What do you do with money given to your young child(ren)?

greeneyed_bride · February 2014

Before DS was born, we used money that was given to us as shower gifts to buy nursery items, clothes, diapers, etc (or saved it to buy those things after he was born.) Since then, there have been a few times where people sent him money for his birthday, Christmas, etc. DH's Grandma sends him $2 for holidays like Valentine's Day, and occasionally a family member who doesn't know what to get him will send him $10. We don't really need to use the money for anything specific, and he's still too young (2yo) for us to give him the money and let him pick something out. So we've just been putting it in a bank account in his name; there's about $150 in there now. His birthday party is this weekend, so I imagine he'll get a little more.

When he's old enough to understand that he's been given money as a gift, then I imagine we'll let him have more control over how he uses money he gets for future birthdays/holidays. But I just don't know what to do with the money he already has sitting in the bank. I mean, when he turns 10/16/18/21, do we just say, "Oh, by the way, you have $300?" Or should we invest it in something? It's not a huge amount of money, so it's not a big deal, but I'm just wondering what other people do.

greeneyed_bride · February 2014

LexiLupin said:

Hookers and blow.

We have a separate savings account for that. What kind of parents would we be if we didn't??

thebanich · February 2014

Does he have 529? You could start on of those.

EVA116 · February 2014

I just have a custodial account for each kid. I invested the money in some mutual funds so that it would grow. They will have access to the account at 18 and I will be off the account when they are 21.

greeneyed_bride · February 2014

Banich4eva said:

Does he have 529? You could start on of those.

Yeah, he does. I guess we could just add it to that. Thanks for the suggestion!

fancynewbeesly · February 2014

Checks typically go into her savings account. (The one exception being for Christmas DH's aunt bought her a gift card and left it at their house--so she gave Reese a check. We felt comfortably letting Reese buy something at the disney store, because we would have ANYWAY with the gift card.)

Cash/coins etc go in her piggy bank.

Gift cards I typically hold onto until I see something I want her to have. Or something that she is expressing an interest in.

theseaword · February 2014

All money goes into their saving accounts. The only thing I would spend on their behalf is gift cards.

EVA116 · February 2014

529's are great if you are sure they will be going to college or a trade school. But the money is not their's. It still belongs to you.

It is beneficial that you can switch beneficiaries any time though. So is child 1 doesn't go to school but child 2 does you can use the money for that.

You get a big tax penalty if the money is not used for schooling. And be careful which plan you choose.

fancynewbeesly · February 2014

I will say with everything going on--I am SOOO thankful that we held onto the gift cards for Reese. She has tons of puzzles and art projects now

MrsT0514 · February 2014

My MIL and GMIL also send DS like 5 bucks in holiday cards for holidays and such. We have a piggy bank in DS's room that we put the cash in. When he gets a substantial amount in there, I may look into dumping it into dome sort of savings account for him.

And as of recently, my parents started a special savings acct for him as well.

shadypines · February 2014

Everything goes into savings passbook.

zeptattoo · February 2014

Checks made out to him go in his savings account. Checks made out to us for him go into his 529. Cash is used for something like a new pair of shoes or clothes.

Smootchy · February 2014

a random $1 or something gets put in their piggy bank. Pretty much anything over $5 goes into their savings account

wiggyslilsis · February 2014

We have a custodial account with her that she saves up change and puts it in there. They have a system where she gets rewarded for deposits.

When it comes to gifts I usually try to find out the intention of the gift. Family members often give her money for her account but her uncle said to buy her something fun since he didn't know what to get her so we bought her a bunch of art supplies.

Eleventy11 · February 2014

Piggy bank Both kids have several hundred dollars in theirs.

aforst · February 2014

If it's just a couple of bucks, we let them put it in their piggy banks and spend it on whatever they want or save it. If it's a more substantial amount ($10 or more) we put it in their 529 accounts.

ladyjenna13 · February 2014

No 529 here. Tax penalties are through the roof and the funds are still legally ours. There are mututal funds out there swetup like checking acoounts, with bigger minimum balances of course.

Every cent that has been given to the boy goes in one of two accounts we have set up for him. One is just a standard passbook savings account. we just throw smaller amounts of money in there. An example would be for Christmas he got a digital piggy bank that counts the money, and three rolls of quarters ($30) from Nana. That went into his savings

For his Baptism and birthday he got much larger sums of money. Larger sums go into a mutual funds account that I have setup through our financial group here at my company. Every quarter I do an analysis of that fund, along with our other investments, and adjust it accordingly. The thing I like about this is that when we transfer control of it over to him at 21, he will have been able to use these funds for college, travel, or other goals and dreams via a checkbook. My parents did this with me while I was in college, and I was never irresponsible with it. I think that they put a daily withdrawal limit on it, but I never reached that.

Money lessons are so important, and I plan on incorporating the management of these two accounts with teaching our children how to build and maintain a budget once they are old enough to grasp those concepts.

Unknown · February 2014

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BluepointToasted · February 2014

Well, right now DS is one, so it goes into his savings. Small amounts we stash in piggy bank until there is enough to warrant a trip to the bank. With DSS, who is 15, we let him take a bit and use if there is something he wants to buy, then put the rest into the bank. He is a pretty miserly kid though, so ends up saving most of it.

Maebb · February 2014

Well, I guess I'm not nearly as responsible as the rest of you. If it's a nominal amount ($20 or less), I normally just pocket it and make sure DS has everything he needs like diapers, etc. He already has too many toys. If it's more than that, he has a savings account for his college fund. I never even thought about setting it aside for him to spend when he's old enough because right now, he thinks money is mostly for putting in his mouth.

casholmes · February 2014

BunkinMama said:

We put it in savings. Now that V is 6 she understands $ buys things so we will let her have some (half depending on the amount) to pick something out to buy. Cute story: The christmas V was 3 and really into jake and the neverland pirates. My dad got 100 dollar gold and silver coins. He put them in a wooden jewelry box and hid them in his house. He then drew a map for her. She adored the treasure hunt and we redid it for 2 months before the coins went to the bank.

^^ That is so precious omg.

We're the same as a PP, right now my family knows any money given 'for the baby' will most likely be needed for things like diapers or um..rent.

But I like what you said about springing it on them when they hit a certain age. If my parents had said "By the way, here's $300 we've been saving for you" on my 16th birthday or something, I would've lost my mind.

ASmallWonder · February 2014

DS1 hasn't banked a lot of cash presents and DS2 has none lol I take that back - they each got $2 in a Valentine's card last week. DS1 saw it, his eyes lit up and he said "What can I buy for this??" It was adorable. Sometimes if bff and I go shopping and split bills and need to settle up at the end of the day she'll sometimes just have me put small amounts I owe her in the boys' piggy banks instead.