The Best Side Hustles for Kids & Teens to Fund a Roth IRA (2025 Edition)
Why Listen to Me?
I've been helping individuals and families build wealth for years, and one of the biggest missed opportunities I see is helping kids and teens start investing early. Investors I’ve worked with often tell me they wish they had started sooner. The reality is, with the right strategy, a child can turn small contributions into hundreds of thousands—even millions—by retirement.
What If Your Child Started Investing at 5?
If a parent or grandparent invested just $1,000 per year from the time a child was 5 years old until 18—and then let it grow untouched—the child could have over $700,000 tax-free at age 62, assuming an 8% annual return.
Think about it this way: that’s only $14,000 invested over 14 years, yet thanks to compound growth, it turns into a life-changing retirement nest egg. And this is without ever contributing another penny after age 18. Most parents or grandparents never consider this, but it’s one of the most cost-effective ways to leave a lasting legacy for their children or grandchildren.
Most money gifted to kids gets spent immediately, but investing even a small amount into a Roth IRA can create generational wealth and eliminate financial stress later in life.
This guide will show you how to help your child build a tax-free fortune while teaching entrepreneurial skills and financial literacy.
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video.
Key Takeaways
- Kids and teens need earned income to contribute to a Roth IRA.
- Jobs like babysitting, tutoring, lawn care, and social media freelancing all qualify.
- A Roth IRA grows tax-free, making it one of the best investment vehicles available.
- Parents and grandparents can match earnings to help kids contribute more.
- A 529 Plan can now roll over up to $35,000 tax-free into a Roth IRA, offering another powerful way to build wealth for kids.
The Best Side Hustles for Kids & Teens in 2025
1. Working for a Family Business (Kids & Teens)
If you own a business, you can legally hire your child for age-appropriate tasks, ensuring they have earned income for a Roth IRA.
✅ Example: A parent owns a photography business and pays their 8-year-old $5,000 per year to appear in promotional materials. That money qualifies for a Roth IRA contribution.
Pros: Income is legally earned and documented, can be sheltered from taxes.
Cons: Must be a legitimate business expense and properly recorded.
2. Babysitting & Pet Sitting
Babysitting is one of the easiest and most flexible ways for a teen to earn money. I’ve seen many families encourage their kids to start here because it pays well ($15-$25 per hour) and teaches responsibility.
Pros: Flexible schedule, cash-based income, great for teens.
Cons: Irregular hours, may require certifications like CPR.
3. Lawn Care & Snow Removal
Kids as young as 9 or 10 can start seasonal work like mowing lawns in summer and shoveling snow in winter with parental guidance. I personally mowed 6-10 yards per week as a kid and learned the value of running a business firsthand.
Pros: Seasonal demand, high earning potential.
Cons: Requires equipment, physical labor.
4. 529 Plan Rollovers to a Roth IRA
A new rule in 2024 allows up to $35,000 from a 529 plan to be rolled into a Roth IRA tax-free.
Pros: Great for kids who don’t use all their 529 savings for college.
Cons: Must have had the 529 open for 15+ years before rolling funds over.
If a parent saves for college but the child doesn’t need all of it, that money can go straight into a Roth IRA for retirement—completely tax-free.
5. Acting, Modeling, and Social Media Earnings (Kids & Teens)
If your child appears in commercials, modeling gigs, or social media sponsorships, that income qualifies for a Roth IRA.
✅ Example: A 9-year-old models for a clothing brand and earns $4,000. That entire amount can be contributed to a Roth IRA.
Pros: Large earning potential, builds financial literacy early.
Cons: Must track payments carefully for tax purposes.
How Kids & Teens Can Open a Roth IRA
Opening a Roth IRA is simple, but minors need a custodial account managed by a parent or guardian. Here’s how to set it up:
- Choose a Custodial Roth IRA Provider – Fidelity, Charles Schwab, and Vanguard all offer great options.
- Fund the Account – Kids can contribute up to the lesser of their earned income or $7,000 (2025 limit).
- Invest the Money – Opt for a growth oriented ETF
Frequently Asked Questions
How much can a kid or teen contribute to a Roth IRA in 2025?
- A child can contribute up to $7,000 or their total earned income, whichever is lower.
Do parents need to report their child’s income?
- Yes, if a child is self-employed and earns over $400 in net income, they must file a tax return. For W-2 jobs, taxes are withheld automatically.
What happens to a Roth IRA if the money is needed before retirement?
- Kids can withdraw contributions (but not earnings) at any time penalty-free. If using funds for education or a first-time home purchase, special rules allow limited earnings withdrawals without penalty.
Conclusion
Helping a child or teen open and fund a Roth IRA in 2025 is one of the smartest financial moves a family can make.
Even if you're thinking about leaving a financial legacy for your children or grandchildren, this is one of the most affordable and effective ways to do so. Instead of worrying about setting aside hundreds of thousands in inheritance, a simple $1,000 per year investment for 14 years could give them financial security for life.
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video.
Sources:
https://www.care.com/babysitting
https://www.varsitytutors.com/
https://www.entrepreneur.com/article/281163
https://www.thespruce.com/how-to-start-a-snow-removal-business-5074693
https://www.redcross.org/take-a-class/lifeguarding
https://www.lawnstarter.com/blog/lawn-care-2/how-to-start-a-lawn-care-business/
https://www.poolandspa.com/pool-cleaning-guide
👉 Here is an article I recently was quoted in on working with children
👉How to build lasting relationships in wealth management
Disclaimer: Case studies are hypothetical and do not relate to an actual client of Lock Wealth Management. Clients or potential clients should not interpret any part of the content as a guarantee of achieving similar results or satisfaction if they engage Lock Wealth Management for investment advisory services.