The $299K Gap: 1 in 3 Americans Would Have a Child for $1K Trump Account
The Trump administration's new Trump Accounts program offers eligible children a $1,000 government-funded investment account at birth. But does it make any difference?
Obviously, four figures is a meaningful perk, as a recent BadCredit.org survey found that 1 in 3 Americans would be more likely to have a child if they received the benefit. But with the cost of raising a child now in the hundreds of thousands of dollars, experts say parents shouldn't make family-planning decisions based on the incentive alone.
Here's why a Trump Account shouldn't play a role in your family planning.
It Costs More Than $300K To Raise a Child in America
According to the latest stats, it now costs over $300,000 to raise a child to age 18. Even with a $1,000 head start — which goes to the child, not the parent — that's a $299,000 gap.
"I would certainly not use this type of incentive as the entire basis for starting a family or having another child," said Erica Sandberg, consumer finance expert at BadCredit.org. "One thousand dollars is seed money for an investment account, but the financial impact won't be seen until your child is 18 years old."
In between that time, there are a vast number of expenses that you need to prepare for.
Why Eligible Families Should Claim the $1K Trump Account
The survey also found that 37% of Americans would not take the Trump Account money, even if they were eligible. This could be a costly mistake, especially once compounding is taken into consideration.
"The 530A account is new, which leads to confusion and even suspicion," Sandberg said. "There is no requirement to add to the account once it's started, so parents can just open the account and allow it to grow on its own."
The $1,000 seed money will be automatically invested in an index fund.
"If you don't want to contribute another penny to the account and would prefer to open a custodial account or use another investment vehicle instead, you certainly can," Sandberg said. "Not opening it is waving free money for your child’s future goodbye."
Depending on market performance, a $1,000 investment left untouched for decades could potentially grow into tens of thousands of dollars, making the account worth claiming even for parents who choose not to contribute additional money.
3 Ways Parents Can Get the Most From a Trump Account
Families who are already planning to expand can benefit from the account's long-term savings opportunities.
Sandberg offered the following tips for families who are eligible to maximize the advantages of Trump Accounts:
1. Don't miss any deadlines or opportunities for free money
"Children born between Jan. 1, 2025 and Dec. 31, 2028, need to be registered. Go to the official portal and get set up. It’s pretty simple."
2. See if you're eligible for employer contributions
"Another benefit of the account is that your employer may contribute. If they do, they can put a maximum of $2,500 into your account every year. It's tax-free, so it won't affect your taxable income. This benefit begins on July 4, 2026. Their contributions won't be deducted from your paycheck — it's just a straight gift."
3. Consider opening an account for older children
"Although older children will be locked out of the 530A’s $1,000 seed money, you can still open an account for them. If your employer offers the $2,500 annual contribution option, you can set that up."
Opening a Trump Account can be one facet of your family's financial planning.
"Although having and raising children certainly has its costs, by preparing your finances with sound credit and money habits, you can manage them," Sandberg said. "Take advantage of vehicles that will help in the future. An investment fund that grows over many years will provide your child with a significant amount of cash they can use to start their own life. That’s exciting!"
A Trump Account may not make a meaningful dent in the cost of raising a child today, but it can provide a valuable financial head start for a child's future.
Editor’s note on political coverage: MoneyLion is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on MoneyLion.com.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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