Personal Finance

Should I invest heavily in my child's education or give her all the money in her 20s instead so she can retire?

Marc Guberti

Published: February 17, 2025 8:19 am

Saving for your children is a noble goal, which is why I enjoyed reading this post in the Fat FIRE subreddit. The Redditor is a 33-year-old male with a $1 million portfolio. He expects to reach his $5 million fat FIRE goal by the time he is 40-45 years old. 

The Redditor is wondering if he should invest heavily into his child’s education or set her up with a nest egg so she can fat FIRE at a young age. I will share my thoughts, but it is good to speak with a financial advisor first.

You Don’t Want the Kid to Fat FIRE Too Early

I am against letting the kid fat FIRE and coast in their early 20s for two reasons. First, the kid may spend the money lavishly and end up outliving it. It’s harder for someone to appreciate the value of a $5 million portfolio if they haven’t worked for it. Teaching your kids about money will make them more financially responsible, but it’s still good to avoidgiving them so much money too early.

The second reason giving your child the ability to fat FIRE in their early 20s is a bad idea is because they don’t have to work for it. It’s very fulfilling to grow your career, save money, and reach long-term financial goals. However, having it given to you early can crush their sense of motivation, especially if they know they will receive the money. There isn’t as much of an incentive to try hard if a $5 million fat FIRE portfolio is waiting for them shortly after they turn 20.

Of course, some children receive a lot of money shortly after becoming adults and do well. However, it’s important for them to work toward long-term goals and have a sense of achievement instead of being presented with money. The Redditor can offer financial support if he desires so she can pursue more options, but she shouldn’t be given a gigantic nest egg early in life. It’s better to prepare it for her so she can inherit it. 

An Expensive University May Not Be the Best Investment

The college education has been losing value. It’s questionable why a 4-year college education can’t be condensed into a 2-year education, and the ROI isn’t what it used to be. Administrative bloat and federal loans have resulted in sky-high tuition prices that put people deep into student debt.

Most people who incur student debt find it more difficult to buy a house and pursue other milestones like marriage. While the Redditor can pay for his child’s college education, the average graduate’s finances out of college makes it important to question the ROI. If you want to go the college route, it’s financially better to send your child to a community college first, where the credits are more affordable. Then, a reasonable state university can offer relatively low prices and a diploma. 

The child can also easily earn certificates by completing online classes, and some jobs take those certifications. For instance, you can get cybersecurity certificates from Alphabet’s training courses, which are available on Coursera. Looking at alternative educational routes like trade schools and online certificates from leading corporations can give your child quicker access to career options without excessive tuition costs.