Money Girl

1052. Thinking about helping your kids buy a home decades from now? Host Laura Adams answers a listener’s question about the best ways to grow savings. You’ll learn how inflation impacts long-term savings and which growth-oriented accounts offer the best return for long-term goals.

Key Takeaways:
For long-term goals, low-yield options like CDs carry risk due to inflation. Broad-market index funds (like an S&P 500 fund) offer higher returns that can keep pace with inflation.
Opening a standard brokerage account in the parent's name allows money to grow in low-cost index funds without contribution caps or early withdrawal penalties. Parents are in complete control of when, how, or if the money is gifted.
UGMA or UTMA accounts allow parents to invest on a child’s behalf, and ownership legally transfers to the child when they reach adulthood.
Families with children under 18 can utilize Trump Accounts, which allow up to $5,000 in annual tax-deferred contributions. Plus, those born from 2025 to 2028 are eligible for a $1,000 federal deposit.
After age 18, a child’s Trump Account converts to a traditional IRA. It can be converted into a Roth IRA by paying taxes on account earnings, which then allows more options for penalty-free withdrawals.
Once a child has earned income, parents can match their earnings in a Roth IRA up to the annual limit ($7,500 in 2026). Contributions can be withdrawn anytime tax- and penalty-free for any use.
After five years of account ownership, a Roth IRA allows up to $10,000 of earnings to be used penalty-free (but not tax-free) for a qualified first-time home purchase.

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Transcripts available at QuickandDirtyTips.com.
Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.

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1051. Are you worried about the rising cost of college? In celebration of College Savings Month, Laura compares the two main types of education accounts: 529 savings plans and 529 prepaid tuition plans. You’ll learn their key differences and how to choose the right plan.

Key Takeaways
Both 529 savings and prepaid plans offer tax-free account growth and tax-free withdrawals when used for qualified education expenses.
529 savings plans invest in market portfolios (like index funds) for higher growth potential, while prepaid plans lock in current tuition rates at state universities to hedge against rising costs.
529 savings plans cover tuition, room, board, books, computers, trade schools, and up to $20,000 per year for K–12 tuition.
Prepaid plans only cover tuition and mandatory fees at a preset in-state university.
Unused funds in a 529 savings account open for at least 15 years can be rolled over tax-free into a Roth IRA for the beneficiary (up to a $35,000 lifetime cap).
You can use both accounts to lock in prepaid tuition rates and a savings plan to cover many other qualified education expenses.

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Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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1050. Buying a car can feel like a financial landmine. Host Laura Adams answers a listener’s question about buying a car before starting his first job. You’ll learn how to evaluate your current car, set a budget, secure financing, and find a great deal that doesn’t wreck your financial goals!

Key Takeaways:
Compare a car’s repair bill against months of new car payments and a potentially higher insurance premium before giving up on an older vehicle.
To keep transportation costs affordable, follow the 20/4/10 rule to put 20% down, finance for no more than four years, and cap total expenses at 10% of income.
Get an auto loan pre-approval before you start car shopping so you have an interest rate benchmark if a dealer offers financing.
Request auto insurance quotes for different cars you’re considering so you understand the cost before buying a vehicle.
Focus negotiation on a vehicle’s total purchase price rather than the monthly payments, which can be adjusted to include fees or longer loan terms.
Leasing a car may make financial sense if you need a lower monthly payment, drive lower annual miles, prefer a new vehicle every few years, and don’t care about building long-term equity.

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Transcripts available at QuickandDirtyTips.com.
Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.

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1049. Think building wealth requires a six-figure salary? Think again. Host Laura Adams breaks down five small, high-impact habits that lead to serious long-term wealth, regardless of your current income. You’ll learn how to turn quiet daily routines into big financial freedom!

Key Takeaways
Wealth is built on consistency. Setting up automatic transfers to high-yield savings and retirement accounts eliminates the temptation to spend.
Taking advantage of tax-advantaged accounts creates opportunities for growth and short- and long-term tax savings.
Low-cost index funds combined with dollar-cost averaging offer a proven, stress-free path to long-term market growth.
Using the debt avalanche method to target high-interest debt first yields a guaranteed return equal to the interest rate avoided.
Income is what comes in; net worth is what stays. Regular updates to a net worth dashboard provide the truest measure of your financial progress.

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Transcripts available at QuickandDirtyTips.com.
Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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1048. Receiving an inheritance can be a life-changing financial event, but passing a portion of those funds along to family members comes with a unique set of tax rules. Host Laura Adams breaks down the federal tax consequences of sharing an inheritance. You’ll learn how inherited assets are taxed at receipt, how the federal annual gift tax exclusion works, and smart tax-free strategies to help your loved ones without triggering extra tax paperwork.

Key Takeaways:
Receiving plain cash or life insurance proceeds does not trigger federal income tax, and you do not need to report it on your federal return. However, a gift giver could owe state tax depending on where they live.
As a gift giver, you can exclude up to $19,000 per person per year (or $38,000 if married) without reporting it.
Gifts above the exclusion simply require filing IRS Form 709 to count against your $15 million lifetime exemption, meaning almost no one owes actual gift tax.
Inheriting property or taxable investments adjusts the asset’s cost basis to its fair market value on the owner's date of death, erasing past appreciation.
If you want to pay tuition or medical bills directly for someone else, it does not count toward your $19,000 annual exclusion or require Form 709 reporting.
You can superfund a 529 savings plan for someone else and use five years’ worth of annual exclusions at once.

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Transcripts available at QuickandDirtyTips.com.
Email: Laura@LauraDAdams.com or leave a voicemail: (302) 364-0308.
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