Anonymous
Post 07/27/2025 09:56     Subject: What account to start for teen from first job wages?
Anonymous wrote:
Anonymous wrote:Silly me. I thought fully funding my kid’s college was more than enough but now I also need to match what they earn so they can put their summer earnings in a Roth instead of their own savings account? Jesus.


I haven't been on this forum long, but ive quickly found it demoralizing for those who aren't wealthy.


None of us are as wealthy as the billionaires who run the country, so we’re trying to sock away as much as we can for our kids using available resources. Who knows how effective it will be in the face of AI related job displacement and growing inequality in the future.
Anonymous
Post 07/27/2025 09:42     Subject: What account to start for teen from first job wages?
Anonymous wrote:Silly me. I thought fully funding my kid’s college was more than enough but now I also need to match what they earn so they can put their summer earnings in a Roth instead of their own savings account? Jesus.


I haven't been on this forum long, but ive quickly found it demoralizing for those who aren't wealthy.
Anonymous
Post 07/27/2025 08:12     Subject: What account to start for teen from first job wages?
Anonymous wrote:
Anonymous wrote:I’d be pissed if I earned money and then my parents put it into an account I can’t access. It’s their money. They should have at least some of it for themselves.


The child can get all their money. The parent can fund a Roth in that amount. It doesn’t have to be the same dollars, just no more than what your child made.


This. Money is fungible and I can afford it. If you can't afford it, than don't do it.

Also, you can simultaneously teach your child about budgeting with the money they can access and teach them about long-term, tax advantaged investing with the Roth money
Anonymous
Post 07/27/2025 08:07     Subject: What account to start for teen from first job wages?
Anonymous wrote:Silly me. I thought fully funding my kid’s college was more than enough but now I also need to match what they earn so they can put their summer earnings in a Roth instead of their own savings account? Jesus.


Of course you don’t have to, but why not do it if you can?
We expect to be spending about 36k per year for DC’s college, what’s another couple thousand?
Anonymous
Post 07/26/2025 23:45     Subject: What account to start for teen from first job wages?
Anonymous wrote:I’d be pissed if I earned money and then my parents put it into an account I can’t access. It’s their money. They should have at least some of it for themselves.


The child can get all their money. The parent can fund a Roth in that amount. It doesn’t have to be the same dollars, just no more than what your child made.
Anonymous
Post 07/26/2025 17:02     Subject: What account to start for teen from first job wages?
Anonymous wrote:DD is 16 and made $2000 this summer. Vanguard says we can open a "custodial" account, either a Roth IRA, or a Unified Transferred Minor Account.

Guess we could also start her a bank account? She likely will make a similar amount next summer, but not more.[/quote
Vanguard is horrible. Go with Fidelity. Your child will make their own Robinhood account once they are 18. I promise.
Don't complicate your child's life or yours with a custodial account. They are 18 soon. They can wait. What you can do is imagine that you bought a stock of your choice on Monday for the $2000 and see how much it is two years from now.
Roth is not a miracle account. What you buy in it, can go down the next two years. It's not like it compounds every year and it gets locked in. The amount is also extremely small, so why bother.
Our DC knows that if he earns $7k now at 18, I will match it, which doesn't mean he is able to put in $14k. It means that I will hand him the $7k in cash. This is to encourage him to make the money before the year ends.
Your child will need the $4000 for living expenses in college.


Anonymous
Post 07/26/2025 11:09     Subject: What account to start for teen from first job wages?
Silly me. I thought fully funding my kid’s college was more than enough but now I also need to match what they earn so they can put their summer earnings in a Roth instead of their own savings account? Jesus.
Anonymous
Post 07/26/2025 11:07     Subject: What account to start for teen from first job wages?
My kid has a taxable investment account and mainly owns growth stocks/etfs that don’t pay dividends.

We talked about a Roth, but he doesn’t want the restrictions and figured if it grows to millions then what’s the big deal if he pays 15% LT capital gains in the future.

Anonymous
Post 07/26/2025 10:59     Subject: What account to start for teen from first job wages?
Anonymous wrote:
Anonymous wrote:I know folks love the Roth IRA, but still a bit confused why do it for a teen.

Assuming normal teen jobs, they won’t pay any tax on their investments for years, but may need to tap into the $$$s for their own expenses.

Are you folks doing this because your teen just doesn’t need the money (ie, you the parent will fund any day-to-day and don’t expect teen to contribute to college)…or some other reason?


Compound interest.


I’m not saying just have a checking account…but rather just have a taxable investment account that can be accessed if needed.
Anonymous
Post 07/26/2025 10:53     Subject: What account to start for teen from first job wages?
Anonymous wrote:I would open a savings account at any bank with the money they earned and teach them about managing money. By virtue of their age, it will be a custodial account.

If you have the means, I would also open a Roth IRA for them and match whatever they have earned. It doesn’t have to be their money that funds the Roth, it just has to be their earned income so in this case, you could put 2,000 into the Roth.

They obviously don’t need a tax deduction, but it will grow to millions in tax free money when they are able to retire.


+1. This is basically what we do with our kid’s hustles. He puts the money in his Roth, we give him an equal amount in cash. He splits all of his earnings into spend, save (savings account), give.
Anonymous
Post 07/26/2025 10:41     Subject: What account to start for teen from first job wages?
Capital One has youth checking and savings accounts, with an associated debit card.

My kids earned their money, then we funded their Roths over a few years until we reached 7000$ in their earned income that we gifted into the Roths. So they have the Roths but still had their spending money. Both kids have some investments in Fidelity that they picked as well.
Anonymous
Post 07/26/2025 10:21     Subject: Re:What account to start for teen from first job wages?
Anonymous wrote:Ira is correct. My 19 year old thru 18 years old has almost $19,000 in the ira.


Love this!

Good financial planning
Anonymous
Post 07/26/2025 10:19     Subject: Re:What account to start for teen from first job wages?
Anonymous wrote:Can you open the Roth for them, with the $1,500 from the teen's earned income, and add parental matching? Is the parental contribution allowed if it's not the teen's "earned income"? (This is assuming the teen made $1,500).


Parent cannot match. Child must earn money, although obviously hard to prove.

My 14 year old has a Fidelity youth account and Roth IRA (I am custodian). She has a debit card for youth account. We just opened the Roth and she put 500 in so far.
Anonymous
Post 07/26/2025 10:02     Subject: Re:What account to start for teen from first job wages?
Can you open the Roth for them, with the $1,500 from the teen's earned income, and add parental matching? Is the parental contribution allowed if it's not the teen's "earned income"? (This is assuming the teen made $1,500).
Anonymous
Post 07/26/2025 09:46     Subject: What account to start for teen from first job wages?
Anonymous wrote:I’d be pissed if I earned money and then my parents put it into an account I can’t access. It’s their money. They should have at least some of it for themselves.


Good point PP. They should not put 100% into a Roth IRA,but should put in something. It’s part of learning how to save and budget. And if they need the money, they can withdraw the principal without penalty.