Here’s Why Trump’s ‘Baby Bonus’ Isn’t Enough, According to Money Expert Preston Seo

There’s been a lot of talk in the media about President Donald Trump supporting a $5,000 federal “baby bonus” for parents who welcome new children. However, as of May 1, the idea of the $5,000 credit is still just a speculation.

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The Math Doesn’t Add Up Seo’s Solutions The Bottom Line

It grew from a passing comment Trump made at a White House event. When asked if a $5,000 “baby bonus” might be a good way to boost the American birth rate, Trump replied, “Sounds like a good idea to me.”

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While this is far from federal policy, the fact that the president expressed support for the idea, even in passing, means it’s worthwhile to explore if it would help Americans considering having children.

According to Preston Seo, creator of the Legacy Investing Show, a $5,000 bonus wouldn’t be nearly enough. Here’s why.

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The Math Doesn’t Add Up

According to Seo’s analysis, by 2033, deaths in America will outpace births. This means that to avoid a population collapse, one of two things needs to happen. Either the country needs to boost its immigration, or it needs American families to start having more babies. But while the $5,000 bonus might spur some potential parents to consider starting a family, Seo cautions them that the math simply doesn’t add up.

By Seo’s calculations, it costs roughly $310,000 to $319,000 to raise a child to the age of 18, adjusted for inflation. While $5,000 would certainly be nice to receive, it wouldn’t come anywhere close to helping cover the real costs of raising a child.

Meanwhile, according to Seo, the median annual income in America is $80,610, but it takes an income of at least $100,000 annually to afford an average home. With Americans already struggling to buy homes in which to raise families, it’s a tough ask to suggest they also take on the more than $300,000 liability of raising a child in exchange for a one-time, $5,000 credit.

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The final nail in the coffin, from Seo’s perspective, is that healthcare costs in America are out of control, and current policy stands in the way of raising a family. As Seo points out, women are rarely, if ever, given paid leave to raise a child, and most workers, whether male or female, could not afford to give up their career to have kids and raise them.

The net result for Seo is that a $5,000 “baby bonus” won’t effectively do anything at all to overcome these burdens that new parents are facing.

Seo’s Solutions

Instead of a $5,000 credit for having a baby — or relying on the government for any kind of assistance at all — Seo recommends financial self-reliance to cover the expenses of raising kids. Here are the steps he suggests:

Dollar cost average $20 per day into Bitcoin; if it achieves the 20% average annual return he expects, those contributions will grow to $1.03 million by the time your kids reach age 18.
Employ your kids in your own business and pay them $15,000 per year; use that money to max out a Roth IRA every year and watch that money grow to $283,000 by the time they’re 18.
Invest $600 per month into a 529 plan and a high-yield savings account to generate another $116,000 by the time the kids reach high school.

Once his kids reach 18, Seo said that he will then give each of them one paid-off property from his portfolio so they can begin their own process of building wealth.

The Bottom Line

Seo’s methods sound straightforward, but the same Americans who can’t afford an average house may not be able to sock away money in the way that he recommends. However, the principals remain sound. By saving and investing for your children as early as possible, and by maximizing the use of tax-advantaged accounts like Roth IRAs and 529 plans, you’re giving yourself the best opportunity to generate enough wealth to cover the costs of raising children.

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