Expecting Our First Child: Open 529 Plan or Max Out Roth IRAs?

June 25, 2023

In this highlight, we discuss how to invest with a newborn and the different account options that you have available.


Next up, we’ve got a question from Joey. He says, “My wife and I are expecting our first child in July, so congrats first of all, that’s awesome. He says, ‘What is the benefit of starting a 529 plan right away for them instead of maxing out our own Roth IRAs? How do you guys think about that?'”

Alright, so what’s spicy? What’s the benefit? I would argue if we’re using “benefit” in the sense of “better than what,” what is better about it? Come on now, bro. I mean, it almost hurts me to… you gotta bring… why don’t you start this one? You start this, you do it. You go, “Well, Joey… Joey, here, lean in closer. What’s first? 5 is your Roth IRA, 8 is the kid’s 529.” There you go, moneyguy.com/resources. Okay, but you can pick it up from there.

No, so that is true, though. Yeah, when you get on LeBron, just talk about an airplane, right? When you get on an airplane, you put your mask on before you can put the mask on someone else. You have to make sure that you are stable before you can help stabilize someone else. Well, kids are no different when it comes to saving for your future financial independence. You have to make sure that you are on firm financial footing. That means following the Financial Order of Operations. If you did not get the sound effect when Brian did his little shaking, Brian, hold up for me. You make sure you’re following the Financial Order of Operations to make sure you’re doing the things that you’re supposed to be doing. And as you graduate through, as you get to step eight, then you can start prepaying for future expenses, like saving for college for junior.

So often, we as parents, we want to sacrifice ourselves for the benefit of our child. And while that sounds noble, it may not actually be what’s in their best interest. Because when your child gets to 18 or gets to college age, they’re going to be any number of opportunities and resources for them to be able to pay for school. If you cannot help them, they can go get grants and scholarships or get loans. Those solutions will be there available for them. When you get to retirement, if you’ve not saved the way that you should have, and if you cannot stop working and live on your own, then you don’t have scholarships or grants or retirement loans. Your only option is to go live with your kids, right? Or to keep working forever. So, we would argue the best thing you can do for your kids is set yourself up on solid financial footing instead of trying to set them up and you being behind, waking up one day and saying, “Oh no, what did I do?”



Most Recent Episodes

What I Learned From Being BROKE!!! (And Why I Wouldn’t Change It)

No one disputes the fact that being broke isn’t great. We want to spread the word that no matter where you came from, you can build wealth. In this episode, Brian and Bo share personal stories about their journey to wealth and lessons they learned along the way....

Top 10 Mind-Blowing Money Stats (2023 Edition)

These 10 money stats will blow your mind! We’ll discuss the unbelievable amount of money Americans save, when most reach millionaire status, and how many Americans carry a credit card balance. Research and resources from this episode: Most Americans don't have enough...

Wealth Multiplier Revealed: The Magic of Compound Interest!

There’s a reason why Albert Einstein called compounding interest the eighth wonder of the world! Do you know exactly how it works and how much your dollars could turn into by retirement? The Money Guy Wealth Multiplier can show anyone just how powerful every dollar...

From $0 to Millionaire in 10 Years (Is it Possible?)

How can you become a millionaire in 10 years or less? We’ll discuss common ways we see millionaires build wealth quickly, including through real estate, entrepreneurship, and the stock market. Discover how real wealth is built and why building wealth quickly may not...

Financial Advisors React to INFURIATING Money Advice on TikTok!

Brian and Bo are BACK to react to some more TERRIBLE financial TikTok advice! Join us as we take a look at some of the worst financial advice on the platform and tell you what to actually focus on in your own financial life. Enjoy the Show? Sign up for the Financial...

Investing Showdown: Dollar Cost Averaging vs. Lump Sum!

It’s a debate as old as time: what’s better, dollar cost averaging or lump sum investing? In this episode, we’ll cover the nuances and pros and cons of both, including in-depth case studies comparing investors at different times. Research and resources from this...

Is Inflation Really Ruining Your Finances? (You Won’t Like the Answer)

Inflation has changed our daily living expenses dramatically over the last few years. While we can’t control all of our expenses, there are many things in your control that can help you become a Financial Mutant and build wealth better than your peers. Enjoy the Show?...

Are $1,000 Car Payments Becoming the New Norm?!

New data shows more Americans than ever have car payments over $1,000. Is this becoming the new normal? How much could having a car payment of $1,000 be costing you for retirement? For more information, check out our Car Buying Checklist!