Americans just got a new bucket of money for their kids, but it may not do much to solve the real financial pain of starting a family.
Billionaires Michael and Susan Dell recently shook up the political and parenting worlds by pledging $6.25 billion (1) to boost the new “Trump accounts,” a government-backed savings program designed to help children build long-term financial security.
The move instantly became one of the largest philanthropic gifts of the year, and it’s now the financial backbone behind a policy that already promised $1,000 for newborns and $250 for eligible children 10 and under.
But as families wrestle with the rising costs of raising children in America, a bigger question hangs over the entire effort: will these accounts actually change anything?
Trump accounts (2) are new, tax-advantaged investment accounts for children that receive a one-time $1,000 federal contribution for babies born between 2025 and 2028, as long as they are U.S. citizens with Social Security numbers and an account is opened for them.
Parents and others can then make additional contributions (generally up to about $5,000 per year from families, plus permitted employer and other third‑party contributions), and the money must be invested in diversified stock index funds or similar vehicles until it can be used in adulthood for things like education, a first home, or starting a business.
Parents won’t be able to tap this money until their child turns 18, meaning it won’t help with the most painful expenses of early parenthood: childcare, diapers, food and housing. The goal instead is to provide a future “nest egg” that could help with education, housing, or even starting a family of their own one day.
Supporters say it’s an important cultural signal that the government and private sector are finally paying attention to the financial challenges young families face.
“The very fact of our government putting money aside for children re-establishes the old standard that it’s good to have kids,” conservative Daily Wire podcaster Michael Knowles told The Wall Street Journal. (3)
But critics counter that money arriving nearly two decades later doesn’t help parents drowning in bills right now. (4) As demographer Karen Guzzo put it bluntly to the Journal: “If I have a baby today, I need money today, I don’t need money when my kid turns 18.”
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The economics of parenthood are brutally clear, and they’re trending worse each year. The average cost of raising a child to age 18 now sits well into six figures. (5) Families are spending more on everything: housing, which remains the single largest expense; food, which has surged in price since the pandemic; childcare (6), healthcare and education are all rising fast.
These realities are among the top reasons Americans say they’re delaying parenthood or deciding to have fewer children than they want. Fertility rates have fallen to historic lows (7), and a recent Pew study (8) shows many young couples don’t believe they’re financially secure enough to start a family.
In that context, a $1,000 deposit – or a $250 allowance for older kids – is not going to fundamentally change the math. Trump accounts may offer long-term benefits, but they could face a challenge in convincing Americans to have more children, and they likely won’t significantly ease the cost of raising the ones they already have.
Still, the accounts might play a symbolic role. Supporters argue that the messaging matters, that simply signaling that children are a societal priority could help reshape cultural attitudes around family formation. Even if the money doesn’t pay the grocery bill, it might at least reaffirm the value of raising kids, which some see as part of a broader national need.
Even though the accounts won’t transform the economics of parenting, families shouldn’t dismiss them. Free money is free money. Used wisely, the funds could grow into something meaningful by the time a child reaches adulthood.
If the accounts allow market-based investments, the smartest approach will be to adopt a long-term, growth-oriented strategy. Equities tend to outperform other investments over 18-year stretches, meaning a modest $1,000 deposit could grow substantially through the power of compounding. Parents should also think of the accounts as one component of a larger financial plan that might include 529 college savings, high-yield savings accounts, brokerage investments, or employer-sponsored tax benefits.
Managing today’s real costs still requires discipline. Families can benefit from creating realistic budgets, planning for large expenses such as childcare or extracurricular activities, and taking advantage of tax breaks, including the newly increased $2,200 child tax credit (9), which offers more immediate help than the Trump accounts themselves.
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CNN (1, 6); Trump Accounts (2); The Wall Street Journal (3); AP News (4); ABC News (5); Institute for Family Studies (7); PEW (8); IRS (9)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
