For all parents/caregivers: What type of money are you setting aside for your kids and why? My husband and I have currently set aside $50k in a 529 (split between two accounts) for our kids. They also have a UTMA for checks they get for their birthdays. We have the means to setup a modest trust fund but I’m debating whether or not we should. I wouldn’t mind giving them a nest egg to help them start out in life but also thinking that we could also just gift them money too when they’re older, keeping control over the money just in case they end up not being responsible enough to handle a larger sum of money. We definitely don’t have the means to give them “never have to work” amounts, but we could give them like $250k each, which would be a nice down payment on a property, med school, etc. Or we could just save the money ourselves and gift them up to $30k/yr each if we feel like they have a worthwhile expense. There is also the larger discussion here of the pros/cons of generational wealth. I know I really struggled having no support growing up. I was in foster care for a while and then became a ward of the court. Putting myself through college and doing everything on my own was hard. Some struggle is good, but some is limiting. TC: $151k
We have a 529 for school which should cover an undergraduate degree and we set up a retirement account with $100k to give a nice start with compounding growth.
I understand the 529. But how do you get a retirement account for them??
Custodial account
Don’t really understand the question. You know that most likely your kids will inherit everything you have left, right? If you’re asking about what things cost money, I think the answer is maybe obvious. College, Wedding and Housing are the big ticket items for most people.
Yeah, they will inherit everything one day, but hopefully not in their 20s as that would imply my husband and I would die in our 50s 😬 So I’m thinking about if I should set aside a little each year for them to have a nest egg in their 20s to start them off in life.
Answer is yes. 😀 The more the merrier, obviously. But note that I know of several fresh grads who cannot get a job now and survive off their parents. This might become more and more common in future as we enter into the AI age and jobs are becoming more scarce. Best to teach your kids to be independent. i.e. teach them how to fish instead of giving them fish.
My son has 75k set aside in his 529 for the obvious reason. At some point we’ll create a general savings account so that when he goes to college he’ll have miscellaneous spending money. No trust yet, but we may end up with so much that it would make sense.
I would put much more money into 529. For each kid college can easily run into 350k over 4 years, that is with current price. It could be over 500k in 10 years.
We will continue to contribute more, but we also don’t plan to contribute the full cost of college. We are EU-US dual citizens so there’s a real chance the kids will go to college for free in Europe.
We are saving money for them in RESP (Canadian savings account for kids) paying for their insurance so that they don’t have to pay when they turn 20 I guess. Mutual funds for their education and other needs.
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No kids yet but I know it’s advisable to save for your own retirement first, aggressively, before trust funds for your kids. Also consider if you will qualify for college financial aid later if one of you stops working. In that case, having money in kids’ accounts other than 529 becomes a liability.
Great advice. I think that we will likely not qualify for any aid unless our financial situation changes a lot. We have $2M in retirement and brokerage accounts now and I think at least some of that is counted (I think the brokerage accounts for sure and they’re at about $800k).