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We opened our daughter a savings account when she turned 5, really I opened it, and put her name in the title. She has about $50 in from chores and work, we employ Ramsey's three part plan, give, save, spend. Certain % to each.
Both of our kids have 529s we opened at birth. All Christmas and birthday money goes there, along with our contributions.
Our kids all have savings accounts all opened within 3 months of their births. They have from ~$7000 - ~$12000. We have a monthly automatic transfer of $100 to each of their accounts and then all the money they get technically should go there (I do forget sometimes but figured putting $1,200 a year in their accounts each balances out whatever amount I used as petty cash 😁
It must be cultural, my kids get a lot of money not for birthdays just generally. We have lots of relatives and family from out of town and country and will visit. They always give the kids money when they are leaving... Often like$20 each. Infact, my mother just left after staying a few months (we invited her and asked her to stay long) and despite the toys and clothes that she brought fit the kids, they all had birthdays enjoy she was here and gave each $50 on their birthdays and when she was leaving, she gave each $200. This year alone, my kids have probably gotten like $500 each (my mum clearly was $250 of that). I actually was a bit pissed when one of my BIL visited and stayed for 2 weeks and left without giving my kids anything not even $5 and yes he could afford it. Both DH and I thought that was so wrong and DH mentioned to his brother later and he apologized. We just don't do that in our family.
I grew up like that as well. And used the money from my childhood account to buy my first car among other things.
Hmmm, several people have mentioned adding "all the money that the children receive for Christmas and their birthdays" to their accounts. Your family and friends must be a lot different than our family and friends.
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Originally Posted by sj08054
It depends on the culture. For some, giving cash is the norm.
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Originally Posted by COCUE
It must be cultural, my kids get a lot of money not for birthdays just generally. We have lots of relatives and family from out of town and country and will visit. They always give the kids money when they are leaving...
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I grew up like that as well. And used the money from my childhood account to buy my first car among other things.
Thanks, I guess it could be cultural. I opened up my own savings account when I started my first paying job at age 16 (I lived on a farm so had hours of chores every day for many years, but, of course, they weren't paid). I'm pretty sure that was the case with my siblings, as well (opening up their first savings account when they started their first paying job).
My children opened their first savings accounts when they started working in HS, too.
Opened one around age 12. I did chores, and things for neighbors like rake leaves, and mow the lawn.
Around age 14 dad sat me down and told me If I wanted a car at age 16/17, I needed a job. So I got one. By age 16. I had $5K in that account, from money I got working, or doing chores, or holiday gifts. I bought my own car at age 17.
For those who opted for the 529 - what are the benefits of that over a regular bank savings account?
Our 5 year old has a regular savings account to give him a headstart at adulthood when he is of age (be it college or whatever) but with interest rates so low now, the money just sits there...
I cuurently have a savings acct for my three boys as well. Looking to opening a 529 for them but unsure of which route to go. I may get a financial planner so I can figure out the best route to go. I never had a savings acct growing up. I was only given a couple grand, in cash, when I went to college. That wasn't the greatest idea :/
For those who opted for the 529 - what are the benefits of that over a regular bank savings account?
Our 5 year old has a regular savings account to give him a headstart at adulthood when he is of age (be it college or whatever) but with interest rates so low now, the money just sits there...
In a savings account you are simply saving money, maybe make a few cents. A 529 is an investment account that grows tax free if used for higher education expenses. Our three year avg for our 529s is around 16%, no bank account can touch that.
We use both, college money goes into the 529, regular savings for saving up for something, tablet, car, etc..
I cuurently have a savings acct for my three boys as well. Looking to opening a 529 for them but unsure of which route to go. I may get a financial planner so I can figure out the best route to go. I never had a savings acct growing up. I was only given a couple grand, in cash, when I went to college. That wasn't the greatest idea :/
Take a look at this site, has some good information. There are lots of options but once you get the hang of it you can find some good options. My advice would be to look for the plan that has the most options, best returns, and lower fees. If your state has state tax deductabilty that is great but it will not out earn poor performance.
In a savings account you are simply saving money, maybe make a few cents. A 529 is an investment account that grows tax free if used for higher education expenses. Our three year avg for our 529s is around 16%, no bank account can touch that.
We use both, college money goes into the 529, regular savings for saving up for something, tablet, car, etc..
Also if in your state there are state income taxes, the money put into the state's 529 is usually deductible. That means, say, if you put $2,000 in there in one year, when calculating your income for state tax purposes the income is reduced by $2,000 for that year.
I opened up savings accounts for both of my children when they were born. I have an automatic deduction from my checking account that goes into their savings monthly. They also receive cash for birthdays and holidays from family. Some they can keep and buy whatever, the rest goes into their savings.
529 are a good vehicle; however, it is investing into the stock market, so you must be ok with that. Also, it must be used for education, if not you are penalized.
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