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Started By
Message
Saving for Children's Wedding
Posted on 2/24/18 at 9:42 am
Posted on 2/24/18 at 9:42 am
I see tons of posts on retirement, saving for a home, saving to purchase rental property, etc. But I have yet to see a post about saving for weddings. I have 3 kids below the age of 12 and trying to decide what is the best vehicle to use to save for a wedding.
I am 38 yo and a few years ago I started a Robinhood account to start saving for these events. I just auto-deposit $90/month and then buy individual stocks from there. Its been fun and I have done OK, but now I'm thinking of tax implications when the time comes to use these funds.
My first thought was a Traditional IRA, I'm currently in 25% tax bracket, because of the tax savings. Due to income level, I would not be eligible for a tax deduction. (Am I correct? Over $119k no deduction?)
Before I ramble on too long, does the MT board have any suggestions?
Random info:
contribute 10% to 401k (slightly behind but catching up)
Currently have 30% home equity (no plans to move)
No 529s
Wife would bury me in the ground to collect the Life Insurance to pay for weddings if I refused ( So not paying is not an option)
I am 38 yo and a few years ago I started a Robinhood account to start saving for these events. I just auto-deposit $90/month and then buy individual stocks from there. Its been fun and I have done OK, but now I'm thinking of tax implications when the time comes to use these funds.
My first thought was a Traditional IRA, I'm currently in 25% tax bracket, because of the tax savings. Due to income level, I would not be eligible for a tax deduction. (Am I correct? Over $119k no deduction?)
Before I ramble on too long, does the MT board have any suggestions?
Random info:
contribute 10% to 401k (slightly behind but catching up)
Currently have 30% home equity (no plans to move)
No 529s
Wife would bury me in the ground to collect the Life Insurance to pay for weddings if I refused ( So not paying is not an option)
9
Posted on 2/24/18 at 9:49 am to PJMLSU
quote:
I have 3 kids below the age of 12
All daughters? I feel for you.
Posted on 2/24/18 at 9:58 am to PJMLSU
I got 2 daughters . My crypto fund is titled Girls Wedding Fund
This post was edited on 2/24/18 at 9:58 am
Posted on 2/24/18 at 10:16 am to S1C EM
quote:
All daughters? I feel for you.
2 girls, 1 boy.
All 3 are getting the same amount.
Hope he doesn't use it on hookers and blow
Posted on 2/24/18 at 10:23 am to PJMLSU
quote:
All 3 are getting the same amount.
I mean....is it because you wouldn't feel it was fair otherwise? Someone is always going to feel "cheated". The girls won't like it if he goes off and buys a new car or puts a big down payment on a house with it and "all they got" was a wedding.
I get it. I do. But I wouldn't give any of them cash. I would do the weeding for the girls as is customary, and the rehearsal dinner for all. But that's just me. And honestly, the way girls are these days, you never know if they're actually going to do a big, traditional wedding or not. Of course, no issues with planning for it regardless.
This post was edited on 2/24/18 at 10:24 am
Posted on 2/24/18 at 10:24 am to PJMLSU
I’ve got 2 daughters and haven’t saved a penny for their wedding. 19 and 16
ETA: And yes, we even have a wonderful relationship
ETA: And yes, we even have a wonderful relationship
This post was edited on 2/24/18 at 10:26 am
Posted on 2/24/18 at 10:28 am to PJMLSU
You don't have 529s, but you're concerned about savings for a boy's future wedding?
Posted on 2/24/18 at 10:32 am to PJMLSU
OP, also, weddings are getting smaller than they use to be. Wife and I spent probably $1,000 on ours counting flowers and stuff which was considered cheap back then. 2 good friends of mine, and also wife’s coworker all spent on average $4-500 on their weddings. That’s starting to become more and more common.
This post was edited on 2/24/18 at 10:33 am
Posted on 2/24/18 at 11:18 am to S1C EM
quote:
And honestly, the way girls are these days, you never know if they're actually going to do a big, traditional wedding or not. Of course, no issues with planning for it regardless.
How if that any different?
She gets a modest ceremony, she can get a car/house payment/etc
She wants all the pomp and circumstance, she has to sacrifice for it. So “paying for it” in the form of opportunity costs.
Posted on 2/24/18 at 11:35 am to Volvagia
quote:
How if that any different?
It's different because the average person pays for the wedding-related things directly; they don't usually offer a lump sum of money to the bride to do with what they please.
Nothing wrong if that's your plan and you can afford to do it for all of your kids, but that's not how most people do it.
Posted on 2/24/18 at 11:37 am to Volvagia
quote:
How if that any different?
The difference is that, traditionally, the bride's family pays for the wedding and the groom's family pays for the (generally significantly cheaper) rehearsal dinner. Hypothetically, all three could have literally identical weddings but the son ends up with a cash windfall.
Posted on 2/24/18 at 11:49 am to S1C EM
quote:
It's different because the average person pays for the wedding-related things directly; they don't usually offer a lump sum of money to the bride to do with what they please.
Nothing wrong if that's your plan and you can afford to do it for all of your kids, but that's not how most people do it.
But we aren’t talking about an average person, or a recommended policy.
We are talking about this one guy in particular.
And antedoctal as hell, most pretty much all of the middle class female friends I’ve known were given similar arrangements: here’s what I set aside for you. If the wedding is less, you get a cash payment.
Posted on 2/24/18 at 11:57 am to Volvagia
quote:
But we aren’t talking about an average person, or a recommended policy.
We are talking about this one guy in particular.
Yes, but it seemed as if he thinks giving his son an equal amount to what the daughters' weddings cost was pretty much the standard. If it is, I've never heard of it. I'd certainly be more concerned with the lack of 529s.
Again, though, it's why I said if that's what you intended to do and you can afford it, it's not an issue.
quote:
most pretty much all of the middle class female friends I’ve known were given similar arrangements: here’s what I set aside for you. If the wedding is less, you get a cash payment.
I've NEVER heard of this as the norm. I've heard of it being done, but in 38 years worth of weddings that I've been to and/or involved with, I know not one person that this arrangement was ever made for.
Side note: What you describe is absolutely NOT "middle class norm".
Seriously, as a whole, at what point do your kids quit being entitled to handouts? It seems we have suddenly become great givers to our kids of everything sans responsibility.
Posted on 2/24/18 at 11:57 am to Volvagia
Parents just spent like $50,000 on my sisters. Hope to god I have all sons
Posted on 2/24/18 at 11:59 am to HYDRebs
quote:
Hope to god I have all sons
Apparently, you're expected to give them all equal sums of cash for their weddings, now. Or maybe just in general if they don't marry.
Posted on 2/24/18 at 12:00 pm to Volvagia
quote:
And antedoctal as hell, most pretty much all of the middle class female friends I’ve known were given similar arrangements: here’s what I set aside for you. If the wedding is less, you get a cash payment.
This is what I was thinking, but we've gotten a little OT. What would be a suggestion as far as an investment vehicle?
Roth?
Traditional?
Robinhood?
HELOC?
Posted on 2/24/18 at 12:08 pm to PJMLSU
My thoughts to the thing in the OP.
-I’m more than a little concerned about the focus on wedding more than education expenses. It’s something to at least consider.
-Also, evaluate spending. Granted, a family of five isn’t cheap, I suspect more than 90 a month can be set aside given your statement of you maxing out deduction eligibility, which is a major thing to consider when you have collegiate expenses in around 6-7 years.
Do the math on the horizons, and see if the number of compound growth is something you’ll be happy with. Model out possibilities, not just throwing money in thinking it’ll be fine.
-Drop the stock picking IMMEDIATELY for a goal like this. I suspect you are a poster candidate for the guy who gets a false impression of their abilities in a stellar bull market. ETFs only going forward if you want to keep using Robin Hood, and divest from your prior holdings as you see the opportunities for which you bought them for mature. If you want to have “fun” stock picking, so it with additional money set aside for it.
Keep in mind that stocks are not like buying something from amazon. There is a person directly on the other side of the transaction who wishes to sell that particular asset. It could even be an investment banker. Why do you think you have an informational advantage over them? That you are right and they are wrong? And are you confident enough in that advantage to bet your kids medium term happiness on?
-I’m more than a little concerned about the focus on wedding more than education expenses. It’s something to at least consider.
-Also, evaluate spending. Granted, a family of five isn’t cheap, I suspect more than 90 a month can be set aside given your statement of you maxing out deduction eligibility, which is a major thing to consider when you have collegiate expenses in around 6-7 years.
Do the math on the horizons, and see if the number of compound growth is something you’ll be happy with. Model out possibilities, not just throwing money in thinking it’ll be fine.
-Drop the stock picking IMMEDIATELY for a goal like this. I suspect you are a poster candidate for the guy who gets a false impression of their abilities in a stellar bull market. ETFs only going forward if you want to keep using Robin Hood, and divest from your prior holdings as you see the opportunities for which you bought them for mature. If you want to have “fun” stock picking, so it with additional money set aside for it.
Keep in mind that stocks are not like buying something from amazon. There is a person directly on the other side of the transaction who wishes to sell that particular asset. It could even be an investment banker. Why do you think you have an informational advantage over them? That you are right and they are wrong? And are you confident enough in that advantage to bet your kids medium term happiness on?
Posted on 2/24/18 at 12:20 pm to PJMLSU
Traditional IRA isn’t even in the cards, and the fact you suggested it is part of why I recommended getting out of stock picking.
Roth is viable, depending on desired distribution to kids goes. You can withdraw contributions without penalty, but don’t touch the growth. You are going to want to up your contributions however.
Robinhood isn’t a vehicle. It’s a colorful shell for a taxable account. Eh. Nothing wrong with it, except perhaps not a fan of no DRIPs
If you get a sufficient balance of quality stocks that generate a decent amount of income, their margin is fairly assessable and is the only form of borrowing I would do for this. Just HELL no on the HELOC. Just be careful not to over leverage.
Personally, I have a general purpose fund for these kinds of expenses. A warchest if you will rather than a series of buckets.
And the cornerstone is Vanguard’s Equity Income in a taxable account. Direct deposit places a fixed amount every check directly into the fund, with the remainder in my checking account. Dividends (capital returns reinvested) pay into a vanguard money market account, which along with earning more interest than a normal savings account, is where I raid if I need to pay off expenses.
Set and forget.
Roth is viable, depending on desired distribution to kids goes. You can withdraw contributions without penalty, but don’t touch the growth. You are going to want to up your contributions however.
Robinhood isn’t a vehicle. It’s a colorful shell for a taxable account. Eh. Nothing wrong with it, except perhaps not a fan of no DRIPs
If you get a sufficient balance of quality stocks that generate a decent amount of income, their margin is fairly assessable and is the only form of borrowing I would do for this. Just HELL no on the HELOC. Just be careful not to over leverage.
Personally, I have a general purpose fund for these kinds of expenses. A warchest if you will rather than a series of buckets.
And the cornerstone is Vanguard’s Equity Income in a taxable account. Direct deposit places a fixed amount every check directly into the fund, with the remainder in my checking account. Dividends (capital returns reinvested) pay into a vanguard money market account, which along with earning more interest than a normal savings account, is where I raid if I need to pay off expenses.
Set and forget.
Posted on 2/24/18 at 12:40 pm to Volvagia
quote:
I’m more than a little concerned about the focus on wedding more than education expenses. It’s something to at least consider.
Right. Invest in education and they can pay for their own wedding
Posted on 2/24/18 at 12:57 pm to Volvagia
quote:
-I’m more than a little concerned about the focus on wedding more than education expenses. It’s something to at least consider.
See original post,paying for the wedding is going to happen. As of now I can't afford to save for both. The amount of debt they decide to take on is up to them. There are 1000's of scholarships out there if you look for them. If I save for their higher education then have to pay for weddings I will be the one taking on debt.
quote:
Also, evaluate spending. Granted, a family of five isn’t cheap, I suspect more than 90 a month can be set aside given your statement of you maxing out deduction eligibility, which is a major thing to consider when you have collegiate expenses in around 6-7 years.
Been there done that. Obsessively. I use YNAB now and it has kept us focused on budgets.
quote:
Drop the stock picking IMMEDIATELY for a goal like this. I suspect you are a poster candidate for the guy who gets a false impression of their abilities in a stellar bull market. ETFs only going forward if you want to keep using Robin Hood, and divest from your prior holdings as you see the opportunities for which you bought them for mature. If you want to have “fun” stock picking, so it with additional money set aside for it.
My stocks are
GE
CSCO
KMI
T
GM
MSFT
PYPL
CSX
DIS
V
AFAM
NKE
No wild guesses. No speculation.
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