What’s the Best Way to Invest for My Kids?

Summary

Podcast Summary: "What’s the Best Way to Invest for My Kids?"

Ramsey Everyday Millionaires
Date: May 6, 2026
Hosts: Rachel Cruze & George Kamel (Ramsey Network)
Guest Caller: Austin from Knoxville

---

Episode Overview

This episode focuses on practical strategies for parents looking to invest and save for their children’s futures—including college, weddings, and beyond. Rachel Cruze and George Kamel field a call from Austin, a father of three, who’s reached "Baby Step 5" of the Ramsey plan and is now weighing options for building financial security for his kids. The discussion covers popular vehicles such as 529 plans, ESAs, brokerage accounts, and Roth IRAs, emphasizing the pros, cons, and flexibility of each while sharing personal experiences and actionable advice.

---

Key Topics & Discussion Points

1. Austin’s Situation: Reaching Baby Step 5

• Background: Austin shares that he and his wife have paid off debt, started a family, and are now focused on saving specifically for their daughters’ futures—college, possible cars, weddings (00:24).
• Concern: He wants to avoid making a decision now that might have negative consequences for his kids down the road and feels overwhelmed by the sheer number of investing options (00:45-01:28).

---

2. 529 College Savings Plans

• Recommendation: George strongly recommends 529s for college savings given their tax advantages and flexibility:
  • “I love the 529 plans, are a great option for college saving...” (01:31)
• Control: The custodial structure allows parents to retain control over the account, but kids get access by age 18 or 21 in most states—creating concern about responsible use (01:45-02:16).
• Flexibility: If the child doesn’t use the funds for college, recent legislation (SECURE Act 2.0) allows up to $35,000 to be rolled into a Roth IRA for the beneficiary (03:42).

Memorable Quote:

"And on top of that, with the new Secure Act 2.0, you can roll over up to 35 grand into a Roth IRA for them. And so there are more options. And I'd rather you have the money and not need it than not have it."
— George Kamel (03:45)

• Scholarship Option: 529 withdrawals up to the amount of scholarships can be made without penalty (03:38).

---

3. Brokerage Accounts for Non-College Goals

• Parental Control: Both Rachel and George advocate for brokerage accounts in the parent’s name to “retain control” over funds that might be used for other purposes, like weddings or future gifts (01:54-02:45).
• Flexibility: These accounts aren’t earmarked for specific uses and don’t transfer to the child automatically at adulthood, reducing the risk of misuse (02:16, 05:25).

Memorable Quote:

"I just don't like the idea that the kids are gonna have control at 18. ... there's a chance they blow it. Prodigal son style. So I like retaining control personally."
— George Kamel (05:25)

---

4. Roth IRAs for Kids with Earned Income

• Future Opportunity: Rachel shares her own story of her parents opening a Roth IRA once she had earned income as a teen—highlighting the power of compounding over a long period (04:20-04:57).
• Legal and Pragmatic Approach: A Roth can only be started for a child once they have taxable earned income, but early starting yields big growth potential (04:57-06:00).

Notable Moment:

"What's crazy is starting that at 15 versus my husband started one after we got married and just...the difference in the compound interest, it's pretty wild."
— Rachel Cruze (04:57)

---

5. How Much to Contribute & Front-Loading

• Contributions: George says it’s fine for the older child to have more saved (“It’s ok to not be fair... the 9 year old should have more dumped in than the 5 year old because they have 4 extra years of saving and compound growth on their side.”) (05:25).
• Front-Loading: Lump sum contributions to 529s are an option to maximize growth (06:00).

---

6. Flexibility, Planning, and Generational Thinking

• Modeling and Planning: Use a financial advisor or SmartVestor Pro to help map out college savings needs vs. projected tuition costs, and strike a balance between over- and under-funding (06:06).
• Underfunding Option: It’s okay to intentionally save less in the 529 and invest elsewhere for flexibility if the child’s plans change (06:40).
• Changeable Beneficiary: 529 plans can be passed down to other children or even grandchildren if unused—potential for a “generational endowment” (07:00-07:28).

Memorable Quote:

"He did the math and it would pay for like 10 kids' colleges the next generation down because of the growth, which is just wild."
— Rachel Cruze (07:28)

---

7. College Alternatives and the Future of Education

• Changing Trends: George and Rachel discuss shifts in attitudes toward college, noting the increasing viability of non-traditional paths (08:09-08:14).
• Maturity and Structure: Rachel values the traditional college experience for personal growth but cautions against debt; instead, recommend only attending with a solid plan and the ability to pay cash (08:34-09:11).

---

Key Timestamps

• 01:31: 529 plans vs. other saving options explained
• 03:38: Handling unused 529 money—scholarships, Roth rollovers
• 04:20: Personal stories—Roth IRA for teens
• 05:25: Why the hosts avoid UTMA/UGMA accounts
• 06:06: Using an advisor to forecast college savings
• 07:00: 529 beneficiary flexibility and generational potential
• 08:09: The rise of non-traditional post-high school paths
• 08:34: Thoughts on the social and developmental value of college

---

Actionable Takeaways

• Open 529 plans for each child as a core tool for college savings and consider brokerage accounts in the parents’ name for other major expenses.
• Start Roth IRAs for your kids when they have earned income to maximize long-term growth.
• Don’t hesitate to be strategic (not “fair”) with funding based on age and timing.
• Consider working with a financial pro to plan for rising costs and adjust contributions as needed.
• 529s are flexible for changing life paths and can become impactful multi-generational tools.
• Keep in mind the evolving landscape of higher education and focus on cash-flowing expenses to avoid debt.

---

This episode delivers both practical and philosophical guidance, prioritizing flexibility, parental control, and intentional investing to secure options and opportunities for children’s futures without over-complicating the process.

Transcript

[Rachel Cruze]

Foreign.

[George Kamel]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Austin joins us up next in Knoxville. What's going on, Austin?

[Austin]

Hey, Rachel and George. How are you today?

[George Kamel]

Doing great. What's going on with you?

[Austin]

Good. Living the dream, of course.

[George Kamel]

Love to hear it.

[Austin]

So my wife and I, we started the, the Ramsey plan a few years back and just started chipping away at it, kind of dive into that deficit. And we, you know, we've since had a family. We chipped away at it and snowballed our debt and got to baby step number five. And so with the three kids, they're getting to the point where we're getting a little nervous because we don't have anything for them. Saved, dedicated just to them. So we were looking at different ways to get the ball rolling. And once you kind of get into that and open those doors, there's a lot of different options. Looking at ESAs, looking at 529s, you know, Roth IRAs. And then even within those, there's different layers for each one of those buckets. And there's a lot of variables in the equation. So. And everybody has obviously the unsolicited advice because we have three daughters. So once they see them all, you better start saving for college or for weddings and all this stuff. And so I guess the fear is, you know, we want to do something, but we don't want to make a decision now that our girls might pay for later on. Right. So how old are we? Nine, seven and five.

[Rachel Cruze]

Okay, nice.

[George Kamel]

We've got a decent timeline here until college, adulthood, weddings. And so the A1 is college and maybe a car if you're going to help with that. And so there's a few ways you can invest. I love the 529 plans are a great option for college saving ESA also. But there's more limitations to that as far as your contributions. And then you can invest outside of that. And so you can do that in a brokerage account in your name. That's personally how I like it because you retain control. What scares me about some of these investment accounts for kids is they get control no matter what when they turn, you know, 18 in most states. And so you give a kid compound growth. It's 100 something thousand dollars. If I'm 18, I'm going to blow.

[Rachel Cruze]

You're like, hey, this is, this should be for a down payment for your future home or wedding. And they're like, I'm going to Europe,

[George Kamel]

I'm buying a Lamborghini.

[Rachel Cruze]

Your girls will probably never do that, Austin. But to George's point, it is. Yeah, that's right. That's right. There is less control when it comes to that. And at 18. Yeah, that's a lot to give, depending on, you know, how much you have saved. So. Yeah, so the 529 is a great starting point for the, for the college fund. That's what we're. That's what my husband and I are doing. Our kids are very similar ages. They're 8, 10, and 5 or 6 now. Gosh, 8, 10, time flies. So, yeah, we do five. We have five 29s for, for each of them.

[Austin]

And.

[Rachel Cruze]

And then we've just kind of created an account in general. I think it's even just like a. An index fund, honestly, that we just throw money in each month that we kind of save and it's kind of earmarked kind of for them in the future. So whatever that looks like to be able to help them, you know, and what they need, weddings and. Yeah, I mean, all. All that kind of stuff that just gets so expensive. And depending on when it hits, you know, it could all be at once, too. You never know.

[Austin]

Sure.

[Rachel Cruze]

That's kind of what we look at

[Austin]

the options with the 529. I know there's the custodial option. Right. Where we have more control as the parents versus them. At the same time, if they don't go into secondary education, they want to do something else, or they get, you know, full rides to wherever. I know there's options there for that money, but if you make, you know, the unqualified withdrawal, we're paying a penalty. There's just. There's a disadvantages when we start to look at it on.

[Rachel Cruze]

Yes, there can be. So the good thing is it grows tax free, which is great. And then if you get a scholarship and grant, you can actually pull money out with these.

[George Kamel]

Yeah, pull it against the scholarship. So if you get a $10,000 scholarship, that's $10,000 you could pull out of the 529. And on top of that, with the new Secure Act 2.0, you can roll over up to 35 grand into a Roth IRA for them. And so there are more options. And I'd rather you have the money and not need it than not have it. And now they're turning to student loans and parent plus loans.

[Austin]

Sure.

[George Kamel]

That's the reality for most people. They go, well, I don't want to invest, because what if we don't use it and then they don't do anything. And so if I'm you, I'm going to open a 529 plan for each kid and then open a brokerage account in my name like Rachel said, and just put money in there and that becomes the future. Gift money, wedding money, whatever.

[Rachel Cruze]

Yeah. And in their name. Austin. My parents did this when. With Roth iras. Once they start working, like when we start when we were teenagers and we actually filed taxes under our name, once they've earned income. They have earned income. Then you can open up a Roth IRA in that. Yes, in their name. And, and what's wild is my Roth, which I'm trying to think, when mom and dad opened that for me, I think I was probably 15. It's when I started working at.

[George Kamel]

I thought you'd be like four years old. Like. Well, Rachel's off. Yeah.

[Rachel Cruze]

No, no, no, no, no. They, they did it the right, the legal way. I really did go earn an income. But they, and I think they even helped fund it. Like because it wasn't a lot of money, but as long as you earn

[George Kamel]

that level, they can fund it. If you made seven grand that year, they can.

[Rachel Cruze]

They can use their own seven grand. Yes, exactly. In it. So. Yeah, it wasn't a ton. Yeah, it was definitely not even seven grand. But what's crazy is starting that at 15 versus my husband started one after we got married and just, you know, just a ten year period. Like the difference in the compound interest, it's pretty wild. So you could do that later too, for the girls. As you're thinking about this, I have a feeling you're gonna have a lot of options, but. Yeah, but you're not a big fan of the utmas, right, George?

[George Kamel]

No, I just don't like the idea that the kids are gonna have control at 18. Cause I just don't know what they're gonna turn into. I hope they're wonderful, sweet children and they're gonna be like, we wanna give it to the old folks home. But there's a chance they blow it. Prodigal son style. So I like retaining control personally. So I would do both 529 plan and the brokerage account really hedges your bets and it's okay to not be fair, you know what I mean? The 9 year old should have more dumped in than the 5 year old because they have 4 extra years of saving and compound growth on their side. So it's okay.

[Austin]

More of a lump sum to start versus a higher percentage or both.

[George Kamel]

You have the money, I mean, if you've got ten grand just sitting, burning a hole in your pocket, you can front load that 529.

[Rachel Cruze]

And what's wild too, Austin, is you. We did this with our, our Smartvestor Pro. They can do a map. It's not 100% because we don't know the future, but they can look at the rate of which tuition has increased and how much money you have in to see and say, okay, you know, are you overfunding it? Are you not? I mean, they can kind of help you balance. And even Austin, if you guys wanted to underfund it some, right? And you didn't, you knew, like, okay, we may only have, I don't know, 30 grand in it per kid or whatever, even though college is going to be double that because we're going to do something else over here. But to George's point, you have to invest somewhere else. The difference, just in case they do go to school. But if you're scared they're not going to use it or whatnot, you could underfund it a little bit and invest somewhere else and use that money and

[George Kamel]

just be prepared to help cash flow.

[Rachel Cruze]

That's right.

[George Kamel]

You have to. Or they're working part time to help pay.

[Rachel Cruze]

Yeah.

[George Kamel]

They're also working on scholarships and grants. So it's a great problem to have. If all of your kids get full rides and the money sits there and you can change the beneficiary at any

[Rachel Cruze]

time, that's it, too. It can be passed down. So your girls could even keep that 529 and give it to their girl. Right. Their grandkids, like that's nephew crazy about it is like, it can stay.

[George Kamel]

It grows in perpetuity.

[Rachel Cruze]

Yeah. There was one call we took. What was that? Last week, George, about the, the debt. It was a. It was a. He was like 40 and he had a call. I don't know.

[George Kamel]

It was a 529 still.

[Rachel Cruze]

It was something like that. And he ended up saying, I didn't want to cash it out. I'm going to keep it.

[George Kamel]

Yeah, Like a generational endowment, basically.

[Rachel Cruze]

And he did the math and it would pay for like 10 kids. College is like the next generation down because of the growth, like, which is just wild. So even that's something, you know, you can think of. High level too.

[Austin]

Awesome. So many options there. And that's where it was kind of like a little overwhelming for us, so we wanted to kind of throw out a lifeline to see if anybody had any good.

[George Kamel]

Yeah, that I keep it simple. I hope we help narrow down your focus to those two things. One for college, one for non college

[Rachel Cruze]

and then I throw in the Roth Once they start working. That'll be later down the road.

[George Kamel]

Get them working. That nine year old, you know, might be coming up. These kids these days, they're always doing side hustles.

[Austin]

Yeah.

[George Kamel]

They're gonna become, you know, world renowned YouTubers by 11 years old.

[Rachel Cruze]

My gosh, that is true.

[George Kamel]

That's what everyone's fear is. They're like, everyone's gonna just be like influencers and YouTubers. No one's gonna go to college.

[Rachel Cruze]

They have so much money.

[George Kamel]

So it's a real fear. Cause I do think college is due for a reckoning where families are waking up going, why would I go to school? Unless you need to. Unless you're becoming a, you know, a lawyer, a doctor, a nurse, a teacher. Things that require that degree.

[Rachel Cruze]

Yeah.

[George Kamel]

Otherwise don't just go to burn some time.

[Rachel Cruze]

I know.

[George Kamel]

As much as Rachel loved her college experience.

[Rachel Cruze]

No, I did. I know. But I do think. And again, I don't know where I sit with this. Again, I'm not at this age where my kids are having to make these decisions right now. But there is something when you're 18 to still be in a structured type environment if you have the money. Again, I'm not saying like, like don't go take out crazy student loans and not know exactly what you're doing. Yes, you want a game plan, but there's something about those years that you're still in a system that helps you kind of like stay on track.

[George Kamel]

You're in a safe bubble to mature and grow and learn some social skills.

[Rachel Cruze]

They're still so young.

[George Kamel]

It's just a very expensive.

[Rachel Cruze]

It is. I know how to do it.

[George Kamel]

I know if you're going to go into crippling debt. So always cash flow. You can go watch Borrowed Future for free on our YouTube channel. It's a documentary we did on the student loan crisis in higher education. Worth the wash with your K.