Overview of DIY Money Jr: How to Save for College
In this DIY Money junior episode, six-year-old Palmer asks how to save for college. Hosts Allie and Logan explain how children and families can turn a large future cost into manageable saving habits, and compare education savings accounts with custodial accounts.
Start Small and Build a Habit
Allie recommends that Palmer talk with parents or other family members and agree on a realistic plan. A child might save a set share of money they receive—such as 10%—and increase the goal later, perhaps when they get a first job. Breaking a large goal into small, regular steps can make progress easier to see and help build discipline.
Logan suggests that parents consider matching a child’s contributions. A match can encourage saving while teaching a habit similar to contributing to an employer retirement plan.
College Savings Options
- 529 plan: Owned by the parent and intended for qualified education costs. Investments can grow in the account, and the hosts note that keeping assets parent-owned may be preferable for families concerned about how savings affect need-based aid.
- Custodial account: Owned by the child, with a parent or other adult managing it until the child reaches the applicable age of majority. Funds must benefit the child. Logan says these accounts can also give children a hands-on way to learn about investing.
The hosts say families can use both types of accounts, depending on their goals. The right mix and contribution schedule depend on each family’s circumstances.
Other Account Mentioned
Allie also mentions a newly introduced “Trump account” program, saying that details were still developing at the time of recording. She describes a government contribution for eligible children born from January 1, 2025, through the end of 2028, and says education may be an eligible use. She encourages families with newborns to look into the contribution and follow updates to the rules.
Main Takeaway
Start with a conversation and a small, repeatable savings plan. Consistent contributions, family support, and early financial lessons can help a child prepare for college over time.