135. How to Financially Prepare Your Kids for the Future with Andy Hill
Jan 23, 2024
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Award-winning family finance coach, Andy Hill, discusses how to financially prepare kids for the future. Topics include starting money conversations early, investing in programs and resources, achieving wealth and financial freedom in your 30s, choosing investments for a 529 or any investing account, transitioning financial conversations with kids, navigating the high cost of college education and home ownership, and a course designed to build generational wealth and happiness for kids.
Allowing children to make financial mistakes and having conversations afterwards helps them learn and become independent adults.
Starting conversations about money with kids from an early age, covering concepts like needs versus wants and smart spending, fosters a healthy relationship with money and prepares them for financial independence.
Generational wealth is about having the freedom, financial stability, and agency to make choices that positively impact the community and empower future generations to create positive change and have financial security.
Deep dives
Importance of Allowing Kids to Make Mistakes
It is important for parents to allow their children to make financial mistakes and have conversations with them afterwards. This helps children learn from their mistakes and become independent adults.
Teaching Kids about Money at Any Age
Parents can start talking to their kids about money from an early age by discussing simple concepts like needs versus wants and smart spending. As kids grow older, they can be involved in discussions about saving, investing, and giving. These conversations help foster a healthy relationship with money and prepare kids for financial independence in the future.
Building Generational Wealth
Generational wealth is not just about passing down money or assets to future generations. It's about having the agency, freedom, and financial stability to make choices that align with one's values and positively impact the community. The goal is to empower future generations to create positive change and have financial security, whether it's through investments for big purchases like college and homeownership, or simply having the freedom to live life on their own terms.
Investing in 529 College Savings Account
A 529 college savings account is a tax-advantaged investment option for educational purposes. It offers state tax deductions and can be used for various educational expenses such as trade schools or out-of-state education. The account requires actively choosing investments, as it is an investing account on the stock market, not a savings account. Additionally, there are new features like rollovers to a Roth IRA, making it a flexible choice for investing in a college future.
Exploring UTMA as an Alternative
UTMA (Uniform Transfers to Minors Act) accounts provide an alternative for parents who are unsure if their children will go to college. UTMA is essentially a kids' brokerage account that can be used for purposes beyond education, like buying a home or starting a business. However, it lacks the same control and portability as a 529 account. UTMA impacts financial aid eligibility more significantly, and children gain full control of the funds at age 18. The choice between 529 and UTMA depends on individual circumstances and goals, considering factors like asset control, flexibility, and financial aid implications.
“When the average person hears the words generational wealth, they think succession, yachts, and trust funds. When you and I talk about generational wealth, what we're really talking about is — how do we make our future family, or even our communities, better than we had it?”
Are you setting your kids up for financial success? Do you even know how to? In this episode, Tori welcomes award-winning family finance coach Andy Hill back to the show to find out all the questions parents are or should be asking to prepare their kids for the future. From how to start talking to your kids about money, why starting at a young age is important, to what programs and resources you should be investing in. This conversation is filled with practical strategies and tools you can use to set your children up for financial success. Don’t have kids? Don’t worry! You’ll still walk away from this episode armed with knowledge and financial tips you can personally use to become more financially secure (with or without kids).
