Ramsey Everyday Millionaires Should I Open a UTMA Account for My Child?
Nov 19, 2025
Emily, a parent seeking financial guidance for her four-month-old son, queries the merits of UTMA/UGMA accounts versus 529 plans. George cautions about losing control over assets as they become the child's at 18. Alternatives like a Roth IRA are proposed for kids with earned income, while a high-yield savings account is recommended for non-college expenses. Control over gifts is emphasized, and George encourages early investing with 529 plans to potentially transform their family finances.
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Don't Use UTMA/UGMA For Long-Term Control
- Avoid UTMA/UGMA accounts because the money becomes the child's legal property with no real restrictions.
- Use 529s for college and keep other gifts in your own brokerage account so you retain control.
Personal Roth IRA Example From Teen Years
- George describes that his parents opened a Roth IRA for him when he had earned income as a teen.
- He contrasts that with others who start in their early 20s to show the power of earlier starts.
Start Investing Early With Tax-Advantaged Accounts
- Open investment accounts early and prioritize tax-advantaged options like a 529 for education.
- Once children earn income, consider a Roth IRA to jumpstart long-term investing.