What to do with child's savings?

[Anonymous]

Whenever our young child receives money from relatives for birthdays, baptism, whatever, we've just been adding it to her savings account that we set up after she was born.

There's a decent amount (for a 3 year old, anyway) in there now, obviously earning next to nothing. I wouldn't want to lose her money as we intend it for her to use for a car, college spending money, etc. when she is older.

Is my best bet just to stick it in a CD so that at least it's earning a little more than nothing?

[Anonymous]

We put any money given to her in the 529 where it earns a decent return. Unless we're told the money is for something specific ("buy her a pair of shoes"), all cash and checks for her are put the college fund. We have the means to provide everything she needs on a daily basis so we figure it just makes sense to put it there.

[Anonymous]

agree with PP.

[Anonymous]

I just stick it in a savings account. We are covering the 529 plan, so unless someone specifically says that it is for colleges we just save it in a regular account.

[Anonymous]

Anonymous wrote:I just stick it in a savings account. We are covering the 529 plan, so unless someone specifically says that it is for colleges we just save it in a regular account.

I would do this too. This is what my parents did for me, and when I was 13 and babysitting, let me have control over the account. I used it fairly wisely and learned about tracking expenses. I used it mostly for fun stuff in college. I didn't get an allowance, so if I wanted to go to the movies as a teen I had to use this money. I don't know that I will do that to my DD, but I am good with my money now.

[Anonymous]

We never get cash for DD, only actual gifts but every few months I scoop up all our loose change that's been accumulating and drop it in a passbook savings account for her. It's earning almost zero interest, but is a good holding place until she's old enough that she can start contributing to it herself or choose together how to invest it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just stick it in a savings account. We are covering the 529 plan, so unless someone specifically says that it is for colleges we just save it in a regular account.

I would do this too. This is what my parents did for me, and when I was 13 and babysitting, let me have control over the account. I used it fairly wisely and learned about tracking expenses. I used it mostly for fun stuff in college. I didn't get an allowance, so if I wanted to go to the movies as a teen I had to use this money. I don't know that I will do that to my DD, but I am good with my money now.

We also have "personal" savings accounts set up for our kids, with their own money that they've been given as gifts for birthdays and holidays. We see it as their money, and it's not for us to decide to put it towards college (by putting in a 529) or spend it however we think. Our oldest gets an allowance, and elects to put some of it in her account to save (currently for an American Girl Doll).

[Anonymous]

Some banks have minor custodial accounts that earn higher interest than regular savings account.

[Anonymous]

We put ours in an online savings account, which has a higher APY that a savings account at our personal bank.

[Anonymous]

If you are counting on financial aid for college in a few years, you do not want money in your child's name as that counts as a higher percentage when figuring out ability to pay than money in a parent's name.

[Anonymous]

We just put it in a savings account. When the kids got old enough they added debit accounts linked to the savings accounts and could do with it what they wanted. One used it for spending money, the other keeps adding to savings. The amount of cash gifts they got before they started getting stuff like gift cards wasn't that much though - maybe $1,000 total by the time they were 14 and got the debit cards.

[Anonymous]

Anonymous wrote:If you are counting on financial aid for college in a few years, you do not want money in your child's name as that counts as a higher percentage when figuring out ability to pay than money in a parent's name.

We aren't counting on financial aid. I sincerely doubt we'd qualify for anything unless something unexpected and long-term happened to our incomes.

[Anonymous]

Anonymous wrote:We just put it in a savings account. When the kids got old enough they added debit accounts linked to the savings accounts and could do with it what they wanted. One used it for spending money, the other keeps adding to savings. The amount of cash gifts they got before they started getting stuff like gift cards wasn't that much though - maybe $1,000 total by the time they were 14 and got the debit cards.

She's already got close to $7k in there at the age of 3. I can't see giving unfettered access to that kind of cash to a young teen. My parents turned mine over to me when I got my first job at 17 and told me that it was my responsibility to manage it and add to it so that I could provide my own spending money in college. At the time it had around $2500 in it and I got it up to $8k before I left for college.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just stick it in a savings account. We are covering the 529 plan, so unless someone specifically says that it is for colleges we just save it in a regular account.

I would do this too. This is what my parents did for me, and when I was 13 and babysitting, let me have control over the account. I used it fairly wisely and learned about tracking expenses. I used it mostly for fun stuff in college. I didn't get an allowance, so if I wanted to go to the movies as a teen I had to use this money. I don't know that I will do that to my DD, but I am good with my money now.

+2

[Anonymous]

Anonymous wrote:

Anonymous wrote:We just put it in a savings account. When the kids got old enough they added debit accounts linked to the savings accounts and could do with it what they wanted. One used it for spending money, the other keeps adding to savings. The amount of cash gifts they got before they started getting stuff like gift cards wasn't that much though - maybe $1,000 total by the time they were 14 and got the debit cards.

She's already got close to $7k in there at the age of 3. I can't see giving unfettered access to that kind of cash to a young teen. My parents turned mine over to me when I got my first job at 17 and told me that it was my responsibility to manage it and add to it so that I could provide my own spending money in college. At the time it had around $2500 in it and I got it up to $8k before I left for college.

It depends on the level of control you want over the cash and how you plan to raise her. My parents put the cash into a savings account for me. And when I was in high school I wanted to go on the spring break trip to Paris with my French club. I had to pay for half the trip and my parents paid for the other half. That savings account allowed me to go on a trip I will remember forever.

And, my CDs were cashed in to pay for my law school books.