Women's Money Wisdom

Episode 322: The Truth About "Trump Accounts" and the Smarter Ways to Save for College with Ann Garcia, CFP®

• Melissa Joy, CFP® • Episode 322

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A new type of savings account has entered the conversation, and if you have young children, you need to know about it. Melissa Joy, CFP® sits down with Ann Garcia, CFP®, returning guest, college funding expert, and author of How to Pay for College, to break down the newly created Trump accounts. Also known as 530A accounts, these IRA-style vehicles are generating a lot of buzz, and Ann helps separate the hype from the reality so families can make smart decisions about whether and how to use them. 

The conversation goes beyond the new accounts. Melissa and Ann also respond to a widely shared Wall Street Journal article about a financial planning expert who is skipping 529s for his own kids, and explain why that strategy works for a very small slice of the population but could leave most families short. They close with practical wisdom on how to talk to your kids about money at every age, and why starting simple is always better than waiting until you have the perfect lesson plan. 

What You’ll Learn 

  • What Trump accounts (530A accounts) are and how they work 
  • How to open an account and claim the free government funding your child may be entitled to 
  • Why Trump accounts are generally not the best vehicle for college savings, and what to use instead 
  • How the kiddie tax affects withdrawals and why it matters for your planning 
  • The difference between how Trump accounts and 529s are treated on the FAFSA 
  • The Wall Street Journal article making the case to skip 529s, and why Ann and Melissa push back 
  • Why the 529 remains one of the most flexible and tax-efficient tools for college savings 
  • When and how to help your young adult children get their first Roth IRA open 
  • Why automating your financial life is the antidote to always being in triage mode 

Connect with Ann Garcia, CFP® 

Website: howtopayforcollege.com

Book: How to Pay for College

The Mather Group: themathergroup.com

The previous presentation by PEARL PLANNING was intended for general information purposes only.  No portion of the presentation serves as the receipt of, or as a substitute for, personalized investment advice from PEARL PLANNING or any other investment professional of your choosing. Different types of investments involve varying degrees of risk, and it should not be assumed that future performance of any specific investment or investment strategy, or any non-investment related or planning services, discussion or content, will be profitable, be suitable for your portfolio or individual situation, or prove successful. Neither PEARL PLANNING’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. PEARL PLANNING is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. No portion of the video content should be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. A copy of PEARL PLANNING’s current written disclosure Brochure discussing our advisory services and fees is available upon request or at https...

Welcome And Guest Introduction

SPEAKER_01

Welcome to the Women's Money Wisdom Podcast. I'm Melissa Joy, a certified financial planner and the founder of Perl Planning. My goal is to help you streamline and organize your finances, navigate big money decisions with confidence, and be strategic in order to grow your wealth. As a woman, you work hard for your money, and I'm here to help you make the most of it. Now let's get into the show. And today I'm thrilled to be joined by a fellow certified financial planner who might be our most frequent guest, Ann Garcia. Anne is an expert on how to pay for college for your kids. In fact, that's the name of her book, How to Pay for College. And she's also a practicing certified financial planner who advises families on all sorts of things, including paying for college. Welcome back to the podcast, Anne.

SPEAKER_02

Thank you so much for having me back.

SPEAKER_01

Well, I just appreciate the excuse to catch up with you. We're friends as well. But there's a lot of new news on the landscape when it comes to ways to save for college. And also we have this brand new account type, um, the Trump account. And so I thought it would be great because those Trump accounts actually are not yet investable, but it near to be investable. And so I thought we could bring in our resident expert to talk about everything you need to know about Trump accounts and then a little bit more about the college savings landscape nowadays. So here you are. Thanks for coming.

SPEAKER_02

My pleasure.

SPEAKER_01

Okay. So you already have established yourself for our repeat listeners as our expert when it comes to college. Now we have this new account type. Can you tell us what it is and what it means to the best of your knowledge thus far?

SPEAKER_02

Yeah, and these are a little new. So it's likely that some of the details will change over time. But the Trump account is um, it's it's it's what's called a 530A account. And that is a form of IRA that you can open for a child who doesn't have any earnings. So for a typical IRA, in order to make contributions, you have to have earnings. But for these, anyone under age 18 can um can receive contributions. The way the accounts work is um families can contribute. And then there are also um some government and foundation contributions. So any child born in 2025 or 2026 who opens the account will get$1,000 deposited on their behalf into the account. In addition, um the the Dells have committed to contributing$250 to every account for a child who lives in a child 10 and under who lives in a zip code where the median family household income is uh$75,000 or less.

SPEAKER_01

And then there have been some other intent to give. So there's maybe over time going to be some money that's there on the table if you administratively can pull it together to get the account open. Do the accounts automatically get funded if the parents don't establish the account?

Free Money And How To Open

SPEAKER_02

You have to establish the account in order for it to get funded. But if you establish the account, you will automatically get all the funding that you're entitled to. So once you've established the account, you do not have to go and request the thousand dollars that the federal government is contributing or the$250 that the Dells are contributing. You just you just have to have the account open. And it's pretty um, it's pretty straightforward to open it. I know when this when this runs, it'll be past tax season. You you can file the form when you file your taxes. And in fact, when you did your taxes, if you had an eligible child, chances are good that your CPA asked you to complete the form. Um, but it's just IRS form 4547 that you file in order to to open the account.

SPEAKER_01

And I know um in some parts of our local county, you there is eligibility for the Dell contribution. Is there an easy way to look that up?

SPEAKER_02

You can just look up household income um for for your zip code and um and and there's a census webpage that it will take you to that tells you that. I mean, the majority of households are going to be eligible. So this has nothing to do with your own family's income. It has to do with your zip code's average income.

SPEAKER_01

Got it. And so I assume that free money that would also would otherwise not be there is at least to me a good thing. Absolutely. How about for you?

SPEAKER_02

Yeah, absolutely. I think you should take all the free money that you're eligible, that you're eligible for. Now, these accounts, there's some unique features to them. So um they are technically they are technically an IRA, which means that they are for retirement. What happens is you can fund it up until the child is 18. When they turn 18, it just converts to a traditional IRA. Got it. Um and at that point, you know, a a traditional IRA, you can you can take contributions out when you're 59 and a half or older. However, there are two exceptions for these accounts. Um, the first exception is to pay for college, and the second exception is um purchase of a first home. Got it.

Why It Fails As College Savings

SPEAKER_01

So these kids, babies today, are going to have automatically have funds that are going to be theirs that they can do what they want with, but in order to avoid a penalty, they will need to use it in, you know, contemporary sense of an 18 to 22-year-old, either to pay for college or to buy a house. Otherwise, it's kind of a retirement fund with a otherwise retirement fund.

SPEAKER_02

Yeah. Otherwise, it's a retirement fund. And now the thing to remember about these accounts, and this comes into play when you think of, do I put my own money into that? Because that's a different question from do I open the account? You know, open the account, take the free money that you're entitled to. When it comes to putting your own money in, it's really important to think about what you're actually going to use this for. Now, one of the one of the challenges with using this as a college savings account is that a child who's a dependent on your tax return is going to be subject to the kitty tax if they take money out of this account. Barring changes in tax in tax legislation. So this is pre-tax money. And um and and dependents are not allowed to have um too much unearned income. Otherwise, if they're above a certain threshold, which is about$2,500, um, then that money gets taxed at their parents' rate. So that makes it not such a great account for college savings.

SPEAKER_01

And just for reference, I think that kitty tax also applies for UTMAs and UGMAs if there's enough taxable events, which is an entirely additional conversation, but just something to keep in the back of your mind.

SPEAKER_02

Yeah. Yeah. So this is not the account that you want to load up to pay for college. Two reasons for that. One being the kitty tax, with the other being that it's taxable income when the person takes it out, even if they're not subject to the kitty tax versus a 529, which is tax-free. So, you know, that$1,000 initial deposit is probably going to be worth, depending on how it's invested, you know, about$3,500 when the kid is college age. Now, if they take that out and it's taxed at your rate, you might have$2,500 ultimately to spend for college. If you put$1,000 into your$529 and it's now through$3,500, you have$3,500 available to pay for college.

SPEAKER_01

Got it. For the FAFSA funding rules as they are stated today, would this money be considered the same in terms of the ability to fund college when it's in the kids' name as a$529 asset?

SPEAKER_02

No, because it's a retirement account, it wouldn't count as an asset, but when you take it out, it counts as income. Got it. And then what are the contribution limits? Income has much more significance on the FAFSA than our assets. Understood.

SPEAKER_01

So what are the contribution limits then? We've said what you may receive, um, not from family money, but um what additional limitations are there if you were saving in all of the other places, which we're gonna talk about in a minute, like where do we put this on the ranking of where you want to put money?

Limits, FAFSA, And Investing Rules

SPEAKER_02

Um so you can contribute$5,000 a year to these accounts. Now, this is not a deductible contribution. It's an after-tax contribution that then goes into a pre-tax account. So all that means is that when you take the money out, the growth in it is subject to tax, whereas your original contributions aren't taxable. The$1,000 you get from the government, any foundation money that you get, that's all pre-tax, and that is 100% taxable to you.

SPEAKER_01

And one similarity I see between this program or just an echo in 529s, each state kind of deems certain financial institutions to be their guy or girl for um, you know, the financial institution that they'll set up their 529 accounts. It's not only always only one. Oftentimes there's an advisor sold 529, which compensates an financial advisor as well as one that's direct sold. Um in the federal Trump accounts, um, there is there are certain financial institutions that will receive the right to offer these accounts. Is that correct?

SPEAKER_02

That is correct. Um, now the accounts don't get opened until July 4th of this year. So I have a feeling there's gonna be a lot of different figuring out. You know, if we told you who was doing it now, it might be a completely different list by then.

SPEAKER_01

Yes. So certain um certain institutions have initially been named recently, but this is an evolving um process and story. And um similar to, you know, like uses of 529s, the ability to um, I think of the ability to convert 529s to um Roth. It's sometimes some of the rules and how things work are a figure out as you go, because it is a new program. And so oftentimes there will be, you know, kind of new interpretations, new guidance, et cetera. Um, and so you need to sometimes be comfortable with an answer, is that is, you know, we don't know yet.

SPEAKER_02

Yeah. The you know, the important thing is that you know, the main investing rules in this is that it has to the the accounts can only use low-cost, broadly diversified funds. So you can't invest in crypto, you can't invest in alt, you can't invest in it's gonna be like a 401k or a 529 where there is a set investment menu. And we like that, I think. I think simplicity is really a virtue in financial things.

When To Contribute Your Own Money

SPEAKER_01

So I'm sure because you are the college financial expert and thus also, you know, like money and kids investment accounts, um, you're getting asked, what do you think about these accounts? So, what are some of the bullet points of, you know, kind of how you're thinking about the accounts um and how you're telling other people who may have children eligible for these accounts to think of them?

SPEAKER_02

Yeah. Um, so I think a couple of things. One is take all the free money that you're entitled to, like we were saying before. Free money is free money. If you, if your child was eligible for the thousand dollar initial deposit and they left it there until they retired, you know, when they're 65, that's gonna be something like$80,000 to$100,000 that they'll that they'll have if they just left it alone and let it grow. You know, if they're gonna buy a house when they're 30, maybe it's, you know, maybe it's$15,000, um, maybe it's$10,000. It's not gonna be a significant amount of money for college. And again, as a college student, there are limitations in in the withdrawals. But, you know, this is money that can grow to a meaningful number if it's just left alone and if all you do is take the is take the free money. When it comes to your own money, in most cases, this is not going to be the best place to put it. You know, if you're thinking about money for college, a 529 is a much better place to put this money because that growth is tax-free and the withdrawal is tax-free. So you'll simply have more money if you um if you put it in a 529. And most of us live in states where if we have state income tax, we're eligible for a state tax benefit for the contribution. So that makes a contribution to a 529 much more valuable for college purposes than a contribution to a Trump account.

The Wall Street Journal Roth Hack

SPEAKER_01

Got it. And then, you know, there are I we shared um a couple messages when now there's gonna be articles coming about out about strategy, which I think is great. Um, and I've gotten questions about the Trump accounts as well. Um, but there was one article that really caught my attention because the headline is just phenomenal. Um, it was published by the Wall Street Journal. I'll try to put a gifted link into the show notes so that you can read the article. Um, but I'm reading the title, The Hack That Turns Trump Accounts into Multimillion Dollar Tax-Free Nesteggs. And I'm just like, wow, that sounds appealing. Um, tell me more. So we both read the article. What are your thoughts about um, you know, this is basically saying you should really consider just jamming more money in there because these this you can kind of supercharge this type of account. Tell me what you think.

SPEAKER_02

Right. And so just the summary of the article is this if you contributed the$5,000 to this account every year until your child turns 18, and then and then when they turn 24 and are no longer subject to the kitty tax, you convert that to a Roth IRA. You have money somewhere else to pay for the taxes, which I think in the article they estimated would be around$40,000 to do this Roth conversion. Now the child has this gigantic Roth IRA that's gonna grow tax-free until they retire and they'll have$3 million in a Roth IRA when they retire, which that sounds phenomenal, doesn't it? Sounds good to me. So let's think this through though, because if you're going to be doing that, this assumes that you're already maxing out retirement, that you're already funding college somewhere else. So so this is something, this is a strategy that works for a family that maybe is saving a hundred thousand dollars a year. Right? Because you've got you're definitely going to a higher tax bracket family retirement account.

SPEAKER_01

Yeah.

SPEAKER_02

Um, and so, and so a you know, a couple things to think about. Um, one is that family, let's say you have two parents who are maxing out retirement every year for their entire careers. Their 401ks alone are going to be worth somewhere in the neighborhood of four to six million dollars when they retire each. So they already have, you know, somewhere between eight and twelve, let's just say for the sake of easy math,$10 million of retirement assets. That means that it's highly likely that they have a surplus that this child is going to inherit somewhere around the time when they retire. So is that$3 million Roth IRA when they retire the most meaningful way that you can build wealth for them? Because you do have alternatives to um to the Trump accounts. You know, you could fund a UTMA account for the child. You get that same growth. You know, you're if you're doing$5,000 a year into a UTMA account, when the child's 24, 28, 30, if they wanted to buy a house, all that money is available to them then. If they wanted to take time off when they have kids, that money is available to supplement their income. That money can also be set aside for the long term if they choose to do so. You can also, as you know, as part of that strategy, as soon as they start working, instead of funding the UTMA, then you start funding the Roth IRA. And then you start building up those Roth assets at an early age where they're where they can compound and grow for decades at a time. Um, any of these strategies don't involve paying$40,000 in taxes when they're 24 to convert these assets into Roth. And they give the child a far higher level of flexibility with what they do, with what they do with that money. So I think when you when you're thinking about, okay, I want to save for long term for my child, think about the points in their life when that money is going to be most meaningful. What are the things that you most want to help them do? Do you want them to have$3 million at a time when you're not going to be around to enjoy it with them, most likely, and where they're probably going to be receiving other assets from you? Or do you want them to have meaningful amounts of money over the course of their adulthood that can be used for a variety of purposes or set aside for retirement?

SPEAKER_01

I love that analysis. And I think obviously there's a level of complexity where, you know, just eat each point of optionality along the way, I'm thinking, okay, if you're gifting to your kids otherwise, there is a limitation on how much you can gift without exceeding many of these strategies. And this one in particular is definitely most likely set up for families in um, you know, the at least the top 5% in assets or income for the typical American. And so every great idea has a place, I think. Um, and also there would be some serious considerations about alternative strategies in some cases. And also, beauty is in the eye of the beholder. So some people may absolutely love these Trump accounts. Um, and for others, there may be a preference for different strategies.

SPEAKER_02

Yeah. But I mean, one of the things to think about with the Trump accounts is they will generate future tax revenue. And so you don't get a tax savings now. Do you want to create a tax liability for your child in the future?

The Case Against Skipping 529s

SPEAKER_01

Which is also something to consider because you know, you have the congressional budget office whenever you're doing analysis of any sort of um budget-implemented policy. And so that had to be a factor and consideration in how the accounts were set up. Absolutely. Okay, so there's also been another attention-grabbing headline if you're a nerd on finance like me. Um, the other one that we've recently people in our world talk about this all the time, right? Yeah. Is um a recent article, which I'll also try to have a gift link. It was published March 31st in the Wall Street Journal. Um, the financial planning expert who's boycotting 529s for his kids. And um, it features conversations about David Blanchette and his personal financial strategies for himself and his kids. He's a well-known financial planning expert who I have um always found to be informative when it comes to, you know, planning strategies. I think he really knows what he's doing. Um, but I have some strong opinions about this article in particular. Did you read the article? I did, yeah. So so he's basically laying out like, hey, I want optionality and I don't, I'm not sure if we'll need um 529 savings. Um, and we also may choose to invest in my wife's um uh entrepreneurial um veterinary practice. Um, I just want to have choices as to where I put my money. Um, and so I'm not saving in 529s. And um, even though I um know what they are, and um I'm a financial planning expert, which is great point of view. Um and then it compares with his brother, who um is saving in 529s, and I think it's a great read. Yeah.

SPEAKER_02

Um I think stuff like this, it's really helpful for how you think about what you're doing with your with your money. It's not necessarily what you want to do with your money. Because to me, there was a giant red flag in that article, and that was where he talked about we might use it for my wife's veterinary practice. Yeah. Well, so let's say you do what's left for college. You know, how do you explain to your kids, well, sorry, we don't have college money, but mom's got a great business over here.

SPEAKER_01

Well, I do think Like, hey, if you have the philosophy that we some families I meet with, and it is not my job to change their mind necessarily. It's my job to be inquisitive. Um, some families absolutely say we had to um sweat equity is what uh got us through school. We did take out student loans, and philosophically, I'm opposed to planning to pay for my kids' school. And sometimes there's two members of a household, two financial decision makers with differing views on how much you should pay for college. That is a really important conversation to have up front. So not everybody is um gonna have the same philosophy. Um, I think both of us have a philosophy that is like if you have the opportunity to prepare to pay, then why not plan? Um, but the thing that stuck out to me too is like I would give that advice with a huge grain of salt because David has all of the tools to assess the risks of putting money into different pools and the optionality that and he got a or has a higher probability of um it's more probable that if he intends to set aside money elsewhere, that that money ends up being set aside elsewhere versus the average American, where if you don't intentionally make the time and space to save for college, when that bill comes up, you do not have room in your household budget to pay for it. So I just like a retirement account, if you don't start, you know, saving early. Um, I get why if he came into my office and said, This is my plan and this is why, I would be like, you do you because you have you know the cost benefit analysis and we might, you know, discuss some options.

SPEAKER_02

Is along the way to make sure that that portion that's supposed to be for college remains remains there and accessible to your kids.

SPEAKER_01

Yeah. And if you're working with a financial planner, they are in all likelihood um uh showing you in software a future liability for your intention to pay for college. Um and um, you know, that they are having that conversation along the way if you're not preparing for it. But I think for the typical American or even perhaps the typical Wall Street Journal reader reader, there is not nearly as much probability that you would end up having the pools of money that you anticipate you would have to figure it out later. And so that is a huge gap in terms of the typical investor's behavior versus someone who is um so steeped in the rigors of financial planning and technical financial analysis.

SPEAKER_02

Absolutely. And I would say a couple of things to that too. One is that I have never met a parent of an 18-year-old who regretted having money in a 529. Same. And it's very who regretted not having money in 529.

SPEAKER_01

It's very flexible. Like there are a lot of options for you. Of course, the money is is typically intended for college, but it actually has its own great estate planning considerations and generational wealth transfer um options. And it's it's actually not um unlike if you know the kid just ran away and never said hi again, it's not like you could didn't have options to kind of claw that money back. What does it cost?

SPEAKER_02

But yeah. Well, um, you know, a couple of other things about that. One is almost 70% of Americans go on to some form of formal schooling after high school. And so if you are in the cohort of Americans that has the capacity to save for college, your kids' odds of going to college are even higher than 70%. Because once you, you know, once you slice and dice into people who have gone to college, people who have pursued graduate degrees, each of those, you know, you're you're gradually stepping up the chain of likelihood that your child does have some form of formal schooling after high school. The other thing is to not do it right at the start, where you get the biggest benefit out of that tax-free growth, is you know, kind of shooting yourself in the foot. I mean, the simple fact is tax-free savings like a 529 means you have more money available when the time comes to spend it than if you put it in a taxable account.

Automate Savings To Beat Triage

SPEAKER_01

So true. So, I mean, we've discussed in previous episodes, I think we both have a bias where um uh in our world with our clients, we've seen good outcomes when it came to 529 savings to assist with paying for college. And not every family can start to make, you know, five to ten thousand dollar contributions when their kids are in diapers, because the cost of childcare is pretty much like approaching the cost of higher ed. Um but, or and um I think it's kind of um the articles that we're referencing are speaking to a very small percentage of the general population, even a small percentage of Wall Street journal readership. Um, and so you need to take everything with a grain of salt. And as always, um, personalized and advice, which includes, you know, in um conversations about your perspectives and your family values, as well as your personal financial situation, is always um more capable of tailoring to your needs than a general article from a financial expert.

SPEAKER_02

I think too, you know, when it comes to finance, one of the best pieces of financial advice is from Morgan Housel in The Psychology of Money. And his advice was the best investment strategy is shut up and wait. So, you know, put your money in the account, leave it there and let it and and let it grow. And 529s are a great shut up and wait tool for investing.

SPEAKER_01

In fact, they were built to have very low um transactions, few transactions. Initially, it was only one a year. And um they they do offer that like just like fix-in, forget it recipe in many cases.

SPEAKER_02

Um I mean, you and I are both parents, and we've been through this before. You know, when you have a so much of your life as a family is in triage mode, right? There's the Science Fair project, and there's the this, and there's somebody who needs physical therapy, and then we got braces, and we got, you know, there's just always something. Life is constantly in triage mode. And finances oftentimes don't reach that triage level until something happens that they that they need to be. So to me, the really one of the most important things that you can do for your long-term and near-term financial security is automate as much of your financial life as possible. That means automate your bill pay, automate your savings, you know, automate your 401k contributions, your 529 contributions, and all of that stuff so that that doesn't get into triage mode.

SPEAKER_01

Absolutely. In fact, it's the antidote to triage mode. And because um, I'm sure you're the same way we're working with people who are peers who are in that messy money middle where you're caring for your parents' situation. Your kids have um maybe maybe they don't need as much um TLC day to day, but they're when a kid has an issue, it's a bigger issue or perhaps more costly. Um then, you know, it the more you simplify and have good um financial hygiene, for lack of a better word, the easier it is to create space and time for the complexity where it presents itself in your life um in this stage of life.

SPEAKER_02

Yeah. That being said, you know, to your original point, pick something that works for you and just do it. Absolutely. It's not a 529. Maybe it is a brokerage account, but make sure you've got that monthly contribution set up so that that account, so that that account grows. Um Yeah, I have no same thing.

Talk College Budget With Kids

SPEAKER_01

You know, just make sure I have no issues with David's strategy. I just I I I definitely would encourage people to, I would say, oh, that's interesting. And I get that for you, but I I wouldn't um publish a book with that as a singular strategy because of some other behavioral outcomes. Is there is there anything else that people that's evolving or changing? I mean, I know there's so much, but any high-level bullet points that you think people should be aware of when it comes to paying for college and um and you know, finances for emerging adults?

SPEAKER_02

Yeah. So I would say, you know, on on the paying for college front, um, the most important financial thing you'll do for college is not financial at all. It's talking with your kids about your expectations and your budget for for college. Um, and doing that at an early enough age where you can be the one who's framing their thinking about it as opposed to their friends framing their thinking about it. Or Instagram or Insta TikTok or any of those places because college is available at every price point out there. There are great outcomes to be had at every price point out there. Um, where families get into trouble is when the kids take on the narrative themselves and and the parents don't get out in in front of that. So I would say that my number one bullet point for um for people thinking about thinking about college. I think, you know, for young adults who are just getting started. I mean, when we're talking about, say people, so your kids' age, you know, middle school, high school, I I think, you know, I think one of the one of the big stumbling points that we have in talking about money for with our kids is thinking that either A, we have to teach them some grand lesson about investing, or B, thinking that we have to share information that we think is is private. You know, you don't need to tell your kids your salary. You don't need to tell your kids the difference between ETFs and mutual funds. What's really helpful, you know, in terms of conversation, you know, money conversations to get started with is talking about what you spend money on and why. You know, we spend money on family vacations because we value that time we have together away from the pressures of our day-to-day life. I love it. And as a result, we don't spend money on these other things because that's our because that's our focus. And that's and that's important to us. Um, so you know, just talking talking about money from a non-defensive, here's, you know, here are things I value that money helps me, helps me get to, I think, you know, takes a lot of the edge off of, you know, off of having having those conversations. As your kids get older, so yours are high school, middle school, mine are early, early career, you know, making sure that they automate those really important financial tasks, you know, getting set up with their 401k when they start a job, um, contributing to a Roth IRA, any of those things that you can that you can help them with are great to do. And in fact, a great thing is to open that Roth IRA when they're still in high school and get their first summer job and get some money into it so that when they become an adult, that account's already there. And it's just a matter of helping them get the money into it as opposed to helping them actually get it open.

SPEAKER_01

Yep. My son has um had a couple jobs in the past year. And um, so we did his tax return, his second ever tax return um this year, and took the amount he'd earned, which was less than definitely less than the max, um, and contributed to a Roth. So now he'll have an it was a gift from full disclosure from me to you know match whatever he earned. Because trust me, he will be working on cash flow. No. And um, so that, but we do have a minor Roth IRA where I'm the custodian, he is um the account owner, it's his money. Um, but until he's 18, I sign the contracts. And um, so that is uh um, depending on the family, a lower cost um way to have some money lessons. And also I I think like you don't have to give numbers, but you can say, like, hey, it's really fortunate that we got to have this recent spring break, or hey, our family's making sacrifices because of X, Y, or Z because mom or dad don't work, or we're really saving for college and you know, we didn't have, you know, generational wealth to pay for it, or hey, did you notice the price of that when we filled up gas? Was this? Like there's so many little moments to integrate financial and money conversations, and every person has their strengths and weaknesses. Like I have a kid that's great at math and um spends every dollar he makes, and I have another kid that spends less and you know, math's more challenging. And so um, you know, addressing and kind of inserting little lessons, it doesn't have to be a three-hour lecture in order to start to share.

SPEAKER_02

Yeah. Yeah. And don't let those big, big things get in the way of of the little things, because the little things are where we start building the knowledge and, you know, and building the foundation of our future financial lives. And to me, a big part of, you know, a big part of having a healthy relationship with money is thinking about how it helps you do the things that are important to you, as opposed to how am I going to get the biggest pile of it.

SPEAKER_01

For sure. I think that money is a resource to invest in your life. Um, certainly you can't have too little because that creates its own vulnerabilities and securities. And, you know, there's a certain minimum threshold that you have to have. Interestingly, your minimum threshold may be different than mine. Um, but um, absolutely like teaching people to have a healthy relationship with money where it's not hoarding it and it's also not um spending it recklessly is a lifetime learning lesson, right?

SPEAKER_02

And well, you know, balance is not about everything being level all the time. Balance is that there's ups and downs and you're able to recover from them.

Where To Find Ann And Closing

SPEAKER_01

And gosh knows that I um had plenty of my own financial lessons though that were the school of hard knocks in my early, my early adult um era. Um Anne, thank you so much for coming on again. Um I your episodes are always so popular. How can people find you and find out more, both for um college specifically, but also um the services you provide for general financial planning?

SPEAKER_02

Yeah, the two ways to find me. Um, the my website is how to payforcollege.com. Um, and that's also the title of my book. So either of those um will get you there, and you can contact me through the website. And then I am an advisor with the Mather Group, and you can contact me there at the Mather Group.com.

SPEAKER_01

Awesome. Well, thank you so much for joining us, and I'm sure you'll be back again with another emerging conversation on how to pay for college and the like. Always a pleasure. Thanks.

SPEAKER_00

Thank you for listening to the Women's Money Wisdom Podcast. If you found value in this episode, the best way that you can support the podcast is to forward an episode to a friend or leave a review. Go to PerlPlan.com and the podcast link to get all the resources and links mentioned. This presentation by Pearl Planning is intended for general information purposes only. No portion of this presentation serves as the receipt of or substitute for personal.

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Melissa Joy, CFP

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