Pros and cons of child bank account

[Anonymous]

Two kids 12 and 14. The older have odd jobs like soccer ref that has income less than $600 a year. Not sure when older will get a real job. Currently they each have about $3k in my account. Currently any interest is reported under my income bracket.

Is there benefit to having them open their own bank accounts now as a minor or just wait till they turn 18? Not sure how any balances adjust their financial aid for college either. What are you all doing?

[Anonymous]

What you should be doing is setting up a Roth and putting their money in that.

[Anonymous]

Anonymous wrote:What you should be doing is setting up a Roth and putting their money in that.

I thought Roth had to be earned income? Their money currently is from birthdays etc. What kind should they be getting specifically?

[Anonymous]

I got my kids bank accounts around age 14. They downloaded the bank app and ApplePay and have learned how to budget and manage their accounts. It quickly taught them how expensive their spending habits were - and the value of working and saving money. Great lessons to have mastered before leaving for college.

For larger amounts (mostly gifts from relatives), they have investment accounts at Vanguard. I don't know about the college implications...

[Anonymous]

My kids are under 10 and I have savings accounts for them. A few years ago the local bank offered $25 to open a child's savings account, so I did. The other benefit is I don't have to keep track of whose money is whose from birthdays and what not. The balances are all under $500.

[Anonymous]

There is no negative to getting them their own bank account. You would be on it too and have complete access. They need to know how money works.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What you should be doing is setting up a Roth and putting their money in that.

I thought Roth had to be earned income? Their money currently is from birthdays etc. What kind should they be getting specifically?

You said “odd jobs like soccer ref” so I thought it was earned income. DS is a ref and that counts. Birthday money does not count.

Fidelity had a good youth Roth. You manage it until they are 18.

[Anonymous]

Anonymous wrote:There is no negative to getting them their own bank account. You would be on it too and have complete access. They need to know how money works.

I agree. Mine opened one when he turned 16 and needed one for direct deposit.

[Anonymous]

Anonymous wrote:I got my kids bank accounts around age 14. They downloaded the bank app and ApplePay and have learned how to budget and manage their accounts. It quickly taught them how expensive their spending habits were - and the value of working and saving money. Great lessons to have mastered before leaving for college.

For larger amounts (mostly gifts from relatives), they have investment accounts at Vanguard. I don't know about the college implications...

What kind of bank account? Doesn’t Apple Pay require a debit card?

[Anonymous]

Anonymous wrote:There is no negative to getting them their own bank account. You would be on it too and have complete access. They need to know how money works.

The negative is that if you might qualify for financial aid for college..money that is in your child's name is counting at a high rate for contributions. If it is just a small amount or you are unlikely to qualify then not an issue,

[Anonymous]

We use Fidelity Youth account. Free and comes with debit card as well as investing options. Default SPAX account has about 4.5% a year interest. Since it’s a custodial account parents must have a Fidelity account set up as well.