ARTICLE | January 16, 2026

For many parents, providing financial security for their children is a top priority. But building that security involves more than funding college or opening a savings account.

The real goal isn’t just to transfer wealth – it’s to prepare the next generation to manage, grow, and protect it.

In this video, we’ll walk through key financial strategies parents can implement from early childhood through young adulthood – from tax-advantaged savings and investment tools to trust structures and financial education.

Whether your child is still in diapers or heading off to college, these steps can help you build a financial foundation that supports them today and empowers them for the future.

Birth to age 5: build the foundation

The earlier you start, the more powerful the impact. And thanks to compound interest, time is your biggest ally.

Here are three smart moves you can make in the early years between birth and age 5:

Open a 529 College Savings Plan

First, leverage a 529 education savings plan, which offers tax-free growth when used for qualified education expenses. And thanks to recent changes, you can now roll over unused 529 funds into your child’s Roth IRA, up to $35,000 over their lifetime. However, there are important requirements:

• The 529 must have been open for at least 15 years,
• Contributions from the last 5 years aren’t eligible for the rollover,
• Rollovers are limited to the annual Roth IRA contribution limit which is $7,500 for 2026, and
• The beneficiary must have sufficient earned income that year.

Start a Custodial Account (UGMA/UTMA)

Also, consider opening a custodial UGMA or UTMA account.  These are brokerage accounts that are managed by you, but legally owned by your child. These accounts are flexible, as the funds can be used for anything, not just education. But keep in mind: when your child reaches 18 or 21, that account becomes theirs – no strings attached.

Use the Annual Gift Tax Exclusion

It’s also wise to take advantage of the annual gift tax exclusion. As of 2026, each parent can give up to $19,000 per year per child, completely gift-tax free. That’s $38,000 annually per couple, and that money can go straight into growth vehicles.

Ages 6-12: start the conversation

Once your child is old enough to understand basic ideas, it’s time to introduce financial literacy.

Teach through practice

Start with an allowance. An allowance system, especially one tied to chores, can teach earning, saving, and delayed gratification. There are even several apps available that enable younger kids to manage digital money in a supervised environment.

Model financial values

Talk to your children about how your family earns, spends, saves, and gives – not necessarily in terms of dollar amounts, but in terms of values and principles.

You might explain why your family prioritizes saving for the future, why you avoid certain types of debt, or how you decide which causes to support through charitable giving.

When appropriate, invite your child to participate. For example, if you donate to charitable organizations, consider asking your child to help choose a cause that’s meaningful to them.

Involving children in these decisions gives them practice thinking about money in terms of purpose, not just purchasing power. It builds financial confidence over time and helps demystify money, which is important because children often absorb financial habits long before they understand financial mechanics.

Start planning Trust structures

And if your long-term plan includes wealth transfer, now’s the time to explore trust planning. A well-crafted irrevocable trust can grow assets outside of your estate and offer asset protection later on.

Ages 13-18: prepare with purpose

Teenagers are often more financially aware than we give them credit for – and this stage of life is a critical window for deepening their financial knowledge and introducing real-world responsibility.

Open a Custodial Roth IRA

If your child has earned income from a part-time job, consider opening a custodial Roth IRA in their name. Even modest contributions in their teens can grow into meaningful assets over time – thanks to decades of tax-free compounding.

Involve them in financial decisions that affect them

It’s also a good idea to involve your child in their own financial realities. If they have an investment account, review the statements together and talk through market basics. If you’re buying them a car, walk them through financing options, loan terms, and what monthly payments actually mean. And if they have a job, help them build a basic budget or set savings goals.

These conversations help teens connect decisions to outcomes. They begin to understand that money isn’t abstract, but rather, a tool that requires planning and trade-offs. By making them an active participant, you’re building the financial judgment they’ll need for adulthood.

Help them build credit responsibly

As your teen begins to earn money and take on more financial responsibility, it’s also a good time to start introducing the concept of credit and how to use it wisely.

Building credit early can give your child a major head start when it comes time to apply for an apartment lease, car loan, or even a job that checks credit history. But this step should be taken with oversight and clear boundaries.

You could consider adding them as an authorized user on your credit card. Some issuers report authorized user activity to credit bureaus, which can begin establishing your child’s credit file – assuming you maintain good habits like paying in full and on time. You might also explore credit cards with a low limit and co-signer, to give them hands-on experience managing credit responsibly. Of course, it’s important to set rules for usage, such as using the card only for gas or groceries, and monitor spending together to reinforce good habits.

The goal here isn’t to give them unlimited access, but to teach them how credit works in a low-risk environment – while also giving them a positive credit history to build on.

Think strategically about college funding

As college approaches, keep in mind that not all assets are treated equally in financial aid calculations.

For example, custodial accounts like UTMAs are considered the student’s assets, and up to 20% of their value can be counted toward the family’s expected contribution under FAFSA rules. A $50,000 UTMA balance could reduce eligibility for aid by as much as $10,000.

However, that same $50,000 held in a parent-owned 529 plan could be assessed around 5.64%, for federal aid purposes, even though the total amount saved is identical. Keep in mind that some private colleges use their own financial aid formulas, which may treat these accounts differently.

The bottom line is that the way you structure savings can have a significant impact on financial aid eligibility, especially when large balances are involved. Because of the nuances in how different assets are evaluated and how regulations continue to evolve, it’s worth working with an advisor to ensure your strategy is both tax-efficient and aligned with college funding goals.

Ages 18-25: transition to independence

Once your child reaches 18, they’re legally an adult. But whether they’re financially ready for adulthood depends on the foundation you’ve laid.

Transfer accounts thoughtfully

If you’ve set up UGMA or UTMA accounts, they now become your child’s property. So, try to make this a guided handoff. Walk them through how to manage and invest the funds.

If you don’t think they’ll be ready to take over large sums of money, consider holding larger sums in a Trust rather than the custodial account. You can set up Trusts that distribute at different milestones, like graduating from college or reaching a certain age.

Use spendthrift or incentive Trusts

That said, spendthrift or incentive trusts allow you to distribute wealth while still setting healthy boundaries, like matching earned income, funding educational goals, or pausing distributions if there are red flags like substance abuse. But you’ll need to work with an attorney to ensure these Trusts are set up and managed properly.

Get legal documents in place

And while you’re thinking about legal structures, it’s just as important to address the basic legal documents your child will need as they enter adulthood.

Once your child turns 18, you generally don’t have automatic authority to make medical or financial decisions on their behalf. That’s why every young adult should have a healthcare proxy, power of attorney, and HIPAA release in place.

These documents offer protection in case of an emergency – allowing you to speak with healthcare providers, access medical records, or step in to manage finances temporarily if needed. It’s a relatively simple step, but it can make a huge difference in your ability to support your child when it matters most.

The real goal

Setting your child up financially isn’t about making them rich.

It’s about making them ready.

Ready to earn, save, give, and grow. And ready to manage whatever wealth they receive or create for themselves.

If you’re looking to align your wealth strategy with your parenting goals, now is the time to act.

Talk to your advisor. Create a plan. And give your child something far more valuable than just money: give them the ability to manage it wisely. For more personalized guidance, please contact our office.