Saving Account Options For Children; Featuring Mann Vs. Money
Financial literacy is critical to have for yourself and to pass along to your children. Unfortunately, not everyone comes from a life of learning the financial do's and don'ts, but it is NEVER too late to learn. Knowing how to disperse, save, and invest your money wisely can help set you up for a better future. Today we will be partnering with Mann vs. Money to explain different savings account options for your little ones.
SAVING ACCOUNT OPTIONS FOR CHILDREN FEATURING MANN VS. MONEY
The moment I found out I was pregnant I instantly thought about my son’s financial future. I didn’t want him to end up as I did due to my lack thereof in financial help. I graduated college with $38,000 of student loan debt, $2000 in my savings and working a job that left me with a few dollars each paycheck after bills. I felt thrown out to the wolves, owing money I knew it would take FOREVER to pay off. That was NOT a life I wanted for my boy.
I started saving money for him slowly but surely; twenty dollars here, one hundred there. I knew some savings was better than no savings, so even if I could give him a little bump I would be satisfied. I later found out there are more saving options than a typical savings account which I initially set up for him. Although he still has a regular joint account, because I am stuck on which one to chose, I wanted to help mothers and fathers out like myself to help set their little ones up for financial greatness.
Here are a few account options to choose from….
Both parents and children are equal owners. Both can make deposits and withdrawals from the joint account. This account is excellent for those of you who are stuck on where to start. You can make weekly or monthly deposits in them until you are for sure what other accounts you may want to open; preferably one that can accrue interest. It’ll be as easy as transferring the money over when you decide. When you're child becomes older you can turn this account into their personal savings account when they receive an allowance or start working. A joint account is suitable for children who have an income and need to learn the importance of banking. While you as the parent can monitor their contributions and withdrawals.
Custodial (UMGA, UMTA)
The parents set up the account for the sole benefit of the child. The child gains control of the account at the age of 18. This account has no contribution limit which means you can deposit as much as you want into the account. Money can be withdrawn and used for anything as long as it’s for the minor. The child will gain control over this account when they turn 18 years old.
529 Plan is an investment account that is set up by the parents to pay for the child’s education expenses. The money can be used for education expenses without penalty. If your child decides not to go to college, you will have to pay taxes on the withdrawals and possibly a 10% penalty. This account isn’t ideal if your child’s future education is already taken care of from another source.
An investment account to save towards retirement. A Roth ira is a great way to give your child(ren) a head start too early retirement. Like mentioned above, if your child’s education expenses are covered this type of account may be good for you to cover their financial future further.
If you are stuck like me and would like more information on what account will work best for you and your little ones, contact a financial adviser at your local bank. Don’t Be afraid to ask a million questions if you have too and NEVER feel pressured to open one if you’re not ready.
I hope this has helped you plan for your little one's financial future! Remember financial literacy is KEY!
Learn More about Mann vs. Money
Mann vs. Money was started in 2019 by two millennials, Martel Mann (L) and George Ladd (R), with nearly 20 years of combined professional experience in the finance industry. Our motivation behind this site is to provide financial literacy and economic empowerment to the common person. Our goal is to help regular people make better decisions when it comes to making, spending, and saving money. Money and Finance can be a very complex subject, but we feel that it shouldn’t be. Hopefully our tips and tools will help YOU win the battle vs. Money!
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