Building Your Child’s College Savings Fund – Episode #550

College costs are rising every year. The projected cost of a four-year college degree in 2035 is estimated to be almost $500,000. Saving for your child’s college education can feel overwhelming. When is the “right time” to start saving? On this episode of the Dentist Money Show, Matt, Victoria, and Ryan review four ways to save for your child’s education.

Related Readings

4 Factors in Planning Your Child’s Financial Future

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Podcast Transcript

Ryan Isaac: Well I’m gonna, I’m gonna kick it off with a sound clip.

Ryan Isaac: Okay,

Ryan Isaac: I don’t know if you’re gonna get this sound clip. Matt will.

Matt Mulcock: My boots tight tight hope I don’t in a fight

Ryan Isaac: Ah. to school.

Ryan Isaac: back to bad school.

Matt Mulcock: the bus drives by

Ryan Isaac: Yeah. Every time. Every time you hear back to school. I can’t not hear that. I know. That’s all. And I have kids and I don’t think about them going back to school. I think about Adam Sandler going back to

Matt Mulcock: those were the oh that was the og Adam Sandler

Ryan Isaac: that song. Do you know that? Did you see that movie? Do you know that movie?

Victoria Ferguson: No, you guys, I have been MIA in the movie

Ryan Isaac: Well, this wasn’t in the movie scene in the last 8 years.

Matt Mulcock: That movie might be older than you.

Victoria Ferguson: Let’s not elaborate.

Matt Mulcock: When did that movie come out?

Ryan Isaac: I’m gonna figure that out. Yeah. While I’m figuring that out, give us a little back to school

Ryan Isaac: goodness.

Matt Mulcock: Ahead.

Victoria Ferguson: nothing to do with

Ryan Isaac: Oh, okay. Well, jokes are

Victoria Ferguson: Where do killer whales go to get their teeth fixed?

Matt Mulcock: Something with Orca.

Victoria Ferguson: The

Victoria Ferguson: Orchidontist!

Ryan Isaac: Orchidontist! Yeah, good, uh, the orchidontist, I’m gonna say that to my kids today. They’ll like that. They’ll like that.

Matt Mulcock: Anyway,

Matt Mulcock: we’re talking kids.

Victoria Ferguson: We are

Matt Mulcock: And saving for kids, big topic.

Ryan Isaac: Yeah,

Matt Mulcock: Very important.

Ryan Isaac: This actually comes up a ton. Do you guys talk to your clients about this all the time?

Victoria Ferguson: Well, yeah, because I mean, everybody wants their kids to than they did.

Victoria Ferguson: It’s one of the universal

Ryan Isaac: Yeah.

Matt Mulcock: can I start off controversial?

Matt Mulcock: Okay. I wanna actually pose a question.

Matt Mulcock: What percentage of people

Matt Mulcock: that we talk to about this, what, how many do you think only bring it up? ’cause they feel like it’s kinda like they’re supposed to be thinking

Ryan Isaac: about saving for kids? But

Matt Mulcock: but like, it’s not really like,

Ryan Isaac: Part of their plan.

Matt Mulcock: they don’t really

Ryan Isaac: Or maybe not care, even? Like high priority.

Matt Mulcock: It’s not like as high of a priority as they, I just think this happens from time to time where people are like, like, oh, I probably should save for my kids,

Matt Mulcock: versus like, I actually want to, or it’s actually a huge goal.

Matt Mulcock: I, Victoria’s not liking this

Victoria Ferguson: question.

Victoria Ferguson: No, I’m not saying us, I’m saying clients.

Matt Mulcock: I’m, no, I’m not saying for us. I’m not saying us. I’m saying

Victoria Ferguson: clients

Ryan Isaac: just

Ryan Isaac: feel the pressure that they have to set up kids savings when they either might not want to, it might not be a priority or they just can’t,

Ryan Isaac: but

Ryan Isaac: they feel like the pressure to that what you’re

Ryan Isaac: saying.

Matt Mulcock: that’s the key. They can’t, maybe they can’t yet. It’s too soon. And they’re like, Oh, but I have to do

Ryan Isaac: Uh huh. Yeah.

Victoria Ferguson: I think it’s more that they want to, I mean, I like to believe that people want to, I think they want to, but don’t know how there’s, there’s more questions than there are answers and there’s a lot of. Barriers. And I think that’s part of the And then it’s, it’s kind of just like, yes, I want to, but it’s kind of on the back burner because I need all of this knowledge to be able to do this confidently.

Victoria Ferguson: And so I think that barrier is like what gets in

Matt Mulcock: It’s probably no different than in that context. I

Victoria Ferguson: Like

Ryan Isaac: Then saving for yourself for retirement.

Matt Mulcock: same thing. Saving for

Victoria Ferguson: same thing for any Money goal that’s not gonna come to fruition for a really long

Victoria Ferguson: time. It’s the same

Matt Mulcock: it’s so true because I, you could use the same question for people that say for retirement, how many people say for retirement that don’t really want to, they know they should, and I don’t, I say don’t want to, in the sense of like, you’d rather take

Victoria Ferguson: this 80,

Matt Mulcock: 000 this year, you’re

Ryan Isaac: they can’t, or they, just straight up

Matt Mulcock: but maybe they can, let’s say they’re, you know, our average client saves, we ran these numbers around 80, 000 a year across their accounts, 80, 000 a year.

Matt Mulcock: 80, 000 is a lot of money to go do something fun

Matt Mulcock: with. to this point, I think, it’s not like a, I don’t want to do

Matt Mulcock: that.

Victoria Ferguson: to, but it’s just hard because it’s a long time away.

Victoria Ferguson: So it’s not like a, Oh, I really want to do this. Like, I’m not jazzed about having to save in a

Matt Mulcock: Yeah. But then I, I do have clients who, I have talked to many dentists that,

Matt Mulcock: will say, no, I’m not saving for my kids. Like

Ryan Isaac: They’re gonna

Matt Mulcock: I made it, they’re going to make it. I I’d rather give them the gift of resilience and then figuring it out on their They just own it.

Ryan Isaac: I’m giving you resilience, child.

Matt Mulcock: but I mean,

Victoria Ferguson: I’m

Victoria Ferguson: not

Matt Mulcock: right or wrong. It’s up to you to decide.

Matt Mulcock: But I do have clients that are just like, no, I, I can. My job is to raise good kids that and good

Ryan Isaac: go fend for go figure it out themselves.

Victoria Ferguson: Yeah, I think also if you don’t really know how to think about it, then you fall prey to the like, Oh, I’m supposed to save for my kids, I guess, but what

Victoria Ferguson: it yeah, like, if you haven’t asked yourself, how do I want to support my kids, maybe I want to support them by giving them these experiences of resiliency and stuff.

Victoria Ferguson: I think that’s, you know, has a lot of value to that. You know, my parents weren’t able to support me, like they did a little bit, but I had to financially support my entire college. I had to work full time and go to school full time. And I wouldn’t give that up for the world because it’s made me who I am.

Victoria Ferguson: So I guess my point is, how do you want to support your kids? What does that look like? Is it financial? Is it not? And so if you don’t ask yourself these questions, then I think you’re, you fall prey to defaulting, which is like, Oh, I probably

Victoria Ferguson: should do this.

Ryan Isaac: prey to defaulting, which is

Ryan Isaac: like a,

Matt Mulcock: Five years from

Ryan Isaac: I

Victoria Ferguson: for tonight. So

Ryan Isaac: should do this.

Ryan Isaac: And it feels like yesterday she was like a one year old and I would think about this time and be like, I’ll be in such a better

Ryan Isaac: position.

Matt Mulcock: Why are you laughing?

Ryan Isaac: Like I’ll, cause I am, but like, I’m not like giving her lots of money to go to college. Like I, but I remember thinking, yeah, I’d like to save for her for sure. But like, I have so much time, you know, down the road, I’ll have more money.

Ryan Isaac: I’ll, I’ll. Be able to do that, you know, and it it’s just crazy how fast that time goes by and it sneaks up on you And you always think like I’ll do it

Matt Mulcock: it later, I’ll

Ryan Isaac: do it later. And it’s just to your point It’s just hard to wrap your head around where you’re gonna be that far

Ryan Isaac: down

Ryan Isaac: the road and what that even looks like and now That I’m there.

Ryan Isaac: I’m like, oh, yeah,

Ryan Isaac: I did have the money, but then I moved to California and got rid of all my

Matt Mulcock: Yeah, you, you, but in all reality, you prioritize something different and there’s nothing wrong with that. I guess,

Matt Mulcock: that’s the, I think

Matt Mulcock: that’s the point

Ryan Isaac: And that’s the, kind of what you’re

Matt Mulcock: that’s the point of my question and I think where I’m getting at is, We’re neutral on what you decide to do here.

Matt Mulcock: I, I think people feel guilty if they’re not, I, this is my

Matt Mulcock: point.

Matt Mulcock: I

Matt Mulcock: think people feel guilty. If they’re not saying top three priorities saving for my

Matt Mulcock: kids. It’s like, it’s okay if it’s not right now. That’s okay. And it is okay if it is. It’s okay if it’s not. Don’t tell me that you want to save for your kids if you don’t actually

Ryan Isaac: Yeah, we don’t have to work on that right

Matt Mulcock: We don’t have to work on that right now. And that’s my main point is like, it’s okay. Don’t guilt yourself into it. And I think a lot of times people

Ryan Isaac: times people do.

Ryan Isaac: And then, you know, what we’re going to be discussing today, it’s pretty nuanced. And it’s tough. And there’s a lot of options to go through. And it’s hard to know, like, how and when and how to get started and how to do it. So, I think it’s a really common question for sure.

Matt Mulcock: the time this comes out, the article will already be out.

Ryan Isaac: already be found where? Which can be found at

Victoria Ferguson: be found at DentistAdvisors. com The Education

Ryan Isaac: Yeah, the,

Ryan Isaac: Edu edu, the edu, the Edu

Victoria Ferguson: The EduLibrary I wrote

Matt Mulcock: the, I, I, I, I’m the

Matt Mulcock: author.

Victoria Ferguson: out to myself for

Ryan Isaac: Can You

Ryan Isaac: shout

Victoria Ferguson: amazing article.

Victoria Ferguson: You

Matt Mulcock: shout out.

Matt Mulcock: You know what I want to do is I want to shout out me.

Matt Mulcock: Oh my gosh. It was an inadvertent shout

Victoria Ferguson: Check out the women’s money conversation, money conversation podcast, where

Matt Mulcock: I’m never going to hear the end of this. It was an inadvertent

Ryan Isaac: On a women’s conversation.

Matt Mulcock: No, No,

Victoria Ferguson: He goes, shout out to Jake, Taylor, Will, and me. He didn’t even notice it.

Matt Mulcock: And then I was

Matt Mulcock: like,

Victoria Ferguson: he just kept going. And I was like, we’re not going to let that slide by. And I

Victoria Ferguson: just asked him, did you just

Matt Mulcock: shout out. Okay.

Victoria Ferguson: And then he looks up and he’s like, I did just shout out

Matt Mulcock: It was inadvertent. Okay. Well done. Well done me. Okay.

Victoria Ferguson: just going to blast past that like

Victoria Ferguson: he

Matt Mulcock: job me. I was trying to get beyond it like I am right

Victoria Ferguson: I know.

Matt Mulcock: I think, Again, I don’t want to mess up the flow of your article, but I think the first part of this would be talking about, as we’re sitting here

Matt Mulcock: saying, I think the first thing to understand is a, do I actually really want to save for kids?

Matt Mulcock: But then B is where, when, like, when do I know I’m ready to start saving for

Ryan Isaac: Yeah, that’s such a good question.

Matt Mulcock: I think that’s huge.

Victoria Ferguson: I want to start with, yeah, my article focuses more on, on how to do it.

Victoria Ferguson: But what I didn’t include was how to even think about it. Like, how do you know when you’re ready? How do you know if it is something important to you? Questions to ask, like, you know, where does it fall on the priority list? What you value? All of that. I didn’t really include that. I just. talked about how expensive college was and how to do it.

Victoria Ferguson: So, yeah, I want to talk about that.

Ryan Isaac: how, like, when do I start prioritizing this? Let’s assume they do have some cash flow like, you know, they don’t have like a problem in the practice or profitability or income. So how do you help someone explore the timing of it? Like, when do you begin that? like

Matt Mulcock: A down payment for a house. Like, do you have, like, do you have a specific goal for

Ryan Isaac: Yeah. Do you want to control the money? Does it want you want to be in your name? Do you want it to land in their lap at 21 or 18?

Matt Mulcock: Is this getting them started for retirement? Is this specifically for college is again. I think getting into that stuff first is the big part of

Victoria Ferguson: Yeah, the framework I always use is, what do you want the money to be used for, and how much control do you want over it?

Victoria Ferguson: That’s how I help them decide what account

Ryan Isaac: the control things. Interesting. Interesting. Have you met? People who saved a lot of money for kids like six figures and then got transferred to their kids at 18 and they weren’t really aware of that, that it would happen.

Matt Mulcock: Yes. I mean, I tell people all the time as we’re getting accounts set up and we’ll go through this, the mechanics of accounts, but yeah, I’ll tell them like, Hey, this account is great, but you need to know that the second they turn 18, it is their money. And there is literally nothing you can do. And most of the time you tell people that and they’ll at the very least hesitate.

Ryan Isaac: very

Ryan Isaac: hesitate. Yeah. Oh, yeah. I’ll

Victoria Ferguson: They’ll

Matt Mulcock: going to find

Matt Mulcock: out.

Victoria Ferguson: No, this happened to my older brother. It wasn’t like a huge amount of money.

Victoria Ferguson: I think my dad saved like 10 grand for him. And it transferred to him at 18 and he blew it in 3 months.

Ryan Isaac: heapskate.

Matt Mulcock: Yeah.

Ryan Isaac: I was a

Victoria Ferguson: he was a senior in high

Victoria Ferguson: school. By the time that came

Ryan Isaac: high school. That came out. Yeah, but at least one of them is gonna blow some money like at

Matt Mulcock: I already know which one of mine would

Victoria Ferguson: of mine

Ryan Isaac: least

Victoria Ferguson: It’s going

Ryan Isaac: like some like car or travel or

Victoria Ferguson: car. Some person is going to have

Ryan Isaac: is gonna have like some Bitcoin idea and be like, okay, you know, it’s gonna happen

Matt Mulcock: 18 year old gets a hundred grand or something. You’re going to go travel the world or you’re going to go do something crazy.

Ryan Isaac: So yeah, the, what were your two questions? The, the

Victoria Ferguson: what do you want the money to be used for and how much control do you

Ryan Isaac: want

Ryan Isaac: Yeah, those are great the

Matt Mulcock: you’re saying, uh, this assumption is

Matt Mulcock: the practice is doing well.

Matt Mulcock: They’ve got cash flow. Cause I’m the other part of this is mechanically. I want to look at how much cash flow. I want to see you saving at least probably 15 to 20%. Yeah,

Ryan Isaac: Yeah. Is your own oxygen mask on right now before we do this?

Victoria Ferguson: That’s

Matt Mulcock: like on top of it. Yeah.

Victoria Ferguson: because you can’t put retirement on

Ryan Isaac: Does your business have enough money? Do you have an emergency fund? Do you have enough cash for anything coming up that you have to spend money on? And are you actively saving money for yourself every month? If not, then I think it’s, yeah. But have you met people who have not hit those steps in the, the, the kid’s thing is, Such a high priority and it may be cultural too, where it’s just like the, they’re like, I’ll work till I’m 90 and never have anything.

Ryan Isaac: I don’t care. And they just want to do that anyway.

Victoria Ferguson: Yes. So I’ll speak to this ’cause , that’s how my mom is like culturally. , and I don’t know if this is all Asian, so I can only speak to Filipinos specifically. They will do what? ever it takes to get their child to college and to pay for it and whatnot.

Victoria Ferguson: I remember my mom was like, I’ll remortgage this house if I have to, for my little brother’s clarinet degree.

Victoria Ferguson: Just

Ryan Isaac: that’s real? That’s real. I thought you just made that

Victoria Ferguson: No, they did. They didn’t actually take out a second

Ryan Isaac: mortgage,

Ryan Isaac: No, I mean the clarinet part.

Matt Mulcock: to like, San Francisco.

Victoria Ferguson: Well, he went to like San Francisco conservative to,

Victoria Ferguson: clear it. Clarinetist. I don’t know. Has he touched it since he graduated?

Victoria Ferguson: No, but my point is to the cultural piece, I always try to be very empathetic to that because for a lot of cultures, it’s such a

Victoria Ferguson: huge

Victoria Ferguson: priority. And in other cultures, they just don’t view retirement like we do. Like Asians, like, or at least Filipinos, I should say. can. Like, don’t really believe in retirement in the way we do.

Victoria Ferguson: Like, retirement’s not really a thing because it’s an expectation

Victoria Ferguson: that

Matt Mulcock: that’s your culture, then

Matt Mulcock: fine,

Victoria Ferguson: that the

Victoria Ferguson: younger generation

Ryan Isaac: kind of stick together and take care,

Victoria Ferguson: Exactly. So if that is a value and that’s your culture, then Then fine. Let’s work with it. I always try to get a little bit of retirement and kind of help understand, like, okay, if you fund this, we prioritize your kids, kids, education, whatnot.

Victoria Ferguson: That just means you’re putting your child in a position where they have to support you in

Ryan Isaac: life. Oh, that’s a good

Ryan Isaac: positioning

Victoria Ferguson: that, are you comfortable with that? Is your kid comfortable with

Ryan Isaac: that,

Ryan Isaac: And that might be the expectation, and it’s totally fine. And that’s what happens

Victoria Ferguson: because I have this client. She just came on board and she’s, This exact same thing.

Victoria Ferguson: Her parents, , supported her through dental school, paid for everything. And now she’s, , kind of mid career. And she’s like, it is an honor to support my

Ryan Isaac: parents.

Ryan Isaac: Cool, Yeah, that’s an interesting

Matt Mulcock: wrinkle to

Victoria Ferguson: So I don’t want to say that this is like a hard, fast rule because I think bringing in culture and values and priorities is totally valid. But for her, I think it was really cool for me to hear that from her and saying like, no, this is an honor to support my

Victoria Ferguson: parents.

Matt Mulcock: It’s an interesting, It

Matt Mulcock: honestly is so interesting because if you think about it, like America is the culture of America is so individual, individualistic,

Ryan Isaac: Yep. Even in

Ryan Isaac: families.

Matt Mulcock: In

Matt Mulcock: families.

Victoria Ferguson: your kids are going to kick you into like retirement

Matt Mulcock: Well, yes, but

Matt Mulcock: this is

Ryan Isaac: we’re one of the only places in the world that, where that happens too. No, no, no. We’re the parents and grandparents. Like, we’re just like, yeah, you guys, you guys gotta go.

Matt Mulcock: And so you talk about this idea of like immigrants, right?

Victoria Ferguson: gotta go. Yeah. Thanks for college.

Victoria Ferguson: Bye.

Ryan Isaac: Mom and dad. Uh, yeah. Here’s your,

Matt Mulcock: But you think of these, like, you’re highlighting something that’s so critical to understand in these conversations of like,

Victoria Ferguson: Yes.

Matt Mulcock: Uh,

Matt Mulcock: immigrants, right? From a very, from a completely different culture that has different approaches to what you’re saying. It’s how you approach, right? Retirement how you approach money and how you use it within the family saving for like that’s huge.

Matt Mulcock: That’s something to understand in these conversations Before you even get into what we’re gonna get into which is like where to even put this

Ryan Isaac: I did think it was interesting at our summit recently, our great friends and partners at Elevation Association, , brought one of their friends and partners who ran, you’re going to have to help me here, he’s from Ghana, wasn’t he from Ghana, and he was the guy who ran a lot of the mission hospital trips that they do, like the dentistry and the medical,

Matt Mulcock: his name father Justin father Justin, yep

Victoria Ferguson: was it Tanzania?

Ryan Isaac: Yeah. Yeah. It’s Tanzania. Is that where they go? They go to Tanzania. There’s so many groups that

Matt Mulcock: groups that go. Anyway, I thought it

Ryan Isaac: Anyway, I thought it was really interesting. We, we were doing this money summit and

Ryan Isaac: Him being there just really threw me out of like, oh yeah, a lot of people view this stuff very differently than we do

Matt Mulcock: do here.

Matt Mulcock: We

Ryan Isaac: You know, like we’re in our own little world and bubble of like, here’s what you do with money and investing and retirement and your life and savings and here’s the priority for money, but then,

Ryan Isaac: one person’s experience can just pull you out of that for a minute and be like, oh yeah, people view this very differently.

Ryan Isaac: And it’s just important to listen to, What that means to them and then help them build it around, you know, because he you know this guy’s telling the story of having like a It was like a $50 a month living stipend, or maybe it was a hundred dollars and he gave half of it to like people in his community.

Ryan Isaac: Yeah. Yeah. And then he is like, yeah, $50 is a lot to still live on a month. And I’m just like, we’re up here talking about saving like millions of dollars to just be okay in the

Ryan Isaac: future. Be okay,

Ryan Isaac: to be

Matt Mulcock: I sustain my

Ryan Isaac: Yeah. So

Ryan Isaac: that we don’t have. Yeah. So do we don’t have to like drop lifestyle expectations.

Ryan Isaac: And this guy’s like living on 50 bucks a month and then giving his other 50, you know, different part of the world, different experience. But that, that was an interesting kind of like context to have

Ryan Isaac: at that time. It was

Matt Mulcock: interesting kind of.

Ryan Isaac: Wait, this isn’t what you wrote

Ryan Isaac: in your article.

Victoria Ferguson: No, let’s, I love this.

Victoria Ferguson: Wait, just I

Matt Mulcock: it!

Matt Mulcock: Ended up in retirement, moving to

Matt Mulcock: Nicaragua

Matt Mulcock: and lived, still lives there. I know hopefully

Matt Mulcock: we’re going to be there, be there next year, but he moved to Nicaragua, comes back and forth, but he’s lived there for like the last 10, 15 years. And he said, when you move, Out of America and you start to see it from the outside looking in and then you come back He’s like it is such a different viewpoint you have of how we exactly what you’re saying how we approach all of

Matt Mulcock: this stuff

Ryan Isaac: Yeah. Not better. Not worse. Maybe worse.

Ryan Isaac: Maybe a little worse, but, it’s

Matt Mulcock: It could be a little

Ryan Isaac: But the, but these are questions that our clients ask is how am I, how am I going to do this for my kids?

Ryan Isaac: It’s super common. We visit this all the time. So

Matt Mulcock: what I was gonna say to to your point of kind of like The timing and understanding. Should you do it? Should you not, when you should say for kids, I have a pretty, I actually have a former client did not work out for this very reason, because he was in a place where. His practice was not doing great.

Matt Mulcock: His cashflow, his practice was actually doing okay, but his cashflow wasn’t great. He had a lot of stuff to figure out with cashflow and saving for retirement. He had no liquidity. He was going into debt to pay for his middle age school kids private school. So he was literally going broke to pay for his kids school.

Matt Mulcock: I, it was kind of this idea of like, Hey man, you might fire me for telling you this, but you definitely should fire me if I don’t bring it up. Like you can’t afford this. He fired me, but it’s like he did because he didn’t want to hear the truth. And I’m like, you’re, you’re going to go broke. So, so I bring this up to say, like, there’s also egregious

Ryan Isaac: Like

Matt Mulcock: a responsibility.

Matt Mulcock: to your, yourself, your family, your business, your patients.

Matt Mulcock: You can’t be going into debt, like credit. We’re talking credit card debt, personal lines of credit to fund your seventh graders private school. That is an egregious example of like, you’re not, you shouldn’t be

Ryan Isaac: that. Well, it’s just not sustainable. Like, it’s not going to help anyone for very long if you, yeah, if you put all of your main things in jeopardy for something like that.

Ryan Isaac: Yeah, it’s probably not very sustainable, but.

Ryan Isaac: You

Victoria Ferguson: I just think

Ryan Isaac: so

Matt Mulcock: I got fired. You’re fired.

Victoria Ferguson: yeah, it just comes down to trade offs. Like if you want to pay for your middle schoolers private school and go into debt, sure. Like that, that’s the trade off you’re making that you’re just making that more expensive.

Victoria Ferguson: You’re putting retirement further out for

Matt Mulcock: But not only that,

Matt Mulcock: in this example, you’re putting your family, you’re putting your family at risk. You’re putting your financial well being, you’re going to go bankrupt.

Victoria Ferguson: like the trade off you’re making, I think that’s what it comes down to as well, is like, do you have clarity around the trade offs you’re And are you okay

Ryan Isaac: as well, like, do you have clarity around the trade offs you’re making? And are you okay with that? You know, severe childhood stuff that they live. They’re like, I will, I don’t want my kids. I’ll do anything to not have my kids go through what I went through.

Ryan Isaac: Like it’s

Victoria Ferguson: Or my parents supported me, so I want to support

Ryan Isaac: Or the opposite. I got nothing and it was horrible. And I, yeah, so you never know why, what like is really making people feel the way they

Matt Mulcock: But it’s, but it’s funny. You could have two kids. That situation with two different reactions.

Matt Mulcock: I’ve heard both. I’ve heard where people say what you just said, which is I don’t ever want my kids to go through what I did, but on the other side, I’ve had people say, I made it and guess what? It made me who I am

Ryan Isaac: and

Matt Mulcock: I want my

Ryan Isaac: go through

Matt Mulcock: to go through the same thing. And usually in those situations, it’s people that it’s like the Warren Buffett thing, right?

Matt Mulcock: Warren Buffett has said with his kids, he wants to give them enough that they can, , like,

Ryan Isaac: enjoy some

Matt Mulcock: They can be okay, but not so much that they won’t do

Matt Mulcock: anything. It’s kind of finding that balance. And I think, I mean, Warren Buffett’s on another level, but I think I’ve heard that

Matt Mulcock: from a

Matt Mulcock: lot of people like to be okay.

Matt Mulcock: I think he said he’s going to donate 99 percent of his wealth. , but I’ve heard most of people that’ll say

Matt Mulcock: They

Matt Mulcock: don’t need to go through what I went through, but I’m also not just going to pay for their whole

Ryan Isaac: Yeah. So you never know what’s driving people, how they feel about it. It’s just good to take time to listen and understand and ask a lot of questions and try to figure out where they’re coming from and then help them build a plan around that.

Matt Mulcock: Yeah,

Victoria Ferguson: I think that they can start with on their own. I think where we come into play is around the

Victoria Ferguson: numbers and account type. So

Victoria Ferguson: I think I love all of this. I think, To start, if you haven’t asked yourself these questions, like, how do I want to support my kid? What does that look like? How do I want, what experiences should I give them or opportunities to help shape that?

Victoria Ferguson: How much money is backing that? What is that? I think all of that is really, really great to think about. And then the next step is, okay, if you do want to fund and that is important to you, what does that look

Victoria Ferguson: like?

Ryan Isaac: it?

Victoria Ferguson: Yeah.

Matt Mulcock: I just say, I think the ultimately it’s what does success look like to me? So like, meaning it’s the same thing with retirement, but it’s your, you gave it, gave a great story of you saying, okay, you know, my daughter was one and I thought I want to, I like you probably had in your mind, but maybe you didn’t, maybe you didn’t.

Matt Mulcock: But I think at that point it’s like, so my daughter’s five and I’m sitting here saying, okay. Okay. In 13 years, she’s going to be 18. What does success look like at 18? What do I, like you said, what do I want to provide for

Matt Mulcock: her?

Matt Mulcock: And then let’s work backwards

Victoria Ferguson: work backwards from

Victoria Ferguson: there. Yeah. Start with that overarching question and then we can decide how money is going to support

Victoria Ferguson: that. So, I think the other thing too, for people who want to fund college, I don’t know that they realize how expensive it

Ryan Isaac: Oh my gosh.

Victoria Ferguson: So I, , I pulled some stats and this is in the article, but, , I can share here. , over the last two decades, private and out of state universities have increased their tuition by 40%.

Ryan Isaac: it’s so

Victoria Ferguson: 20 years. And then for in state schools, I was actually surprised by this in state schools that increased over that same time period by 56%.

Matt Mulcock: It’s insane.

Victoria Ferguson: it’s absolutely, um, insane.

Matt Mulcock: And

Matt Mulcock: can, could you, could anyone make any argument that the

Ryan Isaac: Dude, that’s a whole other podcast. It was

Matt Mulcock: probably gone the other

Ryan Isaac: yeah,

Victoria Ferguson: yeah,

Victoria Ferguson: it’s just become more saturated late. Yeah, definitely.

Ryan Isaac: Like the actual skills you come out with for the, you know, a general

Matt Mulcock: will be a

Victoria Ferguson: me, tell me why I had to learn Greek mythology, you know, and spend thousands of dollars

Ryan Isaac: There’s a whole other, there’s a whole

Victoria Ferguson: but I don’t need to know about Zeus’s love life, you know what I

Matt Mulcock: I, I have someone, I’m going to keep this very vague, but I have someone that I know who paid, he paid for his child’s

Victoria Ferguson: You’re gonna come after the arts, aren’t you?

Matt Mulcock: Well, it was multiple six figures, multiple six figures for a creative writing degree. And I’m like, I’m sorry, but what are they going to do with that?

Victoria Ferguson: Yeah,

Ryan Isaac: it’s

Ryan Isaac: very expensive. It’s

Matt Mulcock: expensive to, it’s a, it’s great.

Matt Mulcock: It’s a great hobby.

Ryan Isaac: Yeah. That’s really pricey, man. Yeah. So expensive.

Ryan Isaac: the

Victoria Ferguson: more stats. So currently the average cost of college in the U S is just 38, just over 38 K per student per year. 38,

Matt Mulcock: That’s the average.

Victoria Ferguson: Yep. And so, , if you were going to go send your kid to college right now, that’d be about, you know, not

Victoria Ferguson: extracurriculars or

Victoria Ferguson: whatever.

Victoria Ferguson: So if your kid is going to college and say 10 ish years. You’re going to need over 200 K to support them per

Matt Mulcock: It’s, it’s wild.

Ryan Isaac: feel like I have nothing to

Ryan Isaac: say because I know because I’m just so

Matt Mulcock: Cause he has four daughters that are all nearing college

Matt Mulcock: age.

Victoria Ferguson: dollars.

Ryan Isaac: so overwhelming to think of like how much money that is and then like for a bachelor’s degree it’s

Victoria Ferguson: not even a master’s, not even dental

Ryan Isaac: even a specific like you’re not we’re not talking about accounting engineering something medical related It’s like

Ryan Isaac: Like a general business management bachelor’s degree for a hundred and fifty grand

Victoria Ferguson: Yeah, but

Victoria Ferguson: I

Matt Mulcock: we’re, don’t come after business degrees.

Matt Mulcock: That’s

Ryan Isaac: I’ve got

Matt Mulcock: got. that’s

Matt Mulcock: what we’ve got. That’s what we all got. But, I mean, we’re speaking,

Ryan Isaac: And still not know anything about. basic, uh, I mean, in our field, there’s no education, like people come out and like, no

Ryan Isaac: one knows how to budget or

Matt Mulcock: was. It’s all separate. It’s all separate. That’s all

Ryan Isaac: or

Matt Mulcock: Yeah. This is a whole other discussion of like how broken the education

Victoria Ferguson: But yeah, I just bring this up for people who, you know, maybe they’re like my, my parents paid for me, so I want to pay for my

Victoria Ferguson: kids.

Matt Mulcock: a different

Matt Mulcock: world. different

Ryan Isaac: maybe

Victoria Ferguson: world.

Ryan Isaac: Lot of money. Different world.

Ryan Isaac: And that’s not

Victoria Ferguson: life, you know, all, yeah. It’s, it’s wild. And so when I have somebody that’s kind of, kind of adamant, like I want to support my kid, I want to pay for their college.

Victoria Ferguson: And then I’m just like,

Ryan Isaac: Yeah. I just know what the

Matt Mulcock: Well, and so this is a great thing to bring up to if, let’s say that they say your, my goal is to pay for a school. That’s a wide range of, of saying, well, what does that look like? Are you saying you, you want to have enough money? To pay for an in state school or community

Matt Mulcock: college or you just want a set amount of money that you’re like I’m gonna save up 50, 000 and they can use it for college and then they finance the rest like or are you saying I want to pay for the college Any private school, any Ivy League, there’s

Matt Mulcock: no limit, which would be a lot more than that.

Matt Mulcock: So it’s like, you’ve got to figure out, it’s very broad to say, I want to save for my kid’s college. It’s

Matt Mulcock: like, what is that? What does that

Victoria Ferguson: Yes.

Ryan Isaac: that goes with it. And with no

Victoria Ferguson: And with no intentionality behind it, then that’s when we start to get

Ryan Isaac: it.

Ryan Isaac: Yeah.

Matt Mulcock: The one thing I would say when it comes to saving for college, like the one piece of advice that I could give, I think generally is if you’re trying to figure this out, I think it’s way easier to designate a dollar amount you’re shooting for. Just

Ryan Isaac: dollar or a monthly savings

Matt Mulcock: I think, and I think it’s an end dollar.

Matt Mulcock: I think if you, and this is just general, but I’m just saying, if you’re going to go one way or the other, cause it’s going to be too

Ryan Isaac: be kind of like

Matt Mulcock: and say, yeah, kind of like retirement, but it’s like, it’s too hard to say like, Oh, I want to save for a private school, like, or I want to save for an out of state school in wherever you don’t even know what’s going to happen with your kid and where they want to go.

Matt Mulcock: So I think it’s better in my opinion to say, I want 100, 000 that I’m going to say, I’m just making numbers up. I want 100, 000 to save for my kid. And that’s going to cover whatever it can cover. How much do I have to save to get to that point? That to me is the best, in my opinion, the best way to take the guesswork out of it and variables that you can’t control if it keeps going the way it’s going, it’s like, you’re going to have to save a million dollars for each

Ryan Isaac: so hard to even wrap your head around that.

Matt Mulcock: So

Matt Mulcock: I just said a dollar amount. And start saving and then,

Ryan Isaac: some point, it’ll be cheaper to like move them to another country where there’s like free state universities

Matt Mulcock: yeah, at some point there’s

Ryan Isaac: and move them back.

Matt Mulcock: think at some point your hope is, you know, the next 10, 15 years that there’s just an overhaul in the whole system,

Victoria Ferguson: about it. I like that route of, okay, this is the dollar amount. Let’s backtrack to figure out what that means for a savings rate today. But I also feel like I think of timing of when you’re having a kid is probably around when you’re either a super early practice owner or probably not even

Victoria Ferguson: yet, right?

Victoria Ferguson: Like You’re probably an associate and there’s probably not a lot of cash flow. Maybe there’s, a hundred bucks a month or something right now. and so I think, just to offer up a different way to think about it, we figure out, okay, this is what we need to save for the practice, retirement. Let’s just start with a hundred bucks a month and then we can kind of project out, okay, this would mean.

Victoria Ferguson: this amount of dollars in 1518 years,

Victoria Ferguson: and we know that over time will be

Victoria Ferguson: able to increase this, but you at least know, okay, we’re gonna have about this So I think

Victoria Ferguson: For people who like probably can’t do that, you know, whatever they can do. And then knowing that

Victoria Ferguson: it’s going to increase over time. That’s just that’s to kind of go today and

Ryan Isaac: Yeah. It’s such a good

Victoria Ferguson: all I have

Victoria Ferguson: right

Ryan Isaac: You can’t just start to be like five grand a month when they’re one years old because yeah, you’re early in your

Matt Mulcock: and to that point, it’s a great point of saying, when you start thinking about this, it’s when your kids are probably really young and you’re in a different position financially than you will be in 10 or 15 years.

Victoria Ferguson: Yeah,

Victoria Ferguson: like take the pressure off.

Matt Mulcock: off. For sure. Uh, I, so to that point, a viable option here, totally viable, especially for dentists. Is to say in 10 or 15 years your debt’s most likely paid off We can look at that on your actual am schedule Your cash flow is going to be way higher like a viable option here as well is to say I’m going to save what I can to your point.

Matt Mulcock: I’m going to save what I can i’m going to cash flow the rest

Victoria Ferguson: Yeah. Like I have some, I have some clients that, you know, they’re prioritizing getting into a practice. , but they just say, okay, I am gonna do like 50 bucks a month to my kids’ account right now just to get the habit

Victoria Ferguson: going. Right. that’s fine.

Ryan Isaac: fine. Yeah

Ryan Isaac: It’ll be helpful. I mean, you’ll be, even if it’s the down payment for the apartment move in or some new supplies, like you’ll be glad you had it. Yeah.

Ryan Isaac: Oh

Matt Mulcock: to your point, it should be extra on top of what we’re saying. Liquidity in the practice, your cash flow is taken care of, you’re saving for retirement, like after all those things are taken care

Ryan Isaac: of.

Victoria Ferguson: Definitely. So I have four different accounts to share today. It’s not a total,

Victoria Ferguson: like, encompassing list. Like, I didn’t go through Utmas and that’s fine. Um. Um, 529s. Let’s start with that one. Because I feel like that is everybody’s default.

Victoria Ferguson: I have yet to see

Ryan Isaac: says that first.

Victoria Ferguson: everyone says that for, Oh, Do I need a 529? It is always the default. , and I think that’s just what’s been socialized. As a as a society, you know, it’s kind of a, expectation that you’re going to save for your kid’s college. Especially if you, if you went to college, it’s kind of an expectation you do that.

Victoria Ferguson: So that’s what people think about, and they usually like, Oh, there’s some like, tax savings with it, but they don’t really know that type of thing. So I wanted to hit that. , so five 29s, there’s actually two types of ,

Matt Mulcock: Tell us more.

Ryan Isaac: Allegedly.

Victoria Ferguson: Oh,

Ryan Isaac: I’ll be the judge of that. Ha, ha,

Victoria Ferguson: let me shed a little light on this.

Victoria Ferguson: So, um, the most commonly known one,

Victoria Ferguson: which is the one that we all interact with the most for our clients, is the education savings plan.

Victoria Ferguson: that’s the one that everybody knows and loves, but there’s also, and you guys have probably heard of this, but the prepaid

Ryan Isaac: Oh, yeah.

Victoria Ferguson: So there’s

Ryan Isaac: That’s technically a 529? Oh, I didn’t know

Matt Mulcock: It’s under that. Plague

Victoria Ferguson: Yeah. And I think there are only four states that still do

Ryan Isaac: this. Yeah,

Victoria Ferguson: It’s wildly uncommon, so I’ll, I’ll,

Victoria Ferguson: hit that super quick.

Victoria Ferguson: um, just the premise of it is

Victoria Ferguson: you basically, , say

Victoria Ferguson: Florida is one of the states and you lock in tuition in today’s dollars.

Ryan Isaac: a Florida

Victoria Ferguson: For a Florida school. You can’t transfer it. , so you

Victoria Ferguson: have to go to that school. , advantage is that you lock in, you know,

Victoria Ferguson: today’s dollars,

Victoria Ferguson: Huge disadvantage. Massively

Victoria Ferguson: limits your

Ryan Isaac: options.

Ryan Isaac: Yeah, your flexibility is

Victoria Ferguson: So I have yet to meet

Victoria Ferguson: anyone that does that. And again, I’m pretty sure there’s only four states that do it. So I just wanted to hit that. So now you have a new

Matt Mulcock: had

Matt Mulcock: a client in Florida ask me about that a couple years ago. They were considering doing it. It almost never makes sense to do it. If they don’t go to that school, uh, you get your money back

Victoria Ferguson: Mm-Hmm.

Matt Mulcock: with just your money back.

Ryan Isaac: money

Matt Mulcock: your cash back. So after 18 years, it’s like you just lost so much money. It makes,

Ryan Isaac: much money.

Victoria Ferguson: Triggered.

Matt Mulcock: Yeah.

Victoria Ferguson: Yeah.

Ryan Isaac: Ooh. Oh, shots fired. Oh, he went there

Victoria Ferguson: my god, you guys. So, let’s talk about the

Matt Mulcock: We’re going to get beat up by insurance people one

Matt Mulcock: day. We’re going to get jumped at a convention.

Ryan Isaac: I’m just going to, I’m just going to accept

Matt Mulcock: Oh, yeah. I’m just going to be like,

Ryan Isaac: I’d be like, the time has come. Huh?

Victoria Ferguson: And I’ll film

Victoria Ferguson: it.

Ryan Isaac: right. Yeah, you

Victoria Ferguson: finally got it.

Ryan Isaac: Yeah.

Matt Mulcock: We’re going to get into a turf war. Turf fight!

Ryan Isaac: Can

Ryan Isaac: we snap at each

Victoria Ferguson: each

Matt Mulcock: Oh, the sharks and the jets?

Matt Mulcock: Uh,

Ryan Isaac: seen that show in my whole

Ryan Isaac: life. Do I need to watch that?

Ryan Isaac: I mean I know exactly what it’s about.

Matt Mulcock: It’s fine.

Ryan Isaac: it’s fine. It’s not that good, go on.

Matt Mulcock: Go ahead. It’s

Matt Mulcock: fine. It’s fine.

Victoria Ferguson: fine.

Matt Mulcock: Have you seen Billy Madison?

Ryan Isaac: yeah, 1995 classic.

Victoria Ferguson: Yes. That

Ryan Isaac: I think On a Balcony

Matt Mulcock: don’t know if it’s on a balcony, but it’s

Ryan Isaac: That might be Happy Gilmore, yeah. Oh, it is in a tent.

Matt Mulcock: Okay. Moving on. Moving on. Yeah,

Victoria Ferguson: It’s

Ryan Isaac: It is in a tent, yeah, carry on.

Matt Mulcock: She’s helping him learn history. Keep going.

Victoria Ferguson: We good?

Victoria Ferguson: good here?

Ryan Isaac: now, I

Victoria Ferguson: Okay. So,

Ryan Isaac: 529

Victoria Ferguson: Education Savings Plan. That’s the

Ryan Isaac: That’s the

Victoria Ferguson: So,

Matt Mulcock: Does everyone love it though? I don’t think everyone

Ryan Isaac: loves Does everyone love it though? I don’t think everyone loves it.

Victoria Ferguson: Yeah, Yeah, well, every, every state has one. Um, that’s controlled by the states. The biggest benefit of a 529 is

Victoria Ferguson: that, The potential , with it, so, um, when, when people say that, they’re talking about the withdrawals from a so if you use it for.

Victoria Ferguson: qualified educational expense, um, you won’t have to pay.

Ryan Isaac: it for any And the, and the list of, uh, I don’t know if you’re going to go through this, the list of qualified educational expenses has expanded a lot.

Matt Mulcock: Yeah, they’ve got, it’s pretty, it’s broadened quite a

Victoria Ferguson: Yeah, I don’t have a list of it, but you can use it now for, what is it, K through 12, private school, um, trade school. You can use it to pay off student loans.

Victoria Ferguson: , I don’t know what else

Victoria Ferguson: is on

Matt Mulcock: I mean room, board, uh, anything like books,

Ryan Isaac: for

Victoria Ferguson: it is for education And if you don’t use it, then you get a penalty. And I think it’s 10%, I wanna say

Ryan Isaac: think it’s 10 percent I want to

Victoria Ferguson: So that’s, Yeah,

Victoria Ferguson: I I like that aspect of it. So if you have a 5 29 and the oldest one, say, gets a full ride scholarship, then you can

Ryan Isaac: transfer it.

Matt Mulcock: and there’s stipulations that if your child who the 529, like they’re the beneficiary of the 529 and they get a scholarship, you can actually pull the money out of the 529 that is, , you know, equal to the scholarship without getting penalized. So you, yeah, so you actually can, can, there’s ways to get the money back out.

Matt Mulcock: You’re basically saying like, I saved for this. They got paid for from the school. You can actually get that money back out and

Ryan Isaac: That’s cool. So they’ve made it, they’ve made it more flexible

Ryan Isaac: to

Matt Mulcock: definitely more flexible.

Ryan Isaac: because that’s been the biggest drawdown is just flexibility of a five 29. If you just don’t happen to need it for educational

Matt Mulcock: Yeah. And the most recent rule change,

Matt Mulcock: maybe you’re going to hit this, but the most recent rule change, you can actually transfer this to a Roth IRA.

Victoria Ferguson: Yeah, I was just going to

Matt Mulcock: Okay.

Matt Mulcock: hit it. Sorry. I’m jumping ahead.

Victoria Ferguson: No, no, you as you should.

Victoria Ferguson: So you can now roll over up to 35, 000 from a 5 of unused 529 funds to a minor Roth. IRA.

Victoria Ferguson: If you meet the requirements.

Matt Mulcock: there’s

Matt Mulcock: some

Ryan Isaac: lot of requirements.

Victoria Ferguson: Yeah, I think the The 529 or the, I think the Roth IRA, had to have been open for 10 years.

Victoria Ferguson: The funds have to sit there for five.

Victoria Ferguson: years. I think those are

Matt Mulcock: And, and you can’t, it’s not 35, 000 in one shot. technically a contribution. So you can only do

Ryan Isaac: it

Ryan Isaac: to

Matt Mulcock: to the limit.

Ryan Isaac: Oh, okay. So, so a kid would have to have the Roth open by age eight, the Roth would have to be open. Then unused five 29 funds could go in there at age 18 if they didn’t use them, but you could only put in whatever the max is for that year.

Ryan Isaac: And then you have to hold that for five more years, age 23 before you can even do anything with the money.

Ryan Isaac: Pretty

Matt Mulcock: I think it’s the, I think it’s the, five 29 has to be open.

Victoria Ferguson: the

Matt Mulcock: That’s I think it’s 15 years. I want to

Ryan Isaac: I want

Victoria Ferguson: Yeah. there’s, Yeah. just Open all the

Ryan Isaac: Yeah, open all the accounts at age zero, and then just sit on them.

Ryan Isaac: And them there. And

Victoria Ferguson: Yeah, that’ll, that’ll

Ryan Isaac: help.

Ryan Isaac: But by the time that happens, all the laws will be changed

Matt Mulcock: Exactly. It, that was more of like a headline benefit, but when you really dig into it,

Ryan Isaac: it, you’re

Matt Mulcock: doesn’t really

Ryan Isaac: like, never mind.

Victoria Ferguson: Yeah. And 35 K, you know, it’s It’s not like you could roll over the entire kickstart the minor

Matt Mulcock: And it’s, again, only 35, 000 total, the lifetime of the beneficiary. So.

Victoria Ferguson: So, TLDR for that one, the huge pro is potential tax savings, you

Ryan Isaac: of the money coming out

Victoria Ferguson: the money coming out and the growth and whatnot. So that, that is really nice. Oh, and then some states will let you do a tax

Victoria Ferguson: deduction for the contributions.

Ryan Isaac: want, are you gonna hit that?

Victoria Ferguson: I don’t know which state. No, that’s all I

Ryan Isaac: was

Ryan Isaac: gonna

Victoria Ferguson: with it, but

Ryan Isaac: I was just going to say a huge misconception people have about a 29 is they assume it’s going to be a big tax benefit, not on the money coming out later, but by making contributions, they view it like a 401k. Like, Oh, if I put money in here, I’m going to get like a huge tax benefit.

Ryan Isaac: Right. And the answer is like not really. And every state has a different benefit. Some don’t have any, if you use their plan. So if you live in Oklahoma and you use the Oklahoma plan, Oklahoma will have a specific state. Benefit if they even do I’m just pulling that out of my head But it could be a it could be a small credit a tax credit on your state tax is not federal It could be a small deduction.

Ryan Isaac: It could be nothing, but it’s very the the actual state tax Implications are very

Victoria Ferguson: Yeah,

Ryan Isaac: The bigger ones are pulling money out tax free for educational expenses later on

Matt Mulcock: Yeah, don’t, don’t be doing this because

Ryan Isaac: like a

Matt Mulcock: front end tax benefits. The, the, none of

Matt Mulcock: the benefits on the front end are big enough to say, yeah, go do

Ryan Isaac: you have to use your in some states. Some people will use other states plans because they’re better managed.

Ryan Isaac: They have better fund options, better fee

Victoria Ferguson: You’re right.

Ryan Isaac: So, yeah.

Matt Mulcock: The one

Ryan Isaac: TLDR

Matt Mulcock: the five 29 will, will remove those assets. As far as I know. for like FAFSA and financial aid.

Ryan Isaac: Okay, it won’t count

Matt Mulcock: it won’t count if you remove it. So it doesn’t remove it from, from that calculation, which, which can be helpful depending on the situation.

Ryan Isaac: you put a lot in there or something.

Matt Mulcock: generally speaking, I think 529s there’s, I tend to think there’s probably more cons than there are benefits

Matt Mulcock: to

Ryan Isaac: Just more restrictions.

Victoria Ferguson: could use it to buy your kid’s first car,

Victoria Ferguson: or for their wedding, or it will, if they want to travel Europe, or, I don’t know,

Ryan Isaac: Not as flexible as people assume. The tax benefits aren’t as huge as people think they are. Especially on like the state side.

Matt Mulcock: Exactly.

Victoria Ferguson: So

Victoria Ferguson: I said, pro potential tax savings, con fairly limited use of funds. control level medium high. You can change beneficiaries, but funds

Victoria Ferguson: must be used for

Ryan Isaac: education.

Matt Mulcock: This is the,

Victoria Ferguson: the beneficiary to be yourself.

Matt Mulcock: yes. Yeah. And, and that, that is a good point that you control the money in the sense of like, this isn’t one of those things where your kid turns 18 and it’s like, they just have the money. Which is good. You do have control over

Victoria Ferguson: Yep. Yep. , that’s 529s. Mine are Roth

Ryan Isaac: moving right along. the minor Roths?

Victoria Ferguson: Yeah. It’s a potential other account to, to hit.

Victoria Ferguson: It’s like a regular IRA but it’s for a

Ryan Isaac: but it’s for a kid. . Yeah,

Matt Mulcock: Did you catch that?

Victoria Ferguson: Does that make

Matt Mulcock: IRA, but for a kid.

Ryan Isaac: Yeah.

Matt Mulcock: Yeah.

Victoria Ferguson: same stipulations 7k a year. Well, I guess in the year of 2024.

Victoria Ferguson: that you can contribute to they, in order to be qualified for it, have to have at least that amount of income. So

Ryan Isaac: Yeah, you kids have to be employed. Going back to our questions of how to ask or what to ask when parents are trying to figure out what to do is, yeah, do you want, what kind of control do you want? Do you want them to have control over, , this money when they’re 18 or 21 depending on the state? And are they going to be on payroll in your practice or do they have a job?

Matt Mulcock: Exactly. They

Matt Mulcock: have to have

Ryan Isaac: have earned income to use a minor Roth, right? So some of these like that will, divert the options one way or another. If they’re like, Oh, they’re not on payroll. I don’t want them on payroll. Or I don’t want them to have control over this account. That’ll just take, , an option like a Roth off the table, but Roths are cool.

Ryan Isaac: They’re very flexible. You probably get into this, but I think they’re awesome. For a kid who’s on payroll, you can use the money for a lot of things.

Matt Mulcock: Structurally way better than a 529. Like, way

Ryan Isaac: Flexibility, investment options.

Matt Mulcock: over time, like what you can use it for. But, The key, That kid gets that money at 18. There’s nothing you can do, and that’s a huge but.

Ryan Isaac: Yeah, you can try to, it is a huge

Ryan Isaac: but. Um, you can try to like hide the mail. You know? Just a lot of parents say, like, I’ll just hide their mail.

Ryan Isaac: They’ll never know. Like, I think they’re gonna know at some point. And they’re gonna be stoked too. They’re gonna be like, wait, I’ve got a hundred thousand dollars.

Ryan Isaac: They’re gonna open a letter one day from Charles Schwab and be like, what? This is

Victoria Ferguson: is this mine?

Victoria Ferguson: Yeah, and how

Ryan Isaac: And what if they’re in their rebel phase, and they’re like mad at mom and dad, you know?

Victoria Ferguson: and they’re not going

Matt Mulcock: Which they will

Ryan Isaac: which they will

Victoria Ferguson: they will be.

Victoria Ferguson: and they’re not going to care about the 10 percent penalty

Victoria Ferguson: withdrawal

Matt Mulcock: by the oh, sorry go

Victoria Ferguson: well, because, you know, I’m 18.

Victoria Ferguson: I just got this money. This isn’t mine to begin with. Yeah,

Victoria Ferguson: I’ll pay 10 percent to get this all in my hands right

Ryan Isaac: But the contributions can

Matt Mulcock: with house money and the contributions can be taken out

Victoria Ferguson: The

Matt Mulcock: you,

Matt Mulcock: the basis can be taken

Matt Mulcock: out

Victoria Ferguson: taken

Matt Mulcock: point with no tax, no

Matt Mulcock: penalty.

Ryan Isaac: care.

Victoria Ferguson: penalty. I’m protecting me! What was

Ryan Isaac: I’m

Matt Mulcock: Man, what you, me? Wait, you start hating on young people and then somehow it comes back to me? no, no, no, no.

Victoria Ferguson: who’s hating on

Matt Mulcock: now who’s the oldie hating on the young pups?

Victoria Ferguson: know what,

Matt Mulcock: know what,

Matt Mulcock: you know what they

Victoria Ferguson: You know

Matt Mulcock: they say that you become like the five people you hang out with most? You’re becoming

Ryan Isaac: most, you’re becoming

Victoria Ferguson: too!

Ryan Isaac: when

Ryan Isaac: you are you at the point where you come to work and you complain about the generation under you ever,

Victoria Ferguson: No!

Victoria Ferguson: I love Studi and Michelle! You just

Matt Mulcock: did. That’s

Ryan Isaac: That’s how you know that

Victoria Ferguson: you’re Yeah.

Ryan Isaac: When the younger generations like doing it wrong for sure.

Ryan Isaac: You’re

Matt Mulcock: That’s when you’re like, Crap,

Ryan Isaac: Crap, I’ve, I’ve

Victoria Ferguson: I think I’m hanging out with you guys too

Matt Mulcock: That’s it.

Victoria Ferguson: I’m becoming you

Matt Mulcock: When you’re like the generation below it,

Matt Mulcock: No, they’re not

Matt Mulcock: doing it.

Matt Mulcock: yeah.

Ryan Isaac: World’s, world’s over with them. The best of the best ended with my generation. Like, you know what the generation above you

Ryan Isaac: thought? Yeah. And two above you thought? Anyway, carry on. Minor

Victoria Ferguson: Minor Ross, you can always access

Victoria Ferguson: the contributions, what you physically put in

Victoria Ferguson: it, for any, For anything. You don’t have to have a reason.

Victoria Ferguson: the, the

Victoria Ferguson: lockup

Victoria Ferguson: is the earnings on that. That’s where you will get assessed that 10 percent penalty if it is not used for uh, what the government deems as a

Victoria Ferguson: qualifying expense. Education is a qualifying expense. First time home purchase, I think,

Ryan Isaac: um, Emergency

Victoria Ferguson: they medical,

Ryan Isaac: a few others.

Ryan Isaac: They’re very flexible. The downsides are that it’s just going to be in their name and they have to be on payroll. They have to have a job to put money in there.

Victoria Ferguson: Yeah, so

Victoria Ferguson: maybe not totally feasible, but if you’re a practice owner, use your child as a, as a model, pop them on the website. if you can make it work, it’s

Ryan Isaac: Yeah, ask your CPA. Most CPAs are like fine with kids on payroll, but

Matt Mulcock: Oh, it’s, it’s a way to me. This is a, this would be the first place I would start assuming they’re okay with the kid getting it at 18, but if you really run the numbers and you say you start doing this for their first 18 years of life and assuming they’re able to keep that money in there till retirement

Matt Mulcock: age, you just gave your kids multiple seven

Ryan Isaac: till retirement age. It’s either hide it or

Matt Mulcock: It’s either hide it or you trick your kid into

Matt Mulcock: convincing them that they can’t pull the money out. Either way, you’re gonna lie to your kid.

Victoria Ferguson: Yeah.

Ryan Isaac: Which is, a good

Matt Mulcock: this is A good parenting, you gotta

Ryan Isaac: Santa Claus, Tooth Fairy, I mean, come on.

Ryan Isaac: You know what I mean? Easter Bunny, you’re special, we

Ryan Isaac: love

Ryan Isaac: you. Yeah, you’re really

Victoria Ferguson: the most

Ryan Isaac: You’re the cutest kid I’ve ever seen.

Matt Mulcock: You’re just, you’re

Ryan Isaac: We love you? That was dark, though.

Victoria Ferguson: said that, not me. I

Matt Mulcock: No, you said I

Matt Mulcock: love you. you. said you’re special.

Matt Mulcock: Either way, either way, this is what we’d call a righteous trick. You’d say, a righteous trick.

Matt Mulcock: Shout out Carl Richards. It’s like I’m going to lie to you until you can’t touch this money till retirement. If you’re able to convince your child and lie to them, like you, we’ve already highlighted, you do your special.

Matt Mulcock: Um, you’re literally sending them up for millions

Ryan Isaac: A tiny human wing sneaks in and takes the dead tooth from under your pillow and replaces it with American

Matt Mulcock: Speaking of that, has there been, what’s the inflation on the tooth

Ryan Isaac: Oh, we need to do an episode on that. Yeah, we always usually do an update on that. yeah, There are probably some estate planning routes you could take to lock those accounts up in a

Victoria Ferguson: Yeah.

Matt Mulcock: Not

Matt Mulcock: a Minor

Matt Mulcock: Roth. Mm mm.

Ryan Isaac: Weekend in a coup.

Matt Mulcock: Because

Matt Mulcock: Okay.

Ryan Isaac: was just generally

Matt Mulcock: There’s going to be a coup started over Minor Roth IRAs. All the young children are going to be like

Ryan Isaac: Gen Z’s rising up and they’re gonna start a coup over minor

Matt Mulcock: Yeah.

Ryan Isaac: Because they want them locked up in

Ryan Isaac: a trust.

Ryan Isaac: No, they don’t.

Matt Mulcock: older generation that’s going to do that. We’ve gone off

Matt Mulcock: the

Ryan Isaac: Okay, anyway, keep going. Alright. Yes, please.

Victoria Ferguson: TLDR TLDR Pro. This one, I think, has the highest potential tax benefit. Because if you, say, make it all the way to retirement, you’re, why are you

Victoria Ferguson: smiling at

Victoria Ferguson: me? Stop looking

Matt Mulcock: that. You went to the lie. We tell our children and you said you’re

Victoria Ferguson: sorry. That got me. That feels like

Matt Mulcock: I’m sorry. That got

Ryan Isaac: that feels like a lot to

Matt Mulcock: That got me. It’s a, there’s a lot to unpack there, but anyway, sorry,

Matt Mulcock: TLDR. No, I just, that was hilarious. Get

Victoria Ferguson: middle child in Holiday Utah.

Matt Mulcock: just realizing, I’m just realizing that we do lie to our kids a

Ryan Isaac: We do that to our kids

Matt Mulcock: for good

Victoria Ferguson: yeah, don’t you just like put your hand on their shoulder and say, I’m lying to you for your own

Matt Mulcock: Yeah. I mean, you

Ryan Isaac: Isn’t that

Ryan Isaac: narcissism? When you’re lying to people and you think it’s for their own good and you know better than them, so you can just continue to lie to them.

Victoria Ferguson: good and you know better than most

Matt Mulcock: Wait, wait, it went off the rails about 20

Matt Mulcock: minutes

Victoria Ferguson: them.

Victoria Ferguson: We’ve been going off the rails for about 20 minutes

Matt Mulcock: Okay, we’re not doing this right now. Get back to

Matt Mulcock: the

Ryan Isaac: have zero capacity to even answer, I have no idea.

Matt Mulcock: Okay.

Victoria Ferguson: It can’t there’s things you keep

Ryan Isaac: It can’t be, cause there’s things you

Matt Mulcock: We’re not

Matt Mulcock: getting into the philosophy of lying right now.

Victoria Ferguson: TLDR. I think minor Roth IRAs have the highest potential tax benefit of any account.

Victoria Ferguson: you know, if you are, if you’re able to, you started young, if you play it all correctly, then it has by far the, the highest, tax, potential highest.

Victoria Ferguson: tax benefit.

Victoria Ferguson: , Con,

Victoria Ferguson: , gets locked up potentially the earnings of it, right? You can’t access that without a 10 percent penalty.

Victoria Ferguson: but

Ryan Isaac: but They’re

Victoria Ferguson: it a

Victoria Ferguson: little restrictive, , if you use it for, you know, things like education.

Victoria Ferguson: unexpected medical costs, , first time home purchase, there’s,

Victoria Ferguson: there’s some stipulations, then you won’t get that 10 percent

Matt Mulcock: home purchase is limited to 10, 000 of those

Victoria Ferguson: I should

Ryan Isaac: that.

Ryan Isaac: yeah, there’s

Matt Mulcock: And you’re only avoiding the penalty, you’re not avoiding the tax.

Ryan Isaac: But let’s see again, uh, in like practical terms in dollar amounts, we’re talking about a kid’s Roth that has a maximum cap every year. A lot of that account is going to be basis.

Ryan Isaac: which is highly usable. I mean, you’re just going to end up with a high ratio of dollars in there that are totally flexible and usable from your basis.

Matt Mulcock: And by the way, if you compare the Roth IRA versus the 5 29, the way you pull that money out is totally different from a tax perspective. A Roth IRA, you pull your contributions out first, where a 5 29, if you wanna pull that money out. For non-educational expenses, it’s pulled out pro rata, which means a portion of it will always be taxed and penalized.

Matt Mulcock: Where the Roth IRA, let’s say you piled up.

Matt Mulcock: 100,

Matt Mulcock: 000 into it, it has grown to 200, 000. The money you pull out, it always takes the basis out first before you get to that growth. So the Roth IRA is so flexible in that respect. Way more beneficial, assuming you’re okay with your kid getting in at 18.

Victoria Ferguson: kid getting it at 18. Yeah, totally. Control level, I gave it a medium because you can withdraw your contributions out entirely before 18.

Victoria Ferguson: if you really want

Matt Mulcock: You’re saying for the kid, but yes, but technically that’s their So like,

Victoria Ferguson: could

Matt Mulcock: you could, and you could, if you’re using it for the benefit of the child, yes. If you’re pulling that out and going.

Ryan Isaac: Well, you’re saying it right at 18, you go pull out your, if you

Matt Mulcock: Oh, I’ve had people say

Ryan Isaac: hold on.

Ryan Isaac: That’s interesting. So you start at

Ryan Isaac: age

Victoria Ferguson: say technically it’s a

Ryan Isaac: grand a year. That’s like 126 grand. I was just doing the math. It’s not in my head. I was just using calculator

Matt Mulcock: Why did you say that you should have just

Ryan Isaac: come

Ryan Isaac: on,

Matt Mulcock: us. We would have

Matt Mulcock: been like, damn.

Ryan Isaac: So it’s like, it’s a six figure amount of money and you’re like, Before they’re 18 and it’s theirs, you’re saying, Pull out the basis.

Victoria Ferguson: I’m not recommending it. I’m

Ryan Isaac: I know. But I wonder, You’ve known people have done that?

Ryan Isaac: And then you leave the gain in there for only qualified expenses.

Matt Mulcock: known clients, I’ve known people, I won’t name names, who have asked me about this. Like, what if we did this, and my response is the same as I’m going to say now, which is, Okay, you can do that, that

Ryan Isaac: their money.

Ryan Isaac: It’s irrevocable.

Matt Mulcock: It is an irrevocable

Ryan Isaac: their money. So

Matt Mulcock: It is their money. So if you go and basically if the government comes

Matt Mulcock: knocking or the kid finds out and they So let’s say you do the day before they turn 18 and they found out the next day, they could sue you. I’m not saying they will. I’m just saying that is their money.

Victoria Ferguson: Yeah.

Ryan Isaac: That is really interesting.

Victoria Ferguson: Yeah, but it does go

Matt Mulcock: we have dentists out there right now just

Matt Mulcock: writing

Matt Mulcock: down stuff, making a plan and saying, You know what?

Matt Mulcock: They told us on the Dentist’s Money Show.

Victoria Ferguson: Yeah, so, um,

Ryan Isaac: did.

Matt Mulcock: Victoria’s

Victoria Ferguson: You guys, no, I, technically,

Victoria Ferguson: no, oh my gosh. Okay, , this account does go to them at 18 or 21.

Matt Mulcock: I think most are 18, but Yeah.

Matt Mulcock: It’s the age of majority in your state. You just google age of majority in your state, that’s the

Matt Mulcock: age.

Victoria Ferguson: yeah. Okay,

Ryan Isaac: Okay.

Victoria Ferguson: Brokerage accounts.

Ryan Isaac: Oh yeah. Uh huh.

Matt Mulcock: That’s, I don’t know

Ryan Isaac: That’s it. Moving on. What’s the next one?

Ryan Isaac: Brokerage account.

Matt Mulcock: you you mentioned,

Ryan Isaac: one.

Victoria Ferguson: ha ha ha

Matt Mulcock: Oh baby, you mentioned

Matt Mulcock: earlier, you mentioned earlier that you didn’t mention Atman’s or Agman’s, but I think this is a great opportunity to talk about, there’s two types of brokerage accounts in this sense. There’s the brokerage account that you would have, and your name is the parent, that you could just put fun and money aside, name that,

Matt Mulcock: Kids money, but it’s in your name, uh, in your ownership.

Matt Mulcock: , then there’s custodial accounts. Like you said, up Mazur, Agmas. It’s the same thing as a minor Roth IRA. You control the money before they turn 18, but it is their money.

Matt Mulcock: And

Matt Mulcock: you put it there again, when they turn 18, it’s

Ryan Isaac: They just don’t have to have an, uh, a job.

Ryan Isaac: They don’t have to have earned income. I mean, there’s no limits of what you

Matt Mulcock: and there’s no real

Ryan Isaac: you can do. And there’s no big tax benefit. It’s just a brokerage account. You put it in your kid’s name or yours.

Matt Mulcock: Exactly.

Victoria Ferguson: tax benefits, but no penalties

Ryan Isaac: No, zero total flexibility. Brokerages are ultimate flexibility in parents, retirement, kid savings.

Ryan Isaac: Yeah, for sure.

Matt Mulcock: There’s a very, very minor tax benefit to them. Very minor, but it’s not significant enough to consider based on that

Matt Mulcock: alone.

Matt Mulcock: I think in most cases for me, I don’t know how you guys feel they would be, if you’re going to use a brokerage account for your kids, I tend to believe you should just put the money or the brokerage account in your name,

Ryan Isaac: the brokerage

Matt Mulcock: Put that in a

Matt Mulcock: trust.

Ryan Isaac: Put that in a trust.

Ryan Isaac: You know, things going on,

Matt Mulcock: Oh, also you can save that in a brokerage account over the next, however many years you can, then there’s a rule with, with five to nines that you can front load them. So you can do, five years in one year, you can, you can accelerate it and be able to, and it doesn’t impact gift tax rules either. So there’s a lot of things you can do with that

Ryan Isaac: that money later. Again, brokerage accounts, yeah, they’re my favorite. We’re

Victoria Ferguson: think they’re like the underdog, We all try to get fancy with

Ryan Isaac: get fancy with you. Let’s go pump it up. Let’s

Victoria Ferguson: let’s, let’s pump it up. Let’s give a

Ryan Isaac: you think

Matt Mulcock: why do you think when you said brokerage accounts, I said, Oh,

Ryan Isaac: open? Yeah, it was

Matt Mulcock: That’s appropriate.

Victoria Ferguson: Yeah.

Victoria Ferguson: You were

Victoria Ferguson: really stoked about brokerage accounts. Yeah, I mean there’s not really much to them. It’s kind of just a savings account that you can

Ryan Isaac: Yeah, totally flexible.

Victoria Ferguson: Plain vanilla, you can use them for whatever the heck. you want. It could be like A wedding gift for your kid, or a car, or

Victoria Ferguson: whatever

Victoria Ferguson: for them to start their own

Victoria Ferguson: business. You can’t use a five 29 for something like that, or a minor, or

Victoria Ferguson: Roth.

Victoria Ferguson: I mean, Not as easily.

Victoria Ferguson: with the

Ryan Isaac: minor

Ryan Isaac: Roth. Yeah, way more restrictions.

Matt Mulcock: Consider though, the tax implications. If you put this money in your name in a brokerage account, you save it for the next 10, 15, 20

Matt Mulcock: years.

Matt Mulcock: And you go to give a large, not even the gift tax issues, it’s you, to give that money away, you gotta sell

Ryan Isaac: it. You gotta sell

Matt Mulcock: And you’re gonna have capital gains tax on

Victoria Ferguson: gonna be 20% percent for most

Matt Mulcock: Exactly. And that’s the difference between that and a minor Roth IRA is the minor Roth IRA. You can pull the basis out. Like we were saying, selling assets within a Roth IRA, do not, does not create any tax issues at all. It’s within

Matt Mulcock: that it’s insulated in that account. You pull the basis out. When it comes to the brokerage, you are not insulated from a tax hit when you sell.

Matt Mulcock: So that’s, that’s a big deal as well.

Ryan Isaac: well. I love these. Yeah. Super flexible. And I’m with Matt. A lot of, parents choose to just keep it in their name.

Matt Mulcock: Yeah, and I, I would still do

Ryan Isaac: that.

Ryan Isaac: I still like that. You got, you know,

Victoria Ferguson: You’re paying for flexibility.

Victoria Ferguson: TLDR brokerage accounts. So I put the pro is the highest level of flexibility, no penalties right? That’s the biggest advantage con, , no tax benefit or the tax consequences if you will, but I kind of view that as you’re paying, you’re paying a premium for flexibility.

Ryan Isaac: Yes. And liquidity.

Victoria Ferguson: liquidity and that money is always yours.

Victoria Ferguson: Doesn’t go to them at 18. So it’s, I’ll just say that as the con, control level high, very high. You never, if you keep it in your name, they can never have access to it. So think of this as you’re paying a premium for flexibility and the maximum amount.

Ryan Isaac: Bingo. Bingo.

 

Matt Mulcock: Okay, what’s the last one?

Ryan Isaac: Um,

Victoria Ferguson: The last one I have is a high yield savings account. I don’t want to discount this one either. You don’t hear about this as often. You know, you’re usually thinking 529 minor Roth, Utma Ugma brokerage account, but I wanted to give a little shout out to the high yield savings account.

Ryan Isaac: the high

Matt Mulcock: a resurgence in the

Ryan Isaac: Yeah. Well, lately, lately, totally that’s a thing. But I actually, I think this is really good because.

Ryan Isaac: An underestimated part of kids savings is allowing them to have spending that they’re in control of, so that they can learn spending and savings habits. I’ve seen that with my teenagers. With our clients, I’m like trying to make them save 20%, you know, and my kids, it’s 50%. They, it’s like, they have a mandatory 50 percent savings rate of everything they earned.

Matt Mulcock: Uh huh. And

Ryan Isaac: Uh huh.

Victoria Ferguson: you have a dad

Ryan Isaac: they, yeah. And they just

Matt Mulcock: they only

Ryan Isaac: So they know they only get half their money that comes in. But the other half is kind of cool to watch them

Ryan Isaac: some of my, one of my kids is like a total spender. It’s always gone. Another one like hoards the money and she has so much money. Yeah. So I think this is really good to include because it’s a, it’s a highly beneficial thing to teach your kids while they’re teenagers, a little bit of spending habits and budgeting.

Ryan Isaac: And my Starbucks is seven bucks, but I’ve got two in there. One of my kids like always, overdraws her account. All the time.

Ryan Isaac: And

Matt Mulcock: probably, you probably learn a lot about their personalities when you’re doing

Ryan Isaac: you’re doing this. Totally learn about their

Victoria Ferguson: It’s like a little tester to see like, are you going to get this brokerage account,

Matt Mulcock: It’s like, which one of you is going to be

Ryan Isaac: and it’s, well it’s cool to see which ones will be like Oh, now that it’s my money, I chose the cheaper jeans or the not name brand lotion or perfume.

Ryan Isaac: Yeah. And like which ones will save money and choose not to buy stuff and like, wait, like it’s a cool, I’m glad you put this in there because I’ve seen this in my kids. Live B. Really helpful to like teach them their own spending, give them their own little cards. And there’s cool, like they, my kids use capital one.

Ryan Isaac: They have like these minor checking accounts. They have high yield savings in there. There’s like the green something card through like visa or something. There’s some, there’s some good ones out there for kids spending. So I like, I like

Matt Mulcock: money’s like it’s when you say this it’s like money’s just a mirror just

Ryan Isaac: It’s just a mirror of how they are.

Victoria Ferguson: with your four ones, what, which ones are the spenders?

Victoria Ferguson: Is there any kind of like

Ryan Isaac: My oldest has been the biggest spender. Like she’ll just go, she’ll go spend all of her money.

Victoria Ferguson: And then what about the

Ryan Isaac: Um, my second, uh, my second, she’ll save a lot of money and she will thrift shop. She’s really frugal. My third, Doesn’t make a lot or save a lot, but she doesn’t spend anything either. So she doesn’t spend anything, but she also doesn’t make a lot.

Ryan Isaac: And my fourth makes a ton. I mean, she’s not even, she’s 12. She can’t even work. She babysits. She makes a ton and shops every day.

Matt Mulcock: She loves

Matt Mulcock: it. Oh, she’s the fancy

Ryan Isaac: yeah, fancy bougie girl, but she’s got a lot of, for a 12 year old, a lot of money saved up that she earned.

Ryan Isaac: But she, she shops every single day. Uh huh. Yeah. It’s funny how it all plays out and like what’s worth it to them and not.

Ryan Isaac: So I’m glad you included

Ryan Isaac: that.

Victoria Ferguson: glad you I think it’s a very important piece.

Ryan Isaac: Oh, birth order.

Victoria Ferguson: Oh, oh, oh. Based on how your parents were, is there any kind of correlation to how you will be with

Ryan Isaac: Whoa.

Victoria Ferguson: And there’s not.

Victoria Ferguson: But they do know that

Matt Mulcock: Spoiler alert.

Victoria Ferguson: spoiler alert,

Matt Mulcock: studies were worthless. There’s no correlation.

Victoria Ferguson: really find anything.

Victoria Ferguson: They, you tend to either be them or go the opposite. Um, so I was kind of wondering based on like, Order

Victoria Ferguson: and how you were with money when they were a certain age. If that would, anyways, there’s, there’s no correlation at this point, but we do know that, um, kids money habits are pretty much formed before the age of 10.

Ryan Isaac: Yeah.

Ryan Isaac: And man, I mean before you send them off out of the house, like it’s really important that they understand that it doesn’t just, it’s not a constantly replenishing bucket of money from parents that is always there. Always getting whatever they want and need at all times. It’ll be a shock to their system if they haven’t figured that

Matt Mulcock: Teaching them that early is huge.

Victoria Ferguson: Yeah. But I, I threw it in there also as like a, you know, if you haven’t had the opportunity to save for your kid until a few years before, maybe less than five years before,

Ryan Isaac: Yeah, something high yield too.

Victoria Ferguson: rates

Ryan Isaac: right now. Yeah, 2024.

Victoria Ferguson: August of 2024, they’re about four to five percent. If you have a shorter time frame, maybe you only have about three years left and you don’t have the , to really reap the benefits of investing, then there’s nothing

Ryan Isaac: Yeah, still great.

Victoria Ferguson: you have a just a short, so that’s why I wanted to throw this in

Ryan Isaac: Yeah,

Victoria Ferguson: that we catch all

Matt Mulcock: It’s, I mean, it’s a good point. Timeline matters and the benefits of a 529 are greatly diminished. The shorter your timeframe

Victoria Ferguson: a minor

Matt Mulcock: and a minor Roth

Victoria Ferguson: those two are the most powerful, the early, the longer

Matt Mulcock: a tax

Victoria Ferguson: from a tax perspective, the longer timeframe you have. Right. And well, I guess kind of brokerage account, but not from the tax

Ryan Isaac: the And you guys were saying this earlier, and to normalize this, for a lot of parents, kids savings doesn’t usually happen until they are older.

Ryan Isaac: because

Matt Mulcock: you’re in a different

Ryan Isaac: careers are not as developed and your financial, you know, situation

Victoria Ferguson: that’s why I wanted to throw it in there because oftentimes,

Ryan Isaac: there, because often Yeah, it’s a late stage saving route, it’s really

Victoria Ferguson: Or just to, you can even have a combination of

Ryan Isaac: Or some CDs, you know, if you’re a couple years out, you know, with your bank or credit union or

Victoria Ferguson: yeah, totally. So I just wanted to give some

Ryan Isaac: Well done. Thank you for the options

Victoria Ferguson: TLDR TLDR pro highest level of flexibility.

Victoria Ferguson: No penalties associated with any withdrawals con no tax benefit. You can’t invest the account control level. Very high. Same thing with a brokerage account. Just keep it in your name.

Matt Mulcock: there’s no chance for higher growth. Like, meaning,

Victoria Ferguson: I guess that’s another

Matt Mulcock: are the

Victoria Ferguson: Yeah. You

Ryan Isaac: yeah, they don’t, yeah, it is what it is, and the, and it’s always being adjusted. I would say this episode wasn’t exactly, this episode was very TL. Yeah.

Matt Mulcock: Yeah, should we give

Matt Mulcock: a TLDR to the whole episode? it. Fast forward to the end and we’ll get

Matt Mulcock: Fast

Victoria Ferguson: the

Ryan Isaac: and we’re done.

Victoria Ferguson: I think this is needed though, because I don’t think we have content like this deep into this topic,

Ryan Isaac: don’t think we have content like this.

Ryan Isaac: Somebody about your kids’ savings and how it fits into your own personal retirement savings plans and cashflow. Go

Matt Mulcock: do, Ryan? What should they do?

Ryan Isaac: I I’m gonna say go to dentist advisors.com. Concur, and uh, click the yellow button and schedule a friendly chat with a dental specific advisor today. We’d love to talk to you.

Ryan Isaac: Thank you, Victoria and Matt. Thank you for everyone joining us. Bye-Bye now.

 

 

Keywords: saving for kids, education, college costs, 529 plans, minor Roth IRAs, brokerage accounts, high-yield savings accounts.

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529s, Saving