clear: if your children want to go to college, it should probably only be for specific career choices that they want to go into, not for just enjoying themselves and figuring it out on the way (unless they or you have the money for them to go to college, have fun, and possibly be unemployed for a long time afterward). 

And even if your child has college paid for and taken care of, it’s still worth asking some good questions about what his or her goal is with it—because even if your child walks out of college debt-free, if he or she can’t get a job, that’s 4 years of not earning income and no wealth building.

And a disclaimer: We don’t think you should put a ton of pressure on your child to be financially successful. We don’t think you should be controlling over their finances as a young adult deciding about college. But we do think that as a parent, you have a unique position and responsibility to explain why college may or may not be a good decision for your kids—and to also train them up and instill a solid work ethic in them so they can discern whether a college degree would actually help them achieve their goals.

A 529 Isn’t the End of the Road

Now, if you start your child off with a 529 savings account, but they don’t use all of it for college or they choose not to go to college, you have the excellent option of rolling the 529 into a Roth IRA. This only works for up to $35,000 of funds from the 529, but that’s still a solid head start for a Roth IRA, no?

Custodial Roth IRA

IRAs are the classic retirement account (IRA stands for individual retirement account). Unfortunately, you can’t start one unless you have income—so your child will have to have a job of some sort before you can open one of these for him or her.

Once you’ve opened one, though, your kid can invest in all kinds of assets, like stocks, bonds, mutual funds, ETFs, and CDs.

What’s great is that although Roth IRA contributions are taxed on the front end (when you put the money in), the money grows tax-free after that point; qualified withdrawals later in your child’s life are 100% tax-free!

Another great thing about Roth IRAs is that contributions can be withdrawn at any time without any tax penalties at all (unlike regular IRAs). Earnings withdrawals are taxed at 10% until age 59 ½, when they also become tax-free.

The contribution limit for Roth IRAs is the smaller of these two numbers:

• $7,000 (for 2025), or

• The child’s earned income for that year.

Note: You can be the one to put the money in; it doesn’t have to be your child, and the money that goes in doesn’t have to be the literal money he or she earned. For example, your child could earn $4,000 from mowing lawns, but spend it all on video games—but you could still contribute $4,000 of your dollars to his or her custodial Roth IRA.

Bottom Line

If this all feels overwhelming, just remember this: any form of investing is going to set your child up really well. It’s not as important to choose the “perfect” option. And if you’re able to, it could be good to choose multiple options—but if you can’t, it’s going to be alright. Even if you’re only able to secure your own retirement, and not to invest for your child, you’re at least setting yourself up to be able to better support him or her in the future from your own financial situation.

Cheers to getting 1% better each week! 🥂

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👂 Are you investing in your child’s future?

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Just hit reply and share.

Thanks for reading,
—Your friends @ Future Funders 🍽️

P.S. Forward this to a friend who’s intimidated by financial acronyms like IRA. 😂