How to Make Your Child a Multi-Millionaire: 3 Common Wealth-Building Strategies

Every parent wants to give their child a bright future. Money isn’t everything, but having a solid financial cushion can open doors later in life. The good news? You don’t need to be rich to build wealth for your child. Teaching kids about money can be simple and effective.

Starting early and using simple strategies allows families of all income levels to put their kids on track to become millionaires. Below, we’ll cover easy, proven ways to generate long-term wealth without complicated investments or extensive upfront costs. 

TL;DR: Building Wealth for Your Child

• The power of compound interest makes early investing the key to building significant wealth for your child's future
• Three proven strategies: invest a lump sum at birth, contribute small monthly amounts until age 18, or open a Custodial Roth IRA for working teens
• Best account options include UTMA/UGMA Custodial Accounts, 529 College Savings Plans, Custodial Roth IRAs, and ABLE Accounts
• Teaching financial literacy alongside wealth building ensures your child can manage their inheritance responsibly
• Start with small, consistent contributions rather than waiting until you can invest large amounts

The Power of Compounding: Why Action Early Matters

If you want to make your kid a millionaire, time is your biggest advantage. That’s because of compounding interest for kids. It’s when the money you invest earns returns, and those returns start earning their own returns. Over time, this creates a snowball effect where the money grows faster and faster. 

The earlier you start, the more time your investment has to grow. For example, if you invested around $1,500 at birth, it could grow to $1 million by retirement age, just by letting it sit in the market with no extra contributions. 

Curious what your numbers might look like? You can try it yourself with a compound interest calculator. It’s a simple way to see how time turns small investments into big numbers. 

As you build wealth for your child, it's helpful to understand financial milestones. Our article What is the Average Net Worth by Age? provides context on typical wealth accumulation throughout life. By starting early with these strategies, your child can potentially reach these milestones much sooner, giving them greater financial freedom and opportunities.

3 Proven Strategies to Make Your Kid A Millionaire

There isn’t one way to generate long-term wealth for your child. However, a few simple strategies work well for many families. These options don’t require vast sums of money, just consistency and time. Let’s look at three easy ways to give your child a significant financial head start. 

No. 1: Lump Sum Investing at Birth

One of the easiest ways to set your child up for life is to invest a lump sum as early as possible. For example, putting $1,544 into an investment account at birth could grow to around $1 million by retirement, even with no extra deposits. 

This works because you’re letting the market do the heavy lifting. You don’t have to add much later because the original investment keeps growing independently. That’s the power of compounding returns—one of the simplest strategies for building generational wealth. 

If you’re starting when your child is older, you can still run the numbers. A calculator will show how much you’d need to invest to reach the same goal. The earlier you start, the less you have to contribute. 

No. 2: Monthly Investing Until Age 18

If a lump sum isn’t feasible, small monthly contributions work well, too. For example, putting away $15 a month from birth until age 18 can also grow to $1 million by retirement. Even small amounts can turn into big results over time. 

This approach is easy to stick with because the contributions are small. You can also make it a learning experience. As your child gets older, you can show them how their money is growing. You can even encourage them to add a few dollars from chores or allowance—one of the simplest wealth-building strategies for families.

No. 3: Custodial Roth IRA for Working Teens

If your teen has a part-time job, a Custodial Roth IRA is a great option. It’s essentially a Roth IRA for teens, allowing them to get an early start on retirement savings. They need earned income to qualify, but it doesn’t have to be a big paycheck. You can even match what they earn to grow the account faster. 

With a Roth IRA, all the growth is tax-free, and there are no required minimum withdrawals later.

Even small jobs such as babysitting, tutoring, or lifeguarding count as earned income. A Roth IRA rewards early work with long-term wealth. 

When it comes to retirement planning, IRAs are a powerful tool for long-term wealth building. For more in-depth information on how these accounts work and how they can benefit your child's financial future, check out our guide: Individual Retirement Accounts (IRAs): What They Are and How to Open One. Understanding these accounts early can help establish smart financial habits that last a lifetime.

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Teaching Smart Money Habits, Not Just Building Wealth

Building wealth is great, but teaching your child how to manage it is vital. Starting a financial planning education early sets them up for lifelong good habits. 

For younger kids, you can start with the basics: dividing money into spend, save, and give jars. As they age, you can introduce topics such as budgeting and investing basics in their teen years. 

It’s also beneficial to set an example. Let your child see you making thoughtful spending decisions. You can give them chances to manage their own money in small ways, like handling birthday money or making saving goals. Celebrating their good decisions keeps them motivated to make wise decisions. 

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Popular Accounts for Kids

There are several good account options to start saving for your child, and each one works differently depending on your goals. 

• UTMA/UGMA Custodial Accounts: There are flexible accounts where you can save for anything, such as college, a car, or a first home. The money belongs to your child once they reach adulthood.
• 529 College Savings Plans: These are for educational savings. You get tax-free growth when the money is used for qualified education expenses. Some states even offer extra tax benefits. Also, thanks to new updates from SECURE 2.0, you can even roll up to $35,000 from a 529 into the beneficiary’s Roth IRA after 15 years if they don’t need it for school.
• Custodial Roth IRA: Great for teens with earned income. These custodial investment accounts grow tax-free for retirement and offer flexibility, like penalty-free withdrawals for qualified education costs.
• ABLE Accounts: If your child has a disability, an ABLE account allows savings without affecting certain benefits, and the earnings are tax-free when used for qualified expenses.

The best account depends on your goals. Are you focusing on college savings, long-term wealth, or general support for your child’s future? A quick chart or personalized financial planning conversation with an advisor can guide you to the best fit. 

Planning for education is another crucial aspect of building wealth for your child. Our Complete Guide to 529 Plans explores how these tax-advantaged accounts can help fund your child's education from kindergarten through college. By strategically saving for education expenses, you can free up more resources to invest in your child's long-term wealth building efforts.

Common Mistakes and Best Practices

While building wealth for your child is admirable, there are several pitfalls to avoid:

• Neglecting your own retirement: Secure your financial oxygen mask first. Your child can borrow for college, but you can't borrow for retirement.
• Overcomplicating investment strategies: Simple, low-cost index funds often outperform complex investment schemes over the long term.
• Forgetting to update estate planning documents: Ensure your wealth transfer plans remain current as family circumstances change.
• Ignoring gift tax limits: Be aware that the annual gift tax exclusion is $19,000 per donor (as of 2025) before gift taxes may apply.

You can also read more about trust & real estate planning to ensure your long-term plans match your family’s goals. 

While building wealth for your child through investing is important, ensuring it's properly transferred is equally vital. Our comprehensive Estate Planning Guide explores how wills, trusts, and other estate planning tools can protect your child's inheritance and ensure it remains secure for generations to come.

Simple Steps to Grow Wealth for Your Child

Building long-term wealth for your child doesn’t need to be frustrating or expensive. With a little planning and consistency, you can put them on track for financial security.

Key Takeaways:

• Starting early is the most effective way to grow wealth thanks to compounding interest.
• Small amounts invested regularly lead to significant results over time.
• There are several account options, such as 529s, Custodial Roth IRAs, and UTMA/UGMA accounts, to fit different goals.
• Teaching your child money basics is just as valuable as saving for them.
• Keeping things simple and reviewing your plan each year goes a long way.

Action Items:

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FAQs

How much should I invest to make my kid a millionaire?

Starting at birth, even as little as $1,500 invested once—or about $15 a month until age 18—could grow to $1 million by retirement with steady returns. The later you start, the more you’ll need to contribute.

What if I didn’t start at birth—am I too late?

No. Starting later just means you’ll invest more or adjust expectations. Investing in a child’s teen years can build significant wealth over decades.

How do Roth IRAs for kids work?

A child with earned income (like babysitting or a summer job) can have a Roth IRA opened in their name, with a parent as custodian. Contributions grow tax-free, and withdrawals in retirement aren’t taxed.

When can a child have a custodial account?

A custodial account (UGMA/UTMA) can be opened at any age. The parent or guardian manages it until the child reaches the age of majority—18 or 21, depending on the state.

What happens if my child doesn’t use their 529 plan for college?

The money can be used for other education costs, transferred to another family member, or even rolled into a Roth IRA (within limits). Non-qualified withdrawals face income tax on earnings plus a 10% penalty.

Should I prioritize my kid’s savings over my retirement?

No—fund your retirement first. Your child can borrow for college or other goals; you can’t borrow for retirement.

Can I use a family match for a Roth IRA even if my child only babysits?

Yes. As long as your child reports earned income, you (or another family member) can contribute up to what they earned, up to the annual Roth IRA limit.

Are there tax penalties or rules for these accounts?

Yes. Each account type—Roth IRA, 529, custodial—has its own rules for contributions, withdrawals, and taxes. Breaking them can lead to penalties, so check IRS guidelines or talk to an advisor.

How can I teach my child good money habits at different ages?

Start with simple lessons like saving allowance in early years, add chores and earning opportunities in middle school, and involve them in investing discussions as teens to build lifelong habits.

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