A soon-to-be father says he wants to do everything possible to set his son up for success. But there’s one thing that worries him: What happens if that success turns into entitlement?
He and his wife plan to open a “Trump Account” and contribute $5,000 a year. The government-backed investment account for children born between 2025 and 2028 includes a $1,000 government contribution at birth, with the option for parents to add more each year.
By the time their son turns 18, the account could hold “hundreds of thousands of dollars,” the father wrote in a letter to “The Ramsey Show” recently.
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His concern is simple: How do you make sure an 18-year-old doesn’t “squander the money away on ridiculous material purchases every 18-year-old dreams about?”
Raising A Responsible Adult Vs. Handing Over Control
Hosts Jade Warshaw and George Kamel said the issue has two sides.
The first is how you raise the child. “What you’re teaching him about money in the next 18 years is really huge,” Warshaw said.
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The second issue is strategy. Do you really want your child to gain full control of a large sum of money at 18?
Kamel said he looked into the accounts and found “there’s not a whole lot of advantages outside of the free $1,000” available for children born between 2025 and 2028. He said he would take the free $1,000, but wouldn’t contribute much more.
“At 18, they get control if it’s a Trump account,” he said. “And they don’t need hundreds of thousands of dollars at age 18,” Warshaw added.
“Their prefrontal cortex isn’t baked yet.” Kamel continued, “These are the same kids taking out $250,000 for degrees that they don’t need. So let’s not give them that control.”
Instead, both hosts said they prefer more established options. They use 529 plans for education and keep additional investments in a brokerage account in their own names. That way, they can gift money when they believe their children are ready.
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Whether it’s paying for a wedding, helping with a down payment or buying a first car, keeping the account in the parent’s name allows flexibility. “I don’t want you ending up with $100,000 or $500,000 at age 18,” Warshaw said.
In the end, Kamel said he’s not against the accounts entirely. He just doesn’t think they’re “all it’s cracked up to be.”
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