Kids and their money

[soon2bmomof3]

Since Chinese New Year is coming up, thought I'd ask about how you handle the money your kids receive.

My kids are still young (3 and 10 months), so they have no idea what money is and what it is for. Well, the 3 yo is starting to...

All the money we've received for them so far has just been deposited into the joint checking, to be used now. I do keep a log of how much each child receives, so later on, when I open an account for each of them, I know how much to put in. Cash usually goes into one of our wallets (depending on who is short on cash) or put away in the safe.

So what do you do with your kids' money? At what age did you start letting them keep their gift money?

[Deleted]

We have one 2 year old. Any money she gets goes into a separate checking account. Once she gets old enough we will give it to her, which may be around 5 or 6?

[NomoreDramaQ1015]

Right now we have a 529 and we put any leftover cash Dh and I have into a piggy bank in her bedroom. Like snerdly our bank is starting to charge fees unless you are depositing $X into the account, it makes no sense to have her own separate account yet when we already have a savings account.

[zibazinski]

I bought savings bonds with any of my kids money.

[doxieluvr]

Jan 24, 2011 10:31:15 GMT -5 @soon2bmomof3 said:

Since Chinese New Year is coming up, thought I'd ask about how you handle the money your kids receive.

My kids are still young (3 and 10 months), so they have no idea what money is and what it is for. Well, the 3 yo is starting to...

All the money we've received for them so far has just been deposited into the joint checking, to be used now. I do keep a log of how much each child receives, so later on, when I open an account for each of them, I know how much to put in. Cash usually goes into one of our wallets (depending on who is short on cash) or put away in the safe.

So what do you do with your kids' money? At what age did you start letting them keep their gift money?

My kids are young, but every dollar they receive gets deposited into their own savings accounts.

[telephus44]

My son is 4-1/2, and I actually have an honest to goodness passbook savings account for him. The interest rate is terrible, but I'm hoping when he gets older he can actually go in the bank with me and deposit more money.

I'm not sure how I'll handle it once he "figures out" money.

[Wisconsin Beth]

We have custodial accounts set up for both kids. They're 15 months and 2.75 years old.

[soon2bmomof3]

I've thought about opening a savings account for each kid, but as some of you have mentioned, the rates suck and the banks are starting to charge fees and stuff if you don't regularly deposit or have a certain balance.

[gs11rmb]

All monies my daughter (she's 2.5) receives gets deposited into her college savings account. We don't have a 529 but instead have a Target Retirement Fund 2030 with Vanguard. Why? We deposit $100 a month into it as well and although it is absolutely intended for her college, we wanted to be able to access it in case of an absolute emergency without paying penalties and fees.

[Urban Chicago]

I have a custodial savings account for each of my kids, and a brokerage account (some relatives like to give stock, rather than cash).

When they are old enough to understand, I will explain everything I'm doing and why, and come up with a good system for allowances/chores etc.

[thyme4change]

Well - your plan is better than mine. Each kid kept it in a piggy bank in their rooms. The money has disappeared over time. I don't know if it was the cleaning lady or their friends. But, I suspect about $20 is gone.

[boosmom]

I opened savings accounts at our credit union for the kids by 1 year of age, as they received a lot of cash gifts for their 1st birthdays. I also have online accounts set up with our online bank. Both institutions don't have any fees.

Most of the cash gifts they receive gets deposited to their accounts at the CU. I will keep about $40 for the older one to use if there's something that can't be lived without -- but that hasn't really happened much yet. The older one just turned 6, so I'm sure more stuff will be on the want list.

[shanendoah]

I am 35, and I still have the savings account that was set up at our credit union when I was a child. My father still auto-deposits $10/month into it (also my older brother's and our two neices' accounts). I had to put half of my babysitting money in as a kid (but not gift money), but could take it out for big purchases or vacations. (A lot came out for my trip to Europe after my senior year of high school.)
It was never big enough to pay for college, but I did use it after college to help pay my student loans for a few months. Now it just sits there and grows, not by much, but its my super secret emergency fund. Most of the time I forget I have it. But I know that if I ever really needed the money, I could call and get it transferred.

[imawino]

I'm curious how any of you with slightly older children (think 10-ish) are with cash gifts given to the kids. Do you let them spend it all on whatever they want? Do you have them put a certain % in the bank and they can spend the rest on junk? How do you talk to them about money?

I have stepsons aged 9 & 11. I worry that they are not being taught anything useful about money and savings. The one is a natural born saver and always knows to the penny how much money he has at home, and he really doesn't like to part with too much of it. The other one has a problem with money burning a hole right through his pocket!

Their father does have brokerage accounts for them they can't access and don't know too much about, but I'm more curious about the cash on hand stuff. And at what age did you start giving an allowance? When you started giving an allowance did you expect they would buy some of their own toys and videogames and such or did you continue buying them stuff pretty much the same as pre-allowance days?

[boosmom]

I'm curious how any of you with slightly older children (think 10-ish) are with cash gifts given to the kids. Do you let them spend it all on whatever they want? Do you have them put a certain % in the bank and they can spend the rest on junk? How do you talk to them about money?

I think when they are older, the people giving the cash gifts would not be pleased if we forced them to save a % of the gift. (Usually the card that the cash comes in says "buy something fun".) So, we will probably let them have it all, and hopefully teach them well about the importance of saving up for things they want. I will expect them to learn about saving by requiring a % of allowances or any earnings to be saved (ST and LT).

[cronewitch]

My niece is doing it wrong with her daughter. I gave the girl $60 for spending. The girl doesn't understand money so said what she wanted and her mother said you have more money than that you could get a video game since what she wanted cost about $10. The girl has down syndrome but likes to go to Target and get something special. Her mother hasn't been teaching her to use math to count her money and subtract what she wants to spend to see what she would have left. Instead when she gets a money gift she lets her get what she wants and if she doesn't have enough makes up the difference and any left over money she keeps. The girl can add and subtract she needs more combining math and money lessons. I don't think she will learn to save long term but she could learn piggy bank math.

When I give a child money I will know if I mean for them to spend it or save it. Until they are old enough to count I want them to save it. Later buy toys then later still save it again. I gave the girl's older brother $60, he wants a car and is saving for it, I hope he saves his for his car.

[MonicaLee5186]

My mother actually did me a favor and set me up to be someone who saves, although at the time, she was terribly unfair and really out of touch with my needs! Until I started working (age 14) all of my birthday money was split in half. Half went into the bank, and half I got to spend on what I wanted. Once I was working, I would deposit all of my checks and live off of my tips. I paid for my first car myself that way.

Thanks, mom! Yet again, I see the wisdom of your ways. I will certainly continue this method with my own children.

[gs11rmb]

As I mentioned in an earlier post my DD is only 2.5. However, when she is old enough to really understand that she can actually buy things with money then I intend to let her do whatever she wants with that money - that includes saving it or blowing it all on a toy of her choice.

[soon2bmomof3]

Would you have a limit on what they can "blow their money" on though? For instance, since I brought up Chinese New Year... When we were growing up at our house, we didn't get weekly allowances or spending money. My parents provided for everything we needed. The only time in the year we got "spending money" was Chinese New Year. The amounts varied over the years but it was usually between $200~$500.

[gs11rmb]

Yes - I'm going to let her spend it on anything she wants. Would I give advice? Of course - but I really think children learn by being given the freedom to make their own choices (I'm not talking about health and safety) and making mistakes. It would be a different situation if she inherits any money but the discussion here is about something slightly different.

[whoisjohngalt]

My kids are 2.5 and 10 mo and they have no "their" money. All "their" money is my money. I will keep it that way until they realize what's going on and protest.

Lena

[beergut]

This reminds me of a story:

A friend's daughter was being baptized on her 1st birthday. I had been working when the little girl was born, and hadn't given her a gift then, so decided to combine the birthday and baptismal gifts and splurge a little. I wanted to buy her a savings bond, but the type I wanted was going to take two weeks. I just said to hell with it, and gave her a card filled with cash. Her parents were thrilled, and told me later it has become the foundation of her college savings account.

[soon2bmomof3]

That's really sweet beergut! I did the same thing for a friend's son's baptism. I jokingly put in the card that I hope it was the start of some kind of education fund b/c knowing her, she'd go out and get him a Gucci outfit or something.

[Lindz85]

Whenever I have kids. I will first put all of their money into a savings account until they are about 3-4 and start teaching them about money and allow them to have part of the money and put the rest of the money into savings and go from there on teaching them the importance of saving money.

[Deleted]

DS is 10 and he has had an account since birth. He gets cash from some relatives for birthdays and Christmas. DH and I allow him to keep about $50.00 in his bedroom bank for DVD's, Itunes,video games, legos, and nerf gun items. The passions of a ten year boy. When he does ask us to order something online (like lego.com) we will ask him to pay us from his stash. He has learned to be selective about what he wants to buy. It's funny he likes to count his money and it bothers him to see the amount go down, so he'll earn $$ doing extra chores around the house.

[boosmom]

The amounts varied over the years but it was usually between $200~$500

That's more than I would give to a child not in their teens. If my kids got that large amount of money at one time from one person, then I'd probably make them save at least half (if not more, depending on how young they are and the amount given).

With teens, if you expect them to buy clothes or pay for their movies/mall outings with their friends, then it should be made clear when giving them that money, but also knowing your children's personalities and how they have handled money through the years would guide me in these kinds of situations.

[soon2bmomof3]

Boo's Mom, when we were younger and didn't know any better, it was much less (under $50).

Plus, we were raised in a strict Asian household. No car, no time to go to outings (we had activities every afternoon/night after school). The only outings I went out to were school field trips.

[boosmom]

soon2be - I think with maturity comes responsibility. So, if you will be letting the teens take the car to go out with their friends, they pay for their own gas. Or if you get a car for them, they pay something toward car insurance and gas. For pre-teens (and teens) they can help with the excess costs of their "wants" e.g. name-brand clothes, sneakers, renting a limo for prom, music downloads, expensive toys, etc. So those cash gifts could go toward those kinds of things.