Decoding the Legalese: How AI Can Help Parents Understand What Their Child’s Savings Account is Used For
- May 6, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Planning for Your Child’s Financial Future
I have an 8-month-old daughter, and while it may seem early, we’ve started putting the money she’s gifted into a separate bucket in our Ally savings account. My husband and I both agree that it’s important to save this money for her future needs. However, we’re not exactly sure what this money could be used for in the long run.
With the passage of time, as our daughter grows older, we envision scenarios where she might want to use her savings to purchase things like a fancy toy while we’re at Target. Perhaps we could use a portion of her savings to teach her the value of money and the importance of saving. However, these situations are still years away, and we’re unsure if it’s wise to keep her gifts in the savings account for now.
One option we’re considering is to transfer the money from her savings account to her 529 college savings plan. Currently, we make monthly contributions to a 529 plan in her name, separately from her gifted money. This way, the funds can grow over time and be used for her education or other future expenses.
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With the help of the AI Legalese Decoder, you can easily compare different savings options, understand the terms and conditions of various investment plans, and ultimately make the best choice for securing your child’s financial future. This innovative tool takes the guesswork out of financial planning, allowing you to confidently save and invest for your child’s future needs.
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We’ve got a 3.5 year old and have done the same thing. We keep a little in a liquid savings account but we put most of it in an investment account. We have a separate 529 that we contribute to monthly.
As for what we plan to do with the money, I’m not really sure. If something should happen that we have to use it for her care we’d obviously do that. Eventually I like to think that we’ll just gift her the investment account at some point.
Mines almost 6.
I have a high yield children’s (0-17) savings account at my local credit union, (I think it’s something crazy like 9% Apr). I put some money there every now and then. When she gets a check from someone that also goes in there.
I haven’t figured out how to explain the number on the screen or a statement is a number like the money in her piggy bank.
That’s her money and I do 529 separate from that.
I figure some day she is going to want to go on a trip to France or buy a car. As for things she wants it usually a few dollars at a garage sale when she sees something she wants so we go home and get her wallet/ open a piggy bank and get some of her saved up money. She’s got more cash than me😂 as she has 7-8 piggy banks and our live in FIL gives her all is change.
My son is 12. We’ve taken 100% of all gift money to him since he was born through 10 and put it into a 529. We also contribute to it monthly. We have about $65k in there now. It should be well over $100k by the time he starts college if he decides to go.
For the past 2 years, in terms of gift money, we take 50% and put it into his 529. We take 25% and go to the bank with him where he deposits it into a savings account. And the other 25% we let him keep at home for whatever he wants to spend it on.
We also have a side UTMA that we put money into so that he can maybe use that for his first apartment or house down payment one day.
My grandparents gave me bonds. Savings accounts or CDs have been traditional. Smarter Personal Finance me would say 529 would be fine or a taxable brokerage invested in something like VTSAX
I’d have a college fund and a bank account in her name. Start contributing to the college account ASAP and max it out if at all possible. We went through my eldest’s college savings in less than 2 years (didn’t always max). We are lucky that we knew we’d have other funding for them.
All random gifts that aren’t earmarked as college funds I’d put into a HYSA. We put our kids on an allowance at an early age. Did not buy toys, etc. outside of birthdays and holidays and when they were old enough we allowed them to spend that money on things they wanted. Think gaming systems, games, etc. once they get past the initial toy aisle browsing. It helps them to learn budgeting, savings, etc.
We prefer to use a UTMA and 529 with Fidelity instead of a savings account.
I don’t have children, so take with a grain of salt. But I was once a college student with a 529 and savings account. My thought? Do half and half for right now. Because having a savings account AND a 529 is helpful since 529s are limited in what they cover (I don’t know the exact details but you know what I mean). Also the savings account can be used before college like in your example and for like, a prom dress later on (again going halfsies maybe).
Only other thought—does the savings account earn interest? If not, might be good to switch to one that does. If she largely leave the money alone for at least a while, that interest could really add up.
Best of luck on the parenthood journey! I’m glad you’re planning for her financial future—while my parents did not, my extended family did, and man did it make my life loads easier. When she’s old enough, get her a credit card that you manage, too. Starting me young to build credit history was clutch of my family, my credit is better than most people my age even still (I’m 30) because I’ve had a credit card since 16 even though I barely used it for many years.
We put it all in a 529! My kids are now 4 and 6, and they can earn spending money via a sticker chart where every few stickers earns them a quarter. The other money they got (cash gifts as babies, the stimulus checks, etc) went into the 529.
If we are talking birthday/holiday gift money I taught my son to of course – before he spends one penny to write a Thank you note, in that note he tells the person what he is planning on spending the money on. He generally keeps 10% of the money for fun purchases then puts the rest in savings. He is 14 now and knows the drill. He has saved enough that by the time he is 16 he should be able to purchase a more than decent car.
I have been saving for his college tuition since he was born into a 529.
Don’t save it like that. Just invest it, and then when she needs something pay cash.
We put it in VTI
My kiddo has a savings account at the credit union, a Greenlight account, a UTMA, and a 529. Half of his allowance goes into the savings account and half goes on his Greenlight card. He can spend whatever is on his card on whatever he wants. He has an “emergency fund” in his savings account and every so often he picks stocks to buy in his UTMA with whatever is in that account higher than the limit we set for his e-fund. This is more to teach him about saving vs. spending every dime. I contribute a small amount to his UTMA each month and a larger amount to his 529 each week.
I really started teaching him about this stuff when he was about 4. He wanted a giant Batman playset and since he’d just had a birthday and it was like $100 and too big for our house I told him that it would be a good time for him to start getting an allowance and saving up for things he wanted. I didn’t really think he’d do it. Joke’s on me though because between his birthday money, his allowance, and pimping his dad out to do chores for Nana…there was a big ass Batcave in my house for awhile.
my hobbies. no kids ;p
Open a ROTH IRA and they benefit from 50 years of tax free compound interest.
I have a 529 and a custodial account. All invested in equity index funds, no cash.
I have the same thing from my 4 yo and I don’t really have a plan. Once she’s out of daycare I’m going to put half the daycare cost into a brokerage account for additional college savings but I’ll keep that in my name for the time being – she has a 529 but my goal is to get that to right around 35K so if she doesn’t go to college she can roll it into a Roth IRA.
The savings account might be set a side for big stuff. Expensive hobby stuff (gaming), Car, travel, etc.
I’ve just kept the money aside and when they got to college that had a good amount of funds. One kid used his funds along the way. The other had saved a bit before college so she put most into her brokerage account and took some to spend
My wife and I contribute $2k per year to our baby’s 529 to max out our state income tax deduction. We also add any gifts he receives throughout the year on top of that. This could ultimately flow into an IRA for him when he’s of age and I’d rather have the money invested than sitting in a HYSA
Have 529 for both my kids, for schoolin’. Any money gifted to them goes into a brokerage account with a conservative long term outlook.
My inlaws did something similar for my wife and that was what contributed to our down payment on our house so thats our plan at least.
In the future when we get into allowances and jobs then we’ll use that money to educate on saving and spending.
Continue as you are doing, with the savings and the 529. Use the savings account to teach her the value of money once she is old enough to understand.
Presuming you give her an allowance, encourage her to save some and spend some. The money she wants to save can go into that account.
Treat it as a miniature version of what an adult might do with savings, ie., saving for something nice in the future–talk to her about what that might look like.
Once she’s of age, turn it over to her. By that time, she’ll hopefully have a good understanding of how to manage a savings account.
My kids only real savings is their college savings accounts. But if they get cash/gift cards for their birthday, they keep that in their rooms.
All money gifts go into his stock account that will be useable with us approving after he turns 18 (such as college) and will be transferred in its entirety to him at 28
I set up 529 accounts for each kid at 2 yrs old and have contributed what I could each month . Otherwise my oldest has an account at our credit union
I’d throw it investment accounts.
When they get old enough to manage spending money, perhaps split between HYSA and investment.
Good opportunity to teach saving for future (and the importance of investing to not lose to inflation)
As kids get older they might ask for a musical instrument, horse back riding lessons, camera, bicycle etc. Use the money for things like that.
I also opened savings accounts for my kiddos when they were newborns and every single cent they were gifted for Christmas or birthdays, etc went into that account. I also had a standing monthly transfer that went into those accounts. Now they’re adults and we’ve used that money do pay for college courses, down payment on a car, etc.
We have separate investment accounts for each of our kids (5 and 3) and contribute $100/month and typically an additional $2k/kid in March/bonus time for me. Our goal is to keep this up until they’re 25 or so and based on rough estimates they should have roughly $150-160k/kid saved up to use for what they want – ideally a house down payment or a wedding.
529s have been taken care of by the grandparents so we don’t worry about those thankfully.
100% into 529 until she reaches an age where she can learn about bank accounts, debit/credit cards and investing. Then split 50/50 between her personal savings account and brokerage account (for stocks etc)
I used the money in their accounts for high cost things that they wanted to do. Play saxophone in the middle school band, school camp trips, sorority dues, etc. Once they graduate from college, I’ll probably just give them the money for them to start out with or buy a car.
I have savings account for the kids that doesn’t get touched. Then I have the chore fund which is a credit which is written on our fridge. I told my daughter she can spend it as she pleases, but to remember that she can buy a small thing or she can save save save and once she gets to $200 I will take her to Disneyland. That way she can see that not spending on dumb little things gives you the ability to do bigger things.
Most monetary gifts go into their 529 or separate investment account. We do have a smaller savings account that we use for sports, camp etc. We let our 5 year old keep a portion of his birthday and Christmas money this year which he chose to spend on toys.
14/10 year olds.
100% of all gift money to him since they been born has gone to their 529 plans. Once they hit 4th grade, we let them keep 50% of their gift money for THEIR choice of savings / spending (Roblox or Fortnite gift cards it seems) and the other 50% goes into the 529 Plan
When it’s appropriate, we’ll set our child up with a checking account but that’ll be only after she’s started earning a cash allowance. And then she’ll be expected to add funds to her savings account as well. We deposit in there and her utma account.
Our policy is to put half of gifts in the account and let them spend the other half. The account is never to be touched.
My kids have an account that’s only ever received deposits, and never a withdrawal. They’re getting close to those pre-teen years, so that may change somewhat, but I like that they both have this piggy bank waiting for them once they truly understand the concept of money.
Just goes in the 529. When she’s old enough to understand that money buys things, I plan on teaching her about budgeting. A percentage will go to savings/investment and a portion can be used for things she wants now.
Each of our kids have a savings account and a 529. Once they get x amount in the savings account everything over a certain amount gets transferred to the 529.
529.
UTMA account. Opted against 529 because utma provides a bit more flexibility. When my kids are kids, I’ll buy their toys
We have a 529 and a savings account for each kid. 529 is clearly for education. The savings account is a way for us to give them a buffer into the adult world. They get it when they show us they have a good plan for it (buy a house, start a business, etc).
Our kid is 21 and his savings are still in a bucket with his name in our Ally account. He also has bonds and an investment account. We provide for all of his needs because he is in school. Once he graduates and has a job and starts managing his own finances we will transfer the funds to him.
I would invest it all because time in the market is king and then when she takes an interest in money, start with an allowance, open her a bank account, and start letting her have gift money. No way she’d have a chance to miss all the money that accumulated prior and it might sabotage her first lessons of saving if she starts with too much.