We all want the best for our kids and grandkids, and that includes setting them up for financial success. The good news? There are some smart, practical ways to start saving for their future—whether it’s for college, a first home, or retirement (yes, it’s never too early!). Here are three powerful options:
1. Roth IRAs for Teens: Any child with earned income (think summer jobs, babysitting, lawn care) qualifies to fund a Roth IRA. You and/or the child can contribute $7,000 for 2025 and $7,500 for 2026, up to the child’s total earned income. This can build significant wealth over the long term as assets grow tax-free, and withdrawals in retirement are tax-free, too. Pro tip: Adults can fund the account as long as the child has earned income. This is a great way to teach investing early and leverage decades of compounding. To develop their savings habits early, you could establish your own match. For example, for every dollar they contribute, you could deposit two!
2. 529 Plans for Education: A 529 plan is a tax-advantaged savings account designed for education expenses. You put money in after-tax, it grows tax-free, and withdrawals for qualified education costs (tuition, books, housing) are also tax-free. Parents and grandparents may earn a state income tax break for contributions, too. While these dollars must be used for education expenses, these programs are becoming much more flexible; If the child doesn’t use it, you can change the beneficiary to another family member or use it to fund their Roth IRA.
3. Coming Soon-Trump Accounts: Trump Accounts are a new tax‑advantaged savings vehicle created under the One Big Beautiful Bill, aimed at helping children build long-term financial security. These accounts combine features of Individual Retirement Accounts and 529 college savings plans. Children born between January 1, 2025, and December 31, 2028, qualify and receive a $1,000 Federal seed deposit. Parents can contribute up to $5,000 per year. While these can be opened in early 2026, no contributions can be made until July 2026.
It is too soon to know which fund companies will offer these, but the assets will be required to be invested in low-cost broad market index funds.
There are some withdrawal rules to note: No withdrawals are allowed before age 18. After that age, the account converts to a Traditional IRA with standard IRA withdrawal rules applying. Imagine the power of compounding these savings all the way to that child’s retirement!
By combining these approaches, families can build a strong, diversified savings plan—empowering children financially in the short-, mid-, and long-term.
Did You Know?
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Their sole desire is to help you achieve the Work-Life-Money Balance that leads to strong financial futures and more fulfilling lives, inside and outside of work. To connect with a Financial Planner and explore the resources available to you, visit FrancisWay.com, call866-232-6457, or download the free Francis LLC app.
