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guttata 
LSU Fan
prairieville
Member since Feb 2006
18255 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 8:43 am to LSURussian)
Emancipate him now and explain to him how when he graduates from high school he will be able to get grants to go to college and won't have to pay back the money. I actually have an acquaintance who's parents did this to him while he was in high school at Dunham. He says its was probably a pretty crappy thing for his parents to do to work the system, but it worked and a lot of his colllege was payed for by grant money. He is now a financial adviser in the Baton Rouge area.
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npt817
LSU Fan
Prairieville, LA
Member since Sep 2010
362 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 8:43 am to Bayou Tiger)
Opened a savings account for my little girl last year when she turned 5. Brought her there to set it up and she loved the attention everyone gave her. Now everytime we pass a Neighbors FCU she says, "theres my bank!" Every month we log online so she can see her balance. Our neighbor is 10 and didnt know kids could go to banks or what a savings account was. Point is start them young to a. Gain their interest and b. Get them in the habit. Dont worry about the returns at the moment. I figure when she turns 10 we will talk about stocks.
This post was edited on 3/13 at 8:48 am
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OnTheBrink 
Alabama Fan
TN
Member since Mar 2012
1815 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 9:14 am to LSURussian)
quote:
LSURussian
How do you go about setting this up? I guess my question is related to taxes and what not? Do you put it in their name? IRA? Education Savings Plan?
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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
63238 posts
 Online
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 9:28 am to OnTheBrink)
I got a social security number for them (within 30 days after they were born), then I set up a regular self-directed brokerage account with myself as the legal guardian (I think it was under the "Uniform Gift to Minors Act" rules) which allows me to direct the investments even though the account is under their social security number and is taxable to the child.
I then bought the stock(s) I thought they would be interested in and would be familiar with what the company did (Disney is a great example) and reinvested the dividends.
I'd add to the account each year following the IRS annual gift exclusion rules and then would buy a different stock, such as Coca-Cola, and reinvest the dividends.
By the time they started college they had over $50,000 in their brokerage accounts. And more importantly they could intelligently discuss PE ratios and dividend yield. 
This post was edited on 3/13 at 9:40 am
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Golfer
LSU Fan
Coral Bay, St. John, USVI
Member since Nov 2005
47553 posts
Online
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 9:38 am to Bayou Tiger)
One of the best things my parents did was setup a bank account for me when I was an infant. They started it with $1000 or so but after that I'd put in 100% of my birthday money until I was like 7 or 8, from then until my teens it was about a 25/75 split and then I chose to keep it at 50/50 when I was in HS.
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Bmath
LSU Fan
TX
Member since Aug 2010
2943 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 9:44 am to Bayou Tiger)
Some ideas I have seen dont involve real bank accounts. Set up a series of piggy banks. Label each one for the various categories such as giving, savings, and spending.
Have them write out a long term goal on the savings jar. Something like a new bike. Set up a money distribution budget and each week you have them divide the money.
You could even give him interest as well, and find creative ways to force him to use the spending money. Perhaps even cause him to make a tough decision on his weekly contribution.
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foshizzle
LSU Fan
Member since Mar 2008
25167 posts
Online
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 9:55 am to Bayou Tiger)
I have heard as an idea that kids should be progressively more and more responsible for their own spending decisions. Sure, go ahead and give them an "allowance" but they decide how to spend.
For example, when a kid turns, say, 12, let him/her buy his own clothes and put enough money in the account to allow reasonable purchases.
They will, of course, make bad decisions, drain their accounts for dumb things, etc. Don't bail him out. It's better to get this out of the way early while the money involved is small.
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Breadcrumbs
LSU Fan
Baton Rouge
Member since May 2005
2797 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 12:03 pm to Bayou Tiger)
get a shadow box frame and put a picture of what he wants to buy in the frame. Use the box part as a bank and drop money in there so he can see the box filling up with cash.
Put coupons on the fridge with magnets so he can work towards more savings for what he wants....$1 to vaccuum, $1 to take out trash, etc.
Finally, offer him a "match on his money" like interest from your pocket if he saves $x toward his goal.
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Breadcrumbs
LSU Fan
Baton Rouge
Member since May 2005
2797 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 12:29 pm to Breadcrumbs)
check out the money as you grow website:
age 2-5 they need to know 1) you need $ to buy things 2) you earn money by working 3) you have to wait before you can buy something 4) wants vs. needs
age 6-10 they need to know 1) you make choices about spending money 2) compare prices before buying 3) it's dangerous to share financial information online 4) an account will protect your $ and perhaps pay interest
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DrEdgeLSU
LSU Fan
Dallas, TX
Member since Dec 2006
5851 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 1:39 pm to Bayou Tiger)
quote:
How exactly does anyone encourage their kids to open a savings account these days with the horrendous interest rates?
Just like you do anything else with your SIX YEAR OLD. Make the decision for him, and just open the account. You don't need his permission.
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Tiger4Ever 
UTEP Fan
Member since Aug 2003
34939 posts
Online
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 1:56 pm to Waffle House)
quote:
You could also do a "company match" where you match 10% of what he contributes to his savings, similar to a 401k program.
This is what I plan to do with my son to foster the saving/retirement planning thought process.
But he's 3 and by the time he's in the workforce...the fedgov will have hijacked 401ks.
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Bayou Tiger
LSU Fan
The Woodlands, TX
Member since Nov 2003
2941 posts
| re: Kindergartners and Bank Accounts (Posted on 3/13/13 at 7:40 pm to npt817)
There are a lot of good ideas in this thread.
I wasn't taking into account how cool it would be for him to go into an actual bank and open up an account. Maybe to start off I could put in $20 if he puts in $5, just to get him started and for the experience.
And even a physical jar where he in puts a dollar or two a week, until he saves up to a certain amount that can then be spent, would give him a good concept of letting money grow and the nice payoff at the end. Maybe it is time to start allowance with his associated "chores" (maybe even the fridge chore coupon idea), having that set savings amount be something that he has to put in out of his allowance every week.
The Disney stock with an actual stock certificate would be pretty cool. For that matter, I may research some other stocks related to stuff he likes and come up with a "portfolio" of stock certificates or something like that.
A DRIP might be an option in a couple of years, although some of the minimum payments seem high on a few of them ($50).
When I was in 4th grade, my parents set me up with an Exxon DRIP. Any money that I put in, they matched 100% and wrote the check. Preferring to play outside or read books instead of buying stuff, I directed a lot of my cash into the DRIP. I really liked watching the value grow, and the dividend reinvestment was the coolest thing for me. They continued matching 100% all the way through high school, allowing me to set aside a nice chunk of change and learn a lot about money along the way.
Maybe in a couple of years I will try the DRIP, but in the meantime thanks for all of the other suggestions.
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THRILLHO 
New Orleans Saints Fan
New Orleans, LA
Member since Apr 2006
25417 posts
| re: Kindergartners and Bank Accounts (Posted on 3/14/13 at 2:54 am to Bayou Tiger)
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