Children's Money

[Sean Moen]

Hey All,
Doing some digging tonight on what to do with my kids' money - gifts and/or allowances. Ages are 5 yr and 1 yr and I'm strictly speaking about the savings portion. I know there is a philosophy around "save, spend, share" but I'd much rather figure out the save portion.

Since there are a *cough* few smart folks hanging around these forums I was wondering what you guys were doing.

First thing that comes to mind is a 529 plan but I'm not a huge fan of it. Still digging into the restrictions but, from what I understand, the restrictions are too tight for me. Plus, it's tax-deferred and I hate that word.

Regardless of my pre-conceived opinion - I would really appreciate the thoughts, opinions, strategies, experiences, etc...even if they are about the 529 plan.

Thanks folks!

[J Scott]

My kids don't understand money yet (they're 3 and 2), but I take whatever is in their savings and invest it with my investments. They get an equity position in the investment equal to their contribution. For example, my 3 year old's first investment was $300 when he was a month old. We flipped a house. The return was about 15%, so he made $45 on that investment that went back into savings.

My 3 year old has now done 5 or 6 houses and my 2 year old has done a couple as well. I'm hopeful that by the time they start to understand what money is, they'll be able to partner with me 50/50... :)

Btw, for anyone concerned that I might be putting my kid's money at risk, that's not really an issue. I'd never let them lose money on an investment...at least not until they're old enough to understand what they were doing and were making investment decisions themselves. This is just a fun way to watch their money grow and to be able to explain to them (at some point in the future) how investing has helped them to make money while they were growing up.