I'm a Finance Expert and Here's How I'm Going to Make My Kids Rich
A Wall Street insider shares her top tips for growing generational wealth.
It's no secret that generational wealth gives you a major leg up in life. However, starting that cycle of prosperity is no small challenge if you happen to come from humble beginnings. That's why, increasingly, everyday Americans are turning to social media to learn the ins and outs of investing from Wall Street insiders. These content creators are sharing all the secrets you need to achieve financial stability and even abundance—for both yourself and your kids.
Vivian Tu, a former trader who now goes by Your Rich BFF on social media, says she has a three-point strategy for doing just that. "I wasn't born rich but I guarantee you my kids will be," Tu said in a recent TikTok post. Ready to take charge of your money and invest in your children's futures? Read on to find out how to start saving now to make your kids rich someday.
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She'll make them authorized users on her credit card.
Tu says that the first thing you should do to set your kids up for financial success is to add them as authorized users on your credit card. Though some credit card issuers will only allow this once a child turns 18, others have lower age minimums.
"If you pay your credit card bill on time and in full every single month, you can add your kid and they can leech off of your good credit," Tu says in the TikTok post. "This will help them have a near-perfect credit score long before they need a loan for a home or a car and they'll always get the best terms."
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She'll open a custodial Roth IRA in their name.
The key to building wealth is patience, consistency, and a smart investment vehicle. Tu says that a custodial Roth IRA is an ideal vehicle for a long-term payoff—and one that many already wealthy families use to make their kids even richer.
"They open up custodial Roth IRAs for their kiddos when they make money mowing lawns, babysitting, whatever. They'll take that earned income and invest it for them in index funds within this tax-advantaged account," she explains. "If they can earn roughly $200 per month to put into the account, they'll have around three million dollars in retirement, not including any other savings or investing."
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She'll use a 529 to save for their education.
Tu also recommends opening up a 529 account to start saving and investing for your kid's education. "Odds are good that your kid will go to college or a trade school, so not only will this help to cover those costs, but depending on your state, you'll get a tax benefit for doing so," she explains.
In fact, in a recent Instagram post, the former trader says that you can set up a 529 account before your children are even born. "I'll set myself as the beneficiary and start contributing to it now," she shares of her own approach. "Once my kid is adopted or born, I'll reassign the account to them. Whether it's private school, K-12, or college, I'll be able to withdraw from the 529 to pay for these expenses tax-free."
The best part, she adds, is that if a child ends up getting a scholarship and doesn't use all the money in the account, you can roll up to $35,000 from the 529 plan into a Roth IRA in their name, thanks to new tax codes. "By the time they retire, it'll be worth $1.6 million," she notes.
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Put your own financial life jacket on first.
Tu says that while it's smart to save for your kid's future, it's also important to take care of your own financial needs first. Only from a place of personal financial stability can you help your offspring achieve the same.
In particular, she says there are five key strategies to building wealth. "If you want to be rich, if you want to be financially stable, if you want to live the life that you want to live, you have to STRIP," she tells Moneywise. This is an acronym, which stands for savings, total debt, retirement, investing, and planning.
To get started on building your savings, create an emergency fund for a rainy day; if you don't have this, the rest of your strategies will be put into jeopardy. Next, address any outstanding debts, targeting those with the highest interest rate first.
Once you've gotten your debt payment plan in place, it's time to look at retirement accounts, Tu says. This could be a 401(k), a traditional IRA, or a Roth IRA, depending on your type of employment. If you've still got any spare cash available after that, you can think about investing more broadly in a diverse portfolio of index funds.
Finally, the "P" in STRIP stands for planning—and this is where all of your hard work, savings, and smart investments pay off. Plan for your future and decide what your ideal lifestyle looks like so that when you get there, you can take your foot off the gas and finally enjoy the fruits of your labor.
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Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.
