Author Topic: Opening an Account for Kids  (Read 2391 times)

Credaholic

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Opening an Account for Kids
« on: November 25, 2014, 11:30:49 AM »
My kids have everything they need and then some as far as clothes and toys go, so I want to open an account (or an account for each of them) so that I can encourage family members to give towards that instead of getting us more STUFF. Our kids are 26 months and 3 months old. So, my questions are:

Should I open one account or two accounts? Does it matter?

Should I open a 529 or a regular savings account?

What's the best institution to open with in your opinion?

Can family contribute directly into the account if I give them the account number?

How can I ask for this instead of presents without pissing everyone off?

tweezers

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Re: Opening an Account for Kids
« Reply #1 on: November 25, 2014, 12:41:22 PM »
We have a 3 and 5 year old and I opened a joint savings account through ING, now CapitalOne 360, for both of them soon after they were born (through one of the "sales" where there was an account-opening bonus). A couple years ago when there was a similar bonus incentive I opened a custodial Sharebuilder account for each of them and now everything goes into that with automatic investment purchases when the savings account gets to a given amount.  They've got $1200-1400 just from the little monetary gifts they get at holidays and birthdays (and these aren't huge amounts....$5-20 here and there adds up!).  Every time I transfer the gift amount from our account to theirs, I enter the giver and occasion in the memo line so there's a history of who gave what and when.  Kind of nice for when the kids are older...

We also have a 529 account for each them (we're also in WA and the GET program is pretty good) but all of our family is in Canada so giving certificates for them to contribute to that was complicated.  However, if they were in the US and somewhat computer literate, we'd potentially have done that instead.

I don't know how to not ask for cash instead of toys.  We just let family members know that these were in place and that all monetary gifts would be deposited, and causally mentioned how much stuff they already had.  We've found that they usually get a gift to open as well as money.  However, the amount of stuff has been toned down considerably, and the gifters feel good knowing that they'll have the money (and appreciate it way more) when they're older.

Catbert

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Re: Opening an Account for Kids
« Reply #2 on: November 25, 2014, 01:00:07 PM »
I would open 529s for each child.  You should "own" the account so you have a measure of control over how it's used.  I one doesn't use it you can ping pong to another child or relative.

 If you set up a  regular saving or brokerage account in the child's name they have total control of it when they turn 18.  Hard to look at those sweet little children and image one of them will turn into a drug addict, but it does happen.  18+$+drug habit=not pretty sight.

Credaholic

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Re: Opening an Account for Kids
« Reply #3 on: November 25, 2014, 01:21:44 PM »
I would open 529s for each child.  You should "own" the account so you have a measure of control over how it's used.  I one doesn't use it you can ping pong to another child or relative.

 If you set up a  regular saving or brokerage account in the child's name they have total control of it when they turn 18.  Hard to look at those sweet little children and image one of them will turn into a drug addict, but it does happen.  18+$+drug habit=not pretty sight.

That's a very good point, and not something I'd be comfortable with! I want to make sure we're in control of the account and can bestow the money as we see fit, especially since gifts from family will be made with the intention of the money being used properly, not creating a mini trust fund for the kids to blow one day. I was looking at custodial accounts or the Early Saver Accounts at BECU (which earn 6.17% on the first 500) but maybe that's not the way to go...

Credaholic

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Re: Opening an Account for Kids
« Reply #4 on: November 25, 2014, 03:36:14 PM »
Okay, after doing some more research I've decided to open a 529 with Fidelity. Seems their site makes it easy for family members to contribute directly, which is one of my bigges selling points for this particular account, and it's where we already have our Roths and my solo 401K.

Now my only question is should I open one for each child, or just one account? It sounds like switching beneficiaries is very hard to do (does it matter that my kids should be in college at overlapping times?) and it seems like the easiest thing to do to run one account and be charged one commission instead of two on purchases. Is this thinking sound?
« Last Edit: November 26, 2014, 04:39:12 PM by Credaholic »