College Fund Or Brokerage Account For Kids' Schooling? Ramsey Show Hosts Weigh In On Lawyer's 'Sketchy' Advice For Single Mom

On a recent episode of The Ramsey Show, hosts Dr. John Delony and Jade Warshaw addressed a single mom’s dilemma about saving for her daughters' college education. Sarah, a caller from Seattle, shared that her lawyer advised her to use brokerage accounts instead of traditional college savings plans like 529 plans. This advice aimed to prevent her ex-husband from minimizing his financial contributions in the future.

Sarah explained that during a child support recalculation, her lawyer suggested that brokerage accounts could offer more flexibility. The reasoning was that if Sarah saved for college using traditional funds, her ex might argue that he should pay less since she had already covered a significant portion. By keeping the funds in brokerage accounts, Sarah could technically argue that the money wasn't explicitly earmarked for college.

Don't Miss:

• The average American couple has saved this much money for retirement — How do you compare?
• Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you.

Dr. John Delony acknowledged the logic of the lawyer's suggestion but expressed concerns about the ethical implications. "Your attorney's exactly right. That could happen," he said, referring to the possibility of the ex-husband leveraging Sarah's savings to reduce his contributions. However, Delony cautioned against taking steps that could compromise her integrity, even if they seemed legally strategic.

"I hesitate to suggest that you also become a person who … is not full integrous and comes up with alternative ways to hold and shield money to put you in a better argumentative position in case something might happen 15 years from now," Delony said. He emphasized the importance of modeling ethical behavior for Sarah's daughters, suggesting that doing the "right thing" could be more impactful than the financial advantages of hiding money.

See Also: With 100+ historic trademarks including some of the high grossing characters in history, like Cinderella, Snow White and Peter Pan, this company is transforming the $2 trillion entertainment market with patented AR, VR, and AI tech. — For a short window, investors are able to claim $2/share ($980 min).

Warshaw echoed Delony's concerns, saying, "It feels a little bit dishonest … It's like you're trying to show that I don't really have this money if, in fact, I really did." Warshaw pointed out that Sarah's reasoning should focus on what's best for her daughters' future, not just on shielding funds from her ex.

Warshaw added that the advice might differ if Sarah had purely wanted to discuss the pros and cons of a 529 plan versus a brokerage account. "If you were worried that you didn't want to save up too much in the 529 because they might not go to school, we could talk about that all day," Warshaw said.

Delony encouraged Sarah to consider the long-term lessons her actions would teach her children. He shared his perspective on maintaining integrity, even in challenging situations. "Your daughters are gonna get a ringside seat to what it’s like watching their mother scratch and claw and do the next right thing always," Delony said. He suggested that this example of perseverance and honesty could be just as valuable as a college education.

Trending: ‘Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.26/share with a $1000 minimum.

While brokerage accounts offer flexibility and avoid restrictions tied to 529 plans, Delony and Warshaw urged Sarah to prioritize transparency and ethical decision-making. Both hosts emphasized that the choice is deeply personal and should align with Sarah's values and goals for her family.

For parents in similar situations, weighing the financial benefits of various savings options against the potential impact on family dynamics and personal values is essential. Consulting a financial advisor can also provide tailored guidance to navigate the financial implications of these complex decisions.

Read Next:

• Many are using retirement income calculators to check if they’re on pace — here’s a breakdown on what’s behind this formula.
• ‘Which Bucket Do I Draw From First?’ Suze Orman Explains To 67-Year-Old The Best Order For Tapping Into Her Retirement Accounts