Helping Setting Kids up for long term Financial Stability

[Anonymous]

We are 1st generation of having financial flexibility.
I was a Pell Grant Kid, my spouse went to college on a ROTC scholarship.
We have saved to fund the kids college and since they were young put $20 a month into a savings account so they will have some "pocket money" when they graduate. If they need cash for a deposit for an apartment - or whatever else they might need.
My oldest is now 18 - and I am trying to figure out if there are things we can do that will further support them.
Example - does it make sense to buy an aftermarket life insurance plan as the cost is cheap now (my SIL was diagnosed with MS in her late 20s and life insurance outside of work company is very expensive)
I navigated this all myself - and made some mistakes along the way and if there is a typical resource that people use now for what the latest thinking is, I would love to help my kids in going through it together to help them get started.

[Anonymous]

If they have earned income, give them money towards a Roth IRA. My Dad did this for me all through college and grad school and that little but if money has grown so much.

[Anonymous]

Anonymous wrote:If they have earned income, give them money towards a Roth IRA. My Dad did this for me all through college and grad school and that little but if money has grown so much.

Good dad! Contributing to your kid’s Roth IRA as soon as and for as long as they have earned income (but not enough to contribute themselves without really feeling it) is one of the best ways to financially support your kids.

[Anonymous]

Fund Roth IRA for them

Help with 1st down payment of condo/townhouse etc..

[Anonymous]

No, don’t take out life insurance on your kid.

If he works, have him open a Roth IRA and help him fund it. Help him start an emergency fund and a starting adult life fund. That’s the best help you can give.

Those insurance policies are predatory and high fees.

[Anonymous]

Whole life insurance is not a good investment for most people. Once you kid has dependents he/she should get term life insurance. But thats it. Not having consumer debt, saving, and investing are the keys to financial stability.

-pell grant recipient too

[Anonymous]

Beyond college savings, I would plan to help with with a home down payment as well. If you still are able to help more, contribute to their kids college funds. We have so many friends who don’t have any more income than we do, but they didn’t have to save their own downpayment and they don’t have to save for their kids college now and I’m so jealous.

[Anonymous]

Here’s what we did (similar to my parents)

Encourage starting Roth upon first job

Attend college debt free (kids are at in-state public)

Build credit by adding kids as authorized users to your accounts in late HS/freshman year of college

Teach about responsible credit. Only spend what you can pay the bill for today. Always pay in full by the due date.

We thought it would be a good idea to invest in affordable properties when our kids were young so we could gift them in adulthood but our finances didn’t allow it. I don’t know how they will afford to own a home with crazy prices and interest rates.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If they have earned income, give them money towards a Roth IRA. My Dad did this for me all through college and grad school and that little but if money has grown so much.

Good dad! Contributing to your kid’s Roth IRA as soon as and for as long as they have earned income (but not enough to contribute themselves without really feeling it) is one of the best ways to financially support your kids.

+1

We have done this with our kids, and once they start "real job" with 401K, we help with that as well. By time kid is 30, they will have the "equivalent of $2M+" at retirement age already in their Roth and 401K. Advantages of maxing retirement in 20s is huge leg up

[Anonymous]

1. Graduate from college debt free

2. Contribute as much into their IRAs each year from 22 onward (max it if you can)

3. Help them get into their first property. Avoid condos. Get them into a townhouse if possible.

I wouldn't help them *too much* as they need to develop their own wealth too, but getting them into a starter house and maxing the IRAs are simple steps that will pay off greatly in the long run.

[Anonymous]

Does a kid’s Roth IRA count as a reportable student asset on the CSS profile so that the college will “take” almost all of it over four years? Or is it handled more like the parents’ retirement assets, which are often shielded by colleges?

Is that why above poster says to start at 22?

[Anonymous]

Anonymous wrote:1. Graduate from college debt free

2. Contribute as much into their IRAs each year from 22 onward (max it if you can)

3. Help them get into their first property. Avoid condos. Get them into a townhouse if possible.

I wouldn't help them *too much* as they need to develop their own wealth too, but getting them into a starter house and maxing the IRAs are simple steps that will pay off greatly in the long run.

**too much** is all relative and depends upon the kid's personality.

We probably help our kids "too much" by most standards. But our kids will inherit $10M+ each. So we'd rather gift it to them in their 20s and beyond, rather than when they are 50+ and we are dead.

IMO, as long as the kid is employed and "working hard", not wasting money and is developing a concept of saving, why not help them out? Not sure that making them live with roommates or in a dump of an apartment or driving a beater vehicle that constantly breaks down is an essential part of being successful adult.

They already know that if they have kids (our grandkids), education will be provided for (K-college if so desired). Yes, their life is better than their friends---their friends have loans and do not fully save for retirement (2-3 years out of college) and they drive older cars. Our kid still drives an older car and will continue to do so until it has issues, then they know we will help them purchase a new one. But they are frugal and budget and love to save. By time your kid is 22+, you should have a great idea if they are responsible adult or whether you shouldn't gift as much to help them learn to be an adult. But if you raised them right, they should be the first.

[Anonymous]

Anonymous wrote:

Anonymous wrote:1. Graduate from college debt free

2. Contribute as much into their IRAs each year from 22 onward (max it if you can)

3. Help them get into their first property. Avoid condos. Get them into a townhouse if possible.

I wouldn't help them *too much* as they need to develop their own wealth too, but getting them into a starter house and maxing the IRAs are simple steps that will pay off greatly in the long run.

**too much** is all relative and depends upon the kid's personality.

We probably help our kids "too much" by most standards. But our kids will inherit $10M+ each. So we'd rather gift it to them in their 20s and beyond, rather than when they are 50+ and we are dead.

IMO, as long as the kid is employed and "working hard", not wasting money and is developing a concept of saving, why not help them out? Not sure that making them live with roommates or in a dump of an apartment or driving a beater vehicle that constantly breaks down is an essential part of being successful adult.

They already know that if they have kids (our grandkids), education will be provided for (K-college if so desired). Yes, their life is better than their friends---their friends have loans and do not fully save for retirement (2-3 years out of college) and they drive older cars. Our kid still drives an older car and will continue to do so until it has issues, then they know we will help them purchase a new one. But they are frugal and budget and love to save. By time your kid is 22+, you should have a great idea if they are responsible adult or whether you shouldn't gift as much to help them learn to be an adult. But if you raised them right, they should be the first.

This is key! We are nowhere close to you guys in NW but have enough to be able to pay for private college for both kids. However, we expect kids to start having some skin in the game.. Year 1, they need to earn enough to take care of 'other' expenses outside of tuition, room and board; year 2 - step that up to food and misc. year 3 - step that up to rent, food and misc., etc. The money we don't give them is put away in their name in a brokerage account they don't know about and will find out on graduation. Since we do their taxes, it's easy to hide this info. Just got done with kid 1 who was cribbing about having to pay rent and that "Sean's dad paid for everything". Imagine his surprise when he got the keys to his $30K brokerage account.
Now.. hope it works out as well with Kid 2.

[Anonymous]

We are planning to cover college and grad school. Starting off with no debt is a big help. We also hope to buy them reliable starter cars. If we can, we will gift them money once they have earned income to be put into a Roth and to encourage them to max their retirement early.

I would also like to give them money towards a first home, pay for weddings, save for college for grand kids, and leave them money to inherit.

DH and I didn’t get any of this, and we see the difference it made for friends we have. The hope is by working hard to help our kids, they will be able to work a little less hard to help their kids and so on down the line.

[Anonymous]

My 22 year old is getting ready to graduate from college. We’ve been working toward setting him up:

100% match of his summer job salaries with a Roth we funded (he made under the limit).

College was prepaid through Virginia so we only had to come out of pocket for room and board. He’ll be graduating debt free.

I’ll be inheriting a townhouse in a decent area with good schools in the next few years. For now the plan is, if my own financial situation is set, to put that townhouse into my trust- he is the sole beneficiary- and let him live there and only have to pay the taxes and utilities and maintenance so he can save the majority of his salary.

He’s graduating with close to $200k in a brokerage account due to gifts from grandparents over his lifetime that he never touched. We had him sit down with the financial advisor to go over what compound interest looks like so the current plan is for him to leave it and let it grow.