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What to do with my kid's piggy bank money?
Posted on 7/9/20 at 6:15 am
Posted on 7/9/20 at 6:15 am
Cleaned out my 5 year old's piggy bank this week and found about $600 in there. Where should I put it?
- She will never use this money, so it doesn't need to be readily accessible
- I'll cover school/college, so she doesn't need to put it into a 529
- She will get more money at future birthday parties, and I'd like to be able to add the new money to the old money
What should I do with it?
- She will never use this money, so it doesn't need to be readily accessible
- I'll cover school/college, so she doesn't need to put it into a 529
- She will get more money at future birthday parties, and I'd like to be able to add the new money to the old money
What should I do with it?
9
Posted on 7/9/20 at 6:18 am to The Johnny Lawrence
Maybe open a custodial account and put that $600 into the market. Add to it as time passes.
Posted on 7/9/20 at 6:34 am to The Johnny Lawrence
Buy her a couple shares of AAPL or MSFT and keep adding to it
Posted on 7/9/20 at 7:49 am to The Johnny Lawrence
Buy Disney stock. I am sure you have already purchased a good bit of princess crap. Start paying yourself back.
Posted on 7/9/20 at 8:51 am to WylieTiger
quote:
Maybe open a custodial account
In most instances this works out well. One caveat about this however. As soon as the money is put in the account, there are legal restrictions on how the money is used. It is her account, you only manage it. When she turns 18, you will not have access to the account. For some 18 year olds, it is not a good thing for them to have immediate access to thousands of dollars (which the account will likely have in the next 13 years).
A lot will happen in the next 13 years. If she happens to be one of those 18 year olds, as custodian, you will not be able to legally take the money out of the account just because you don't think she is ready to handle it. Just something to think about and perhaps research.
This post was edited on 7/9/20 at 9:03 am
Posted on 7/9/20 at 11:24 am to The Johnny Lawrence
If you set up a 529 it will grow tax free. You don't have to pay education expenses direct from the account just have proof there were qualified expenses equal to the amount withdrawn. Pull it out of the 529 set it aside and give her access to it when she is responsible.
Posted on 7/9/20 at 11:30 am to The Johnny Lawrence
UTMA for the kiddo. Find a solid stock and let it ride. My current three year old received about $1,000 when she was born and I opened an UTMA and put it almost all of it into BABA
Posted on 7/9/20 at 11:54 am to MSTiger33
UTMA and UGMA are considered assets of the student and have a larger impact on financial aid in future. Unless you plan to pay cash for college or already have fully funded 529 why not shelter that $ from taxes and get more favorable financial aid treatment? If you want to give it to the child earlier give them $ from your own funds and reimburse yourself come college time.
Posted on 7/9/20 at 12:35 pm to TorchtheFlyingTiger
Fair question. We have A 529 for each child. The money I invest in their UTMAs was given to each child as a gift. I believe that they should have that money with no strings attached at some point since it was a gift to the child. They can use it for their wedding, but a house or blow it on booze and drugs on a weekend trip to Vegas.
Posted on 7/9/20 at 12:48 pm to The Johnny Lawrence
When my daughter turn 6 she had $100, I took her to the bank and showed her how to buy savings bonds. The return wasn't great, but the lesson was.
Posted on 7/9/20 at 7:22 pm to The Johnny Lawrence
Purchase a high risk crypto coin with it and if it hits she’s a millionaire and if it doesn’t it’s only 600 dollars.
Posted on 7/9/20 at 9:19 pm to The Johnny Lawrence
Do you even IDEX bro?
Posted on 7/10/20 at 6:59 am to Donnie 9 inch
You could just take the $600 and replace it with $60. She will never know.
Seriously, we had about $3000 for each kid from birthdays, grandparents, etc. when they were babies. We set up a 529 and put it in there. Doubled in about 10 years.
It might pay for a semester or two of books in another 8 years.
Seriously, we had about $3000 for each kid from birthdays, grandparents, etc. when they were babies. We set up a 529 and put it in there. Doubled in about 10 years.
It might pay for a semester or two of books in another 8 years.
Posted on 7/10/20 at 7:28 am to The Johnny Lawrence
I personally invest for my kid with my own money or if someone gifts him that specifically (I.e. a buddy gifted him AAPL stock one year).
For their piggy bank money, that’s their money to use for whatever. I’d simply open a savings account or CDs or something with it. The idea for their piggy bank money is to learn to actively manage their own spending, not to invest or save it while I still buy them everything. For example, when we go on vacations and he wants a souvenir or to buy a pool raft, or he wants a droid from Disney, etc. that will be from his money. That way he can learn the value of money and what spending it does to his future ability to buy things.
College, future investments, etc. are on me.
Also good advice on the non-custodial account. I specifically chose not to put mine into a custodial account for this reason. At age 18, he may not be ready to be handed the keys to this account. Plus, it’s still my money, just simply earmarked for him. If for some reason SHTF, I could still use it.
For their piggy bank money, that’s their money to use for whatever. I’d simply open a savings account or CDs or something with it. The idea for their piggy bank money is to learn to actively manage their own spending, not to invest or save it while I still buy them everything. For example, when we go on vacations and he wants a souvenir or to buy a pool raft, or he wants a droid from Disney, etc. that will be from his money. That way he can learn the value of money and what spending it does to his future ability to buy things.
College, future investments, etc. are on me.
Also good advice on the non-custodial account. I specifically chose not to put mine into a custodial account for this reason. At age 18, he may not be ready to be handed the keys to this account. Plus, it’s still my money, just simply earmarked for him. If for some reason SHTF, I could still use it.
Posted on 7/10/20 at 10:06 am to LSUtigerME
What I have done when my kids receive money as gift has worked well. I let them have it to spend if they choose but if they don't then I match what they "invest." It lets them see the power of investing and they get to watch their money grow.
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