How much money you need to make your kid a middle class trust fund kid

@budgeters_anonymous

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Why it worked

The video provides a clear, step-by-step financial plan for parents, breaking down complex concepts into actionable advice. The use of visual aids (sticky note with calculations) and relatable goals (college, house, retirement) makes the information accessible and aspirational, likely driving engagement and shares.

Summary

This video explains how to financially prepare a child for middle-class independence by outlining a savings plan. It details how to allocate income, invest in college funds (529 plan), brokerage accounts (UTMA), and retirement accounts (Roth IRA) from birth until age 25, aiming to cover college, a down payment on a house, and retirement.

Structure

1Introduce the concept of creating a trust fund kid.
2Explain the 50/30/20 budget framework.
3Calculate the minimum required salary and savings for the child.
4Detail the investment strategy using 529, UTMA, and Roth IRA accounts.
5Show the projected outcomes for college, homeownership, and retirement.

Product placement

The video discusses financial planning and investment accounts like 529 plans, UTMA accounts, and Roth IRAs, which are financial products. The creator uses a sticky note to visually represent the budget and savings plan.

On-screen text

How much money you need to make your kid a middle class trust fund kid Here's a basic budget framework You should be saving 20% if you want financial freedom Money you invest for your kid comes out of lifestyle budget This is the monthly cost of the "trust fund" This is what actually hits your account This is your min salary This might seem unreasonable but across two salaries it's not THAT bad Here's why you'd want to do all this This account is for college This account has flexibility This happens the until 8 years old At 8 years old you make a simple change You open a Roth IRA This happens until 18 College? Paid for! Keep investing until 25 though! House? Paid for! Retirement? Funded!

Original caption

#investing #investingforbeginners

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Transcript

How much money you need to make your kid a middle class trust fund kid. The amount of money that you need to be making if you want to make your kid a middle class trust fund kid. First off, we're gonna assume that you are following a 50:30:20 budget. All that means is 50% of your money goes to bills, 30% of your money goes towards your lifestyle, and you save and invest the last 20%. You should be saving 20% if you want financial freedom. This 20% that you're saving is entirely for you and your partner. You have to put your oxygen mask on first, that way your kids don't have to support you later in life. Money you invest for your kid comes out of lifestyle budget. You wouldn't want to spend more than 5% of your lifestyle budget on your kid. This is the monthly cost of the "trust fund". That 5% has to be at least $350 a month. Which means your salary after paying taxes has to be $84,000 a year. This is your min salary. Your gross income, meaning the amount of money that you make before you pay taxes, is probably going to be somewhere around $122,000. This might seem unreasonable but across two salaries it's not THAT bad. This might seem unreasonable but across two salaries it's not THAT bad. Ideally, if you're each making a median salary of $61,000, you could totally be able to do this. Here's why you'd want to do all this. That $350 a month would do for your kid. First, you would take $200 a month and you'd put it into a 529 plan. This account is for college. Then you take the other $150 and you'd open up a UTMA account. This account has flexibility. It's basically a custodial brokerage account. And you do this for 8 years. At 8 years old you make a simple change. You open a Roth IRA. You would then split up that $150 into a UTMA and a Roth IRA. This happens until 18. College? Paid for! At 18 they would have $86,000 in their 529 plan. Keep investing until 25 though! You would stop investing in the 529 plan. Instead, you would reallocate that $200 to the UTMA and the Roth IRA. If you did that until they were 25, this brokerage account would now have $100,000 in it, which they could use as a down payment on their first home. Retirement? Funded! Assuming that neither you or them ever add another dollar to their Roth IRA, at 62 they would be able to retire with $529,000.