Mother's Day Finance Edit 🤍

Happy Mother’s Day to all the mamas, soon to be mamas, grandmothers, caregivers, and people who step into mother roles in so many different ways.

No one really tells you how many financial decisions suddenly appear the second you become a parent. Not just diapers and daycare and strollers, but the bigger questions too. How do I give my child a head start? What does “setting them up well” actually look like? Where do people even begin?

And honestly, the language around kids accounts can feel overwhelming at first. 529’s. Custodial accounts. Roth IRAs for kids. It sounds way more complicated than it needs to be, so here’s a simple breakdown of a few of the most talked about account options parents are opening right now and what they’re actually meant for.

This is usually the first account parents hear about. A 529 is designed for education expenses like K through 12 tuition, college, trade school, and certain student loan repayments. One of the biggest perks is that the money can grow tax free when it’s used for qualified education expenses.

A lot of families also like that grandparents, relatives, and friends can contribute too, which is why some people now ask for 529 contributions instead of more toys during birthdays or holidays.

One question for modern parents is what college education will look like in 18 years in the age of AI. There is a question as to whether or not a college plan will be needed by then. No one really knows, but ideally the rules for “qualified education expenses” will evolve by then.

Yes, these are real. And people love talking about them because starting retirement savings early can make a huge difference over time.

The catch is that your child needs earned income. Babysitting, modeling, acting, lawn mowing, tutoring, things like that all may count. Contributions can grow tax free, and qualified withdrawals in retirement are generally tax free too.

These are usually considered the more flexible option. Unlike a 529, the money does not need to be used specifically for education. Some families use these accounts for future college expenses, while others like the flexibility for things like a first car, travel, or even helping fund a future business.

The account is managed by the parent or guardian until the child reaches adulthood, depending on the state. Investment earnings may also be taxed annually, and custodial accounts can impact future financial aid calculations.

You may have seen people talking about these online recently. These proposed accounts would include a government seeded contribution for eligible children, with parents able to contribute additional money annually into long term investments.

Unlike a Roth IRA for kids, earned income would not be required. Details around rollout and eligibility may still evolve, but it’s definitely one many families are keeping an eye on.

The best account is usually the one you actually open. Not the perfect one. Not the one someone on TikTok says you have to use. Just the one that helps you start.

Because financial wellness is rarely built through one giant decision. It’s usually built through small consistent steps over time. And even starting small while your kids are young can create habits and conversations around money that stay with them for years.

Disclaimer: This content is for educational and informational purposes only and should not be construed as investment, tax, or legal advice or a recommendation to buy or sell any security or financial product. Mary & Pip Investments LLC is a registered investment adviser. Investing involves risk, including possible loss of principal. Readers should consult their own financial, legal, or tax professionals regarding their individual situations before making financial decisions.