Money Guy Show Episode Summary: "3 Ways to Make Your Kid a Multi-Millionaire"

Release Date: July 16, 2025
Hosts: Brian Preston and Bo Hanson
Description: Empower your wealth-building journey with straightforward strategies from The Money Guy. Discover financial tactics that transcend common sense, enabling you to achieve your monetary goals swiftly. Let your assets work for you, alleviating financial worries and fostering a more fulfilling life.

Introduction to Building Wealth for Your Child

In this episode, hosts Brian Preston and Bo Hanson delve into effective strategies parents can employ to set their children on the path to becoming multi-millionaires. Emphasizing the power of early investment and disciplined financial planning, they present three key approaches designed to maximize growth through compounding interest.

Strategy 1: Lump Sum Investing at Birth

Overview:
Investing a lump sum immediately upon your child's birth harnesses the full potential of compound interest over a long investment horizon.

Key Insights:

• Investment Requirement: To reach a millionaire status by the age of 65, parents need to invest approximately $1,544 at birth.

  • Bo Hanson [01:33]: "If your goal is for your child to be a millionaire by the time they get to 65, all that you would need to invest on the day they're born is $1,544, just a little over $1,500, to become a millionaire."

• Growth Dominance: Contributions constitute only 0.15% of the future million-dollar value, with the remaining 99.85% derived from growth.

  • Ribe [02:03]: "Your Contribution is only 0.15%. The other almost 100% is specifically coming from the growth."

Resources:
Parents can utilize the Wealth Multiplier Tool on MoneyGuide.com to calculate the necessary lump sum based on the child's current age.

Strategy 2: Regular Monthly Savings

Overview:
Consistent monthly contributions significantly contribute to achieving millionaire status by leveraging the power of compounding over time.

Key Insights:

• Monthly Contribution: Investing $15.44 monthly from birth to age 18 can grow to approximately $9,274, a foundation for millionaire status by retirement.

  • Bo Hanson [03:08]: "If you want your child to be a millionaire by age 18, you would need $9,274 saved by then, requiring just $15.44 a month."

• Minimal Financial Impact: The required monthly savings are roughly equivalent to the cost of one to two coffees, making it an affordable commitment for most families.

  • Bo Hanson [04:19]: "If you're a parent thinking through this, are you thinking $15 a month? That's all it was. It does not seem like that's an incredibly difficult hurdle to get over."

• Growth vs. Contributions: Similar to lump sum investing, the bulk of the million-dollar goal is achieved through growth rather than the initial contributions.

  • Ribe [04:30]: "Only 0.33% of that million is actually yours and your child's contributions. The other 99% comes from compounding growth."

Resources:
The Wealth Multiplier Tool allows parents to adjust savings based on the child's current age.

Strategy 3: Custodial Roth IRA with Parental Matching

Overview:
Combining a custodial Roth IRA with parental contributions maximizes tax advantages and accelerates wealth accumulation during the child's formative years.

Key Insights:

• Parental Matching: By matching the child's savings dollar-for-dollar from ages 15 to 18, parents can significantly boost the investment’s growth potential.

  • Bo Hanson [06:20]: "If you match a child's $111 monthly savings, it results in a cumulative $222 monthly contribution, propelling them toward millionaire status by retirement."

• Tax Advantages: Contributions to a custodial Roth IRA grow tax-free, enhancing the overall investment return.

  • Bo Hanson [06:20]: "Opening a custodial Roth IRA... could lead to tax-free millionaire status."

• Behavioral Benefits: Encouraging early work habits and disciplined saving instills financial literacy and responsibility in children.

  • Ribe [07:03]: "It's not just about the money; it's about teaching good behaviors, discipline, and the value of deferred gratification."

Resources:
Parents are encouraged to explore MoneyGuy.com Resources for tools like the Wealth Multiplier to plan and track these investments effectively.

Do’s and Don’ts in Setting Up Financial Success for Your Child

Key Points:

• Do: Teach Financial Independence
  Avoid making your child solely reliant on parental funding. Instead, foster independence by providing the tools and knowledge necessary for them to manage and grow their own wealth.

  • Bo Hanson [08:21]: "Don't just make your kid a millionaire. Teach them how to fish."

• Don’t: Cheat the System
  Refrain from using unethical methods or complex financial maneuvers that might backfire or lead to unintended consequences.

  • Bo Hanson [09:08]: "Don't try to cheat the system... start with teaching independence."

• Do: Prioritize Your Financial Health
  Ensure your own financial stability before committing resources to your child's financial future.

  • Bo Hanson [09:51]: "Prioritize your own well-being first before building your child’s financial independence."

• Don’t: Neglect Behavioral Education
  Financial wealth is not just about numbers; it’s equally important to teach children about money management, budgeting, and responsible spending.

  • Ribe [09:08]: "Encourage discipline, work ethic, and other financial habits."

Quotes:

• Bo Hanson [08:21]: "Don't just make your kid a millionaire... teach them how to fish."
• Ribe [09:08]: "There's a lot of life that happens between the investment and retirement... teach behavioral habits."

Choosing the Right Financial Accounts

Overview:
Selecting the appropriate financial vehicle is crucial based on your child’s future goals, be it higher education, general wealth accumulation, or special needs planning.

Options Discussed:

1. UTMA/UGMA Custodial Accounts:
   Suitable for general savings and building assets which become the child’s property upon reaching adulthood.

   • Bo Hanson [15:50]: "You could use a UTMA or UGMA custodial account to build money for your child."

2. 529 Plans:
   Ideal for saving towards higher education with tax advantages, and offers flexibility if the child does not attend college.

   • Bo Hanson [16:35]: "If you want to save for college, 529s are a great option... if she doesn't go to college, you can roll over the funds."

3. Custodial Roth IRAs:
   Excellent for long-term retirement savings with tax-free growth, contingent on the child having earned income.

   • Bo Hanson [06:20]: "Opening a custodial Roth IRA could lead to tax-free millionaire status."

4. ABLE Accounts:
   Designed for children with special needs, offering tax advantages without jeopardizing eligibility for government assistance.

   • Ribe [16:35]: "ABLE accounts are excellent for children with developmental struggles or special needs."

Considerations:

• Flexibility: Some accounts like 529 plans allow changing beneficiaries if initial plans change.
• Tax Implications: Understanding how different accounts are taxed is essential for maximizing benefits.
• Legal Structures: For specific inheritance goals, trusts may be necessary to control asset distribution.

Conclusion and Final Insights

Brian Preston and Bo Hanson emphasize the transformative power of early and consistent investing in a child’s financial future. By leveraging lump sum investments, regular savings, and strategic account selection, parents can set their children on a path to substantial wealth accumulation. Additionally, they underscore the importance of fostering financial literacy and responsible money management habits to ensure that children not only inherit wealth but also know how to sustain and grow it.

Final Takeaways:

• Start Early: The sooner you begin investing for your child, the greater the benefits of compounding interest.
• Be Consistent: Regular contributions, even modest ones, can significantly impact long-term wealth.
• Educate and Empower: Equip your children with the knowledge and habits necessary to manage their finances effectively.
• Choose Wisely: Select the right financial vehicles that align with your child’s future goals and your financial situation.

Resources Mentioned:

• Wealth Multiplier Tool: moneyguide.com/resources
• Financial Order of Operations (FOO): Available at moneyguy.com/resources

Notable Quotes with Timestamps:

• Bo Hanson [01:33]: "If your goal is for your child to be a millionaire by the time they get to 65, all that you would need to invest on the day they're born is $1,544..."
• Ribe [02:03]: "Your Contribution is only 0.15%. The other almost 100% is specifically coming from the growth."
• Bo Hanson [06:20]: "Opening a custodial Roth IRA... could lead to tax-free millionaire status."
• Bo Hanson [08:21]: "Don't just make your kid a millionaire... teach them how to fish."
• Bo Hanson [09:51]: "Prioritize your own well-being first before building your child’s financial independence."

By implementing these strategies and principles, parents can confidently guide their children towards a prosperous financial future, ensuring that their assets do the heavy lifting while fostering a generation of financially savvy individuals.