Saving money for kids?

[wanderingback]

So what did you all do about accounts for kids? Our 13 month old got her first $20. I think I’m going to open a 529 because we get a tax break in our state, but I still want to double check all the rules before I do it in case she doesn’t go to college.

So anyway, other than a 529 what "regular" types of accounts did you open for your young kids? Should I just open a capital 360 account in my name and label it that it’s her account? Do I need an account specifically with her name on it also? Did you all open up anything else that accumulates higher interest?

The 2 banks I use are usaa and capital one.

Any recs or thoughts would be appreciated!

[puppylove64]

For only $20 I might open just a savings account. My kids have money they can access and spend and makes interest at capital one. I think it is in my name because minor accounts are sometimes difficult. I think the kids savings didn’t pay interest. I have them listed as beneficiary and earmarked as their money. Also it is on my app, so it is easy to transfer money from my account if they give me cash. They can put in as much as they want, but only get 6 withdrawals a month.

They also have a UTMA and 529, but you can’t take money out of those easily.

[quesyrah]

My kids have the capital one teen money checking accounts. We opened them last year (they’re 10 and 13).

I would just go with a CapOne savings account probably

[waverly]

We just have the 529 for now. Family doesn’t give them money gifts for them to contribute to a regular account. So we’ll just get the regular account once they start working. There are some jobs that can start at 13/14 like a referee for the young kids soccer, but otherwise it would be 15/16 years old.

[mccallister84]

They have sub accounts in Capital One. But my kids don’t get many financial gifts - I’m not sure either has gotten one after their Christening.

If it was going to be an ongoing thing I’d probably look more in to a 529.

[whitemerlot]

There are some new changes to 529 plans that make them a really great choice, including being able to roll over unused funds up to $35,000 into a Roth IRA in the beneficiaries name over time up to the annual max after they’ve been open 5 years. If you get a tax benefit, I would be very motivated to use the 529!

[chpmnk1015]

Savings and cds and an ibond each. We will probably take their ibond now and move to a Roth since they had jobs this year. 14 and 15. College is looming so...
Some savings were moved to our name this year and put in cds..

[wanderingback]

Jan 7, 2024 7:31:42 GMT -5 chpmnk1015 said:

Savings and cds and an ibond each. We will probably take their ibond now and move to a Roth since they had jobs this year. 14 and 15. College is looming so...
Some savings were moved to our name this year and put in cds..

Thanks for this, I guess this was my question. So why did you decide on cds and ibonds too? Just to get more interest? Did you just put a lump sum in each once at some point?

[chpmnk1015]

Jan 7, 2024 8:47:28 GMT -5 wanderingback said:

Jan 7, 2024 7:31:42 GMT -5 chpmnk1015 said:

Savings and cds and an ibond each. We will probably take their ibond now and move to a Roth since they had jobs this year. 14 and 15. College is looming so...
Some savings were moved to our name this year and put in cds..

Thanks for this, I guess this was my question. So why did you decide on cds and ibonds too? Just to get more interest? Did you just put a lump sum in each once at some point?

Honestly, I don't really know...we just didn't love 529s... each kid has a savings account..so when they get 1 or 2k in we will do ance. We also did a fidelity youth account with 1k so they can start to look at stocks and stuff.

[mrsGreeko]

Originally we just had regular savings accounts for each kid that we auto deposited a little money into every month. Then at some point I got around to opening 529’s and we auto deposited in both the savings account and 529 monthly. Then I realized a UTMA account was a better option for the savings account money.

So now the kids each have a 529 that gets auto deposits monthly, a savings account that their UTMA account money gets auto deposited in and then auto debited into the UTMA account, and they have savings (and checking for my oldest) accounts at a different bank that are their working accounts. That’s where they can put their own money and my oldest can get her paychecks deposited and pay for things from.

In my state the UTMA accounts will revert to them at the age of 21. They can use the money to pay off student loans, put down a down payment on a house, or leave it in the account to continue to grow as a nest egg. Splitting it between the 529 and UTMA was decided because our oldest kept telling us she wasn’t going to college and at the time there wasn’t the option to move it to an IRA so we wanted some flexibility with some of the money. Joke is on us because she starts college in a week. UTMA accounts do count as investment on the FAFSA which may or may not be an issue depending on your family’s circumstances.

I think starting with a 529 is a good idea. Then you can reevaluate other account options later.

[wanderingback]

Jan 7, 2024 10:12:36 GMT -5 mrsGreeko said:

Originally we just had regular savings accounts for each kid that we auto deposited a little money into every month. Then at some point I got around to opening 529’s and we auto deposited in both the savings account and 529 monthly. Then I realized a UTMA account was a better option for the savings account money.

So now the kids each have a 529 that gets auto deposits monthly, a savings account that their UTMA account money gets auto deposited in and then auto debited into the UTMA account, and they have savings (and checking for my oldest) accounts at a different bank that are their working accounts. That’s where they can put their own money and my oldest can get her paychecks deposited and pay for things from.

In my state the UTMA accounts will revert to them at the age of 21. They can use the money to pay off student loans, put down a down payment on a house, or leave it in the account to continue to grow as a nest egg. Splitting it between the 529 and UTMA was decided because our oldest kept telling us she wasn’t going to college and at the time there wasn’t the option to move it to an IRA so we wanted some flexibility with some of the money. Joke is on us because she starts college in a week. UTMA accounts do count as investment on the FAFSA which may or may not be an issue depending on your family’s circumstances.

I think starting with a 529 is a good idea. Then you can reevaluate other account options later.

I will have to Google what UTMA is, thanks!

[midwestmama]

My kids each have a kids/teen account at our credit union. I deposit $10 to each of their accounts from each of my checks. They also deposit gift money and if they earn some money and want to save it into their CU account. Last year I moved some of their balance to CDs to accrue higher interest. DH and I have a 529 for each of them, which we auto deposit money into each month.

[ssmjlm]

I'm pretty sure her account is just a kids savings account at Cap360. I didn't want/care to think about anything else because it was like $100 from my grandparents when she was born. I'll care more when she needs a working account beyond depositing christmas or birthday money.

We have a small 529, but I didn't want her money tied up in that.

[simpsongal]

DS (10) has a kids savings connected to my account. I use it to transfer allowance money when I get sick of paying cash. It's a meager amount of money, but it still kills me to have any money sitting at like 1% or whatever it's earning....

[fn2187]

Thinking ahead, you may want to take financial aid for college into consideration. For example, (not exact numbers here) a student could have 20% of their savings assessed which is expected to be paid for college. Parents may only be 5% assessed. This could potentially be a huge difference in financial aid for the child. I’m not stating to do anything sneaky to get extra aid, but it’s nice to get the facts on how this will all affect you and your child down the line. Title on accounts can be a much bigger deal than most people think about. You may want to look more into that.

[aspentosh]

We opened a 529 right after she was born and contribute to that monthly.

But for all other money she receives (Christmas, birthday, elementary school graduation, etc) that she wants to save, we had been putting in a high interest account until last year when we did a CD (13 month). She isn't using the money for years (she's almost 12) so she liked the idea of getting as much interest as possible. I think we'll just re-up the CD if it's a good rate when it matures. For the money she receives while the CD is current, it's still in a separate high yield savings account.

[ellipses84]

My kids have saving accounts through our local credit union that partners with the elementary schools. It’s a higher savings rate for kids age 5-13 than the adult % rate up to $500. My name is on the account too. Previously we had one kid’s savings account at Wells Fargo but they didn’t have a good kids savings account program at the time and it was basically just a joint account with a parent, where they waived account minimums and fees.

For an 1 year old, I would start a 529 or other small investment account. I wanted to try the Alinea app because it’s women owned and sustainability focused so I’ve been investing a little bit there each month. I’m not sure if it’s what I was looking for, but any simple app based investment account would be good for this (it may have to be in your name and look into gifting it or the funds later - not sure about tax implications but it’s not huge $$$). The 529 rules changed and you can rollover a good chunk into retirement accounts and not lose it.

No savings account is going to give you the compound interest of a 529 or investment account. Unless you want to use it for future toddler activities like swim lessons, soccer, children’s museum passes, etc. your child likely won’t have a need for it for a few years or more. Once you are approaching that point, you could stop investment contributions and re-route it to a savings account, until it has the $$$ amount they received in gifts to use as they please (but in the mean time you’ve made money on that original amount). We didn’t have a lot of room in the budget when my kids were young and I prioritized my retirement accounts (as recommended), but I really wish I’d started saving even $20-50 a month in their 529s when they were born.

[heygrey]

DS (9) rarely gets monetary gifts, but I opened kids saving and chequing accounts at our local bank for him last summer so he can understand saving and earning interest. I transfer allowance to him at the beginning of the month and he deposits money earned from returning pop cans. He likes checking every month to see the interest earned on his savings account.

We also have an education savings plan (Canadian version of a 529) that we opened when he was born, but that is something we contribute to monthly. I've never put his money into it.

[brooke77]

DS is 6. I have a sub-account in Ally for him. If he gets cash gifts, I put it in there. He only has about $2,000. Friends will sometimes send him holiday cards with $5, but I otherwise don’t touch it or contribute. We have the majority of savings for him in a 529. My family will also sometimes send contributions, which is my preference over toys.

[wanderingback]

Jan 9, 2024 9:18:32 GMT -5 brooke77 said:

DS is 6. I have a sub-account in Ally for him. If he gets cash gifts, I put it in there. He only has about $2,000. Friends will sometimes send him holiday cards with $5, but I otherwise don’t touch it or contribute. We have the majority of savings for him in a 529. My family will also sometimes send contributions, which is my preference over toys.

I think $2,000 is pretty good for a 6 year old! That’s more than some adults have.

[jewel]

My kids have regular saving accounts at a local credit union. The idea of a brick and mortar bank holding onto their money is easier for them at this age (6 and 9). They get pretty excited to deposit cash with the teller, get their receipt, and keep track of their balances.

They also have 529s that are mostly just used for family to contribute to in lieu of gifts (which I love). For gift giving occasions, there are a few people who regular give my kids a small gift and then $ straight into their college accounts. It’s nice to be able to give people a direct link for deposit, if that’s what they’d like to do.

[Susie]

My kids each have a savings account at our local credit union, and a 529.

The 529s are mostly just for H and I to save for college, since we're the ones getting the state income tax benefit.  When the kids get cash, we let them either keep it or put it in their savings account.

[robot]

We have a 529 for each child, but for birthday/gift money, etc, I created Capital One 360 accounts in my name, and just labeled it with their name in the app. I already bank with Capital One, so it's extremely easy for me to transfer the desired amount of money from my checking acct into their savings and pocket their cash. This way I never need to deposit their cash. Now that my kids are teen/tween, they like being able to see what they have/how it gains interest, and they sometimes ask me to take money out for a purchase.

[CloudBee]

We do max out a 529, but sometimes I wonder if we "should". I really don't know if DS will go to college. He's such an outdoorsy guy who loves working with his hands. It wouldn't surprise me if he started up some type of landscaping business or buys a fleet of tow trucks.

He doesn't receive much cash as gifts, so it usually goes into a wooden box in his bedroom. He's a saver by nature. We have a savings account setup for him, that we put a few cash gifts he received upon birth. I didn't know people gave cash at birth, but this was literally the ONE time he received two or three chunks of money. ($500 from a great aunt!) We don't have him deposit money into that account because he's so good at saving on his own and understands interest, BUT we should probably start going through the motions.

One thing we do that's fun, is follow the stock market with him. We bought some stock in his name when he was a baby and we track it.

[fryjack2]

I have a sub account for each of them in my Cap one 360. Its under my name, but their bday checks get deposited to my account and then I just transfer money to their account.

Or if they get cash, it goes in a jar in their room and I use it to tip service guys or grab some out when I need cash quickly. Ha They never seem to want to spend it so they don't care when I do that and I just transfer the equivalent of whatever I take out to their savings account. .

They have college savings in a 529 but we don't put gift money into that.

When they start working for real, I will have them open a Roth or something that is more long term savings. They are 11 and also want to invest their money. Which is prob the kick I need to look into investing outside of retirement because learning to do so has been on my yearly financial goals for years.

[dutchgirl678]

We don't have 529s for them and it is kind of too late to start now (they are 15 and 12) but we have savings accounts at Capital One (currently getting about 4.35%) and I just put part of their savings into a CD there that is getting over 5.4%

[Stan]

Niece and nephews all have a HYSA in my name that I add to on birthdays and Christmas because I’m not close to their my siblings/their parents and got tired of sending money/gifts without even a text in return. I’ll send the money to each kid on their 18th birthday.

My kid has an earmarked investment account in my name invested in VTSAX. She’s got about $7500 in it from gifts and tax credits (the Covid credit we got for her we put in there). Her college is taken care of as she’s got full access to both our GI Bills (72 months worth of eligibility) so we don’t save a ton extra in there but any financial gift she gets goes directly there. I plan to give it to her at 25 but may do it earlier. She knows it exists (she likes the graphs haha but is upset it’s not “the biggest number block she’s ever seen”).

Edit: I didn’t to an UTMA or UGMA because I was dumb at the ages it would legally go to her and would have wasted that money so I wanted a bit more control over turning it over to her based on life situation and temperament.

[magpie]

We have 529s for both kids, but they also each got personal savings accounts for allowance savings and birthday/gift money through my bank. The accounts are connected to my account. It's kind of interesting because, at least where we live, cash is no longer used very often. Every couple of months I go to the bank and get a bunch of coins (we have $1 and $2 coins here) to pay their allowance, but I'm often out, so I sometimes just transfer their allowance into their savings accounts. They aren't allowed to have ATM/credit cards attached to their accounts until they are a little older (they are 7 and 10) so I have to either bring them to the bank to withdraw money or transfer between accounts. One kid never touches her allowance money and the other kid frequently buys stuff (mostly toys and junk) so I have to transfer it back into my account. It feels really stupid and pointless, but I'm trying to make sure they understand that tapping my bank card or waving the phone at the pay sensor is actually taking away money!