What is best way to spend hard earned money for your children

[harley]

Back in 1990, when DD was 5 or 6, I put $5K in an investment account as part of her college fund. Not knowing what I was doing, I put it in my name. I then performed brilliantly in the stock market (mostly by it being the 90s), and by the time we figured out she wasn't going to go to college it had grown to $75K+, even after the 2002 recession. I couldn't just gift it to her, both because of tax reasons and because she wasn't mature enough to handle it. So I started gifting the max amount allowed into a Roth IRA for her. I've been doing that for about 10+ years, and at age 31 she's got quite a healthy Roth. The best thing is that the investment fund still has almost $65K in it, due to lucky/good investments in AAPL and BRK.B. I anticipate being able to do this for many more years, and since she's become quite a capable money manager herself I'm hoping she will also be able to FIRE someday (if she wants to). She should at least be FI, anyway. I feel like that has been a great way to help her get a good start while allowing her to make her own way in the day to day world and learn her own lessons without us cushioning her too much.

 

[FUEGO]

YMMV but here's what we're planning on doing.

Around half of college, with the rest likely to be paid by a combo of financial aid, hustle, and scholarships.

Somewhere around $10,000 to $30,000 total for post-high school adult stuff. Things like help with wedding, house down payment, car down payment or gift, sweet a$$ trip overseas, capital for new business, etc. I hope to propose this as a one time lump sum to be used as they see fit since I think it's silly to prioritize how they spend money when they are 21+.

If they turn out grossly irresponsible (all signs point to this not coming true at age 10-12), then we'll attach strings and dole out any money more carefully.

 

[NextInLine]

Beyond all the stuff you have described? Easy: your time and attention. I have seen so many kids who grew up with every material thing you could imagine (up to and including a private plane), but whose parents were so focused on their career that they are fundamentally missing parts of what I would call a fully developed adult personality.


I'd say that with the possible exception of a college education, this is possibly the most expensive thing you can give them. Don't think so? Try reducing your hours worked materially and putting in less than 100% and see what it does to your earnings. Nevertheless, well worth the sacrifices.

Out of the box thinking, but nail it nevertheless!

 

[skipro33]

Both my sons went to private universities with minimal scholarships. To pay for it, my wife went to work. Prior she home schooled them. She got a great job at a megacorp insurance company so her salary paid for tuition and then some.
Of course I didn't tell the boys that. I made them apply for loans and they both became RA's to help cover costs. Once they were out of college, married and bought homes, I offered to pay off their college loans with the funds DW made while they were in college. My plan was; if they didn't deserve the financial support by taking BS classes or dropping out, then they were on the hook for tuition and DW and I had a nice sum to drop on ourselves. But they did well in all respects and we were pleased to offer to pay their loans. One son took the money and is bankrolling it for his kid's college. The other is going to use it and get his doctorate at USC. (not cheap!) He's a dean at a university and the degree will really make a difference in his future employment. The son who is bankrolling his kid's college is an engineer and further formal education won't really matter.

 

[donheff]

Debt free educations, contributed to Roths early on, always tried to have family dinners and other family activities, always tried to be available to them.

 

[Car-Guy]

Be careful, they could become dependent on your "help. Some may recognize their parents as safety nets for their poor or carefree decisions in life.

 

[travelover]

Be careful, they could become dependent on your "help. Some may recognize their parents as safety nets for their poor or carefree decisions in life.

While this is definitely true of the general population, it is never true of one's own children.

 

[6miths]

We did all the things on the list. College savings in an family education fund which had very good results. Also changed jobs to allow more time with them during their formative years. They have all been very responsible with monies earned or given to them for their 'futures' after it officially became theirs.

 

[harley]

Be careful, they could become dependent on your "help. Some may recognize their parents as safety nets for their poor or carefree decisions in life.

While I might do a couple of things to help my child get a firm foothold financially, I would never post their bail. Some lessons need to be learned.

 

[JPatrick]

Two kids, two degrees (one w/med school) and a couple of cars. It was expensive, but seeing them flourish was well worth it. Have one grandkid and will help with his education after the parents pay the lion's share (hopefully all of it.)

 

[FlaGator]

For those of you who paid or helped with the college education, did you have a separate account you saved in under your name... or a UTMA/UGMA... or 529, or did you pay from your own invested accounts?

Our DD's grandparents generously contribute to her savings account on birthdays and holidays, but we are struggling over saving additional money to the potentially limited options of a UTMA/UGMA or 529.

Kid #1 has about 50% of her 529 in an UGMA, the balance in a regular 529. The idea of the UGMA was to lock up a windfall so she would have it for school no matter what happened to us. Prosperity continued to shine on us, so the rest of her money and all for kid #2 went into regular 529s.

Chose that structure for the tax benefits on the gains, plus it's quasi-out of reach. Don't even include the balances when I consider NW, WR, etc.

While there is "enough" in those accounts to cover 4+ years of schooling, I suspect I'll be paying incidentals out of pocket for both of them.

 

[growing_older]

I was fortunate to be able to fund childhood activities fully. If they were interested in something, I made it happen. Plus a couple years of piano lessons, whether they wanted them or not. Sports? Yes. Summer camps? Yes. Classes outside of school? Yes. Wilderness survival? Yes. More music lessons for other instruments? Yes. School plays, musicals, outings? Yes. Coding camp? Yes. Basically any kind of mind expanding and enrichment activity was fair game, and I made sure to go to as many games, recitals, events, demonstrations, science fairs as possible. Even coached a few years.

Beyond this, I was fortunate that my parents funded my college. This enabled me to be as involved in education, enrichment, student life, research programs, and even paid employment as I wanted, greatly enhancing my college experience. I was determined to offer my kids the same opportunity. So far that's worked out well.

Beyond that, I don't know. I do think it's important for them to be self supporting and learn for themselves the value of a dollar and hard work. I will likely have some estate tax issues that could be alleviated with regular gifts, but I don't want to do anything like that until they've been well established and the risk of outpatient economic care is reduced. Maybe 10 years of developing responsible careers?

I don't much care for big weddings, but if my kids wanted them, I'd probably contribute. Certainly if they ever got into financial trouble I'd be there to help. Maybe we'll indulge in multi-generation vacations from time to time, which I will happily fund. I want to give them as good a chance at a good life as I can, but not hurt their chances by undermining their financial autonomy. Still working out how to accomplish this.

 

[Amethyst]

No lessons, no camps, no contributions, no car, no inheritance; father's Social Security paid for my undergraduate education (it was a better deal back then for dependent students, than can be had now).

I lived at home during college, and was pushed out of the nest directly after graduation. I was a very naive young woman, and I floundered for a couple of years. I am not a big fan of the "school of hard knocks." In fact, I think it's for the birds.

Somehow, I survived and did rather well. But I didn't like my Dad as much as if he'd shown a little more concern for my comfort and security. So I would say, your kids will survive either way, but they will like you better if you do more for them.

 

[ivinsfan]

No lessons, no camps, no contributions, no car, no inheritance; father's Social Security paid for my undergraduate education (it was a better deal back then for dependent students, than can be had now).

I lived at home during college, and was pushed out of the nest directly after graduation. I was a very naive young woman, and I floundered for a couple of years. I am not a big fan of the "school of hard knocks." In fact, I think it's for the birds.

Somehow, I survived and did rather well. But I didn't like my Dad as much as if he'd shown a little more concern for my comfort and security. So I would say, your kids will survive either way, but they will like you better if you do more for them.

If you don't mind my asking, what would you have like your Dad to do? I think this is what the posters on this thread are wondering about in regards to their kids and maybe grandkids. Moral support as in how are things going,like asking do you need anything? Guidance as to how to get along in the outside world, or a little money boost when things got tough. I didn't much like my own Dad, I got no money for school and none of the other items either. Money was tight, but it was the lack of other support that bothered me more.

 

[eastnortheast]

For those of you who paid or helped with the college education, did you have a separate account you saved in under your name... or a UTMA/UGMA... or 529, or did you pay from your own invested accounts?

Our DD's grandparents generously contribute to her savings account on birthdays and holidays, but we are struggling over saving additional money to the potentially limited options of a UTMA/UGMA or 529.

Have a 529 in each of the kids name. Contribute each month to each account. First two are in college now and enough in their account to fund four years for each. Working on the others, but good chance I will retire prior to all being finished with college. Will probably have a couple of unfunded college years that will be made up with from the overall portfolio

 

[Jerry1]

Be careful, they could become dependent on your "help. Some may recognize their parents as safety nets for their poor or carefree decisions in life.

While this is definitely true of the general population, it is never true of one's own children.

Sooooo True!

 

[Amethyst]

That's a good question, ivinsfan. I got moral support from my mother, and I've always had high self-esteem which kept me out of trouble, so obviously they did something right as parents. I read all the time about kids who have been given everything, yet throw it away due to low self-esteem and a tendency to follow the crowd.

It was all very abrupt and strange. I would have liked to continue living at home for a while, and some help obtaining a car, since it was a very car-dependent area. And yes, a bit of cash now and then would have been welcome at first.

Oh well. Somehow, like a lot of young people, I managed. And, due to the SS subsidy, I had no college debt. Once I finished floundering around and became fairly successful, my Dad was very proud of me.

Moral support as in how are things going,like asking do you need anything? Guidance as to how to get along in the outside world, or a little money boost when things got tough. I didn't much like my own Dad, I got no money for school and none of the other items either. Money was tight, but it was the lack of other support that bothered me more.

 

[bmcgonig]

I have done versions of all of those for my two youngsters and to be honest, their personalities are so different that the end result seems to be very mixed. I have no ability to declare "what works and what doesn't, based on my sample of two...

I have a friend with twin boys. Fraternal. They're only 7 at the moment but their personalities are so so different. One is super dilligent and detail oriented. The other could care less. We joke that one is definitely headed for Harvard and the other will probably be a ski bum.

 

[Car-Guy]

While I might do a couple of things to help my child get a firm foothold financially

Been there, doing that. Again.

I would never post their bail.

I try never to say never but probably not in most cases.

Some lessons need to be learned.

Agreed but then again, some really smart people can't (or won't) seem to learn somethings in life.

 

[Dreamingaboutretirement]

One thing I know from experience that gives children a great advantage from day one is raising them in a supportive, friendly and close-knit community with a good public school system. On the east coast, where I am, this often means a very HCOL area, not only for the upfront housing costs, but the annual property taxes. Plus, everything else -- activities, tutoring, etc. -- are similarly more expensive. However, I believe raising a family in such a place pays enormous dividends in education, lifelong friendships (and future networking opportunities with similarly educated and privileged friends), a sense of community, etc., and my wife and I are making the financial sacrifice for this.

We and the grandparents also contribute to 529s, but I think the core foundation of a great town with a great public school system is equally, if not more, valuable than low/no undergraduate debt.

 

[kgtest]

In my state, tuition of 4-year prepaid college cost $60-70K not include room and board.

Has anyone tried Roth IRA? $10K with 40 years of compounding interest would worth something. But on the other hand, it makes too easy for the kids that they may not appreciate "hard-earned" money.

My wifes folks set her up with a roth. god bless them for that. paid for her college, graduate, room+board and a cpl used cars.

Compounding+Time

 

[ivinsfan]

My wifes folks set her up with a roth. god bless them for that. paid for her college, graduate, room+board and a cpl used cars.

Compounding+Time

Roth, how is it possible that it paid for all that, you need earned income to fund a Roth...what age did your DW start working?

 

[NYEXPAT]

Took the advice of some very smart people and bought my Daughter a "Pony". Never a problem with drugs,boys,school. 28 years old now has her PHD and is getting married in September. Got divorced when she was 8, moved to Peru when she was 15 and if she ever complains to me, I would just say...."Yeah, but I bought you a pony"! In retrospect I probably should have bought one for the Ex.

 

[Fedup]

Roth IRA was first available in 1998 for very small amount. See link below. My husband and I started reasonably early on Roth IRA so we know. It's not long enough to do any of the things like paying for college tuition.
https://en.m.wikipedia.org/wiki/Roth_IRA
Are you confused with 529 account?

 

[pacergal]

For those of you who paid or helped with the college education, did you have a separate account you saved in under your name... or a UTMA/UGMA... or 529, or did you pay from your own invested accounts?

Our DD's grandparents generously contribute to her savings account on birthdays and holidays, but we are struggling over saving additional money to the potentially limited options of a UTMA/UGMA or 529.

Purchased payroll US savings bonds for years until program stopped at work,, then mostly out of yearly income and savings.