Savings for kids weddings/future

amother

Sun, Jul 07 2024, 6:13 pm

How do you save money for your kids future?

I recall my parents had custodial accounts for each of us and we knew they existed and the money was used for all wedding related expenses/home furnishing when we each got married, but we never actually touched it. Basically, it was my parents money that they earmarked for each child and they used it as each child reached that point. I was planning to do the same for my kids.

I was speaking with someone today who told me that at age 21 the accounts she has for her kids with the savings for their wedding and future transfer to her kids and she has no access to them. Hopefully the children will use the money to pay for their wedding expenses, but the parents have absolutely no way of preventing the child from using (or squandering) the money as they wish.

So I'd love to know. How do you save money for your kids future? What kinds of account and what safeguards do you have in place to ensure it is used for its intended purpose?

amother

Trillium

Sun, Jul 07 2024, 6:22 pm

I do a combo of both.

I have two brokerage companies - Vanguard and Ameriprise.

At Vanguard, each of my child has a CUTMA account - I'm the custodian and at a certain age, they will get their money. That's where I put monetary gifts that THEY get, that is THEIR money - birthday presents, bar/bat mitzvah money, money from the grandparents for chanukah, etc. I hope they'll use it for a down payment for their future houses.

Then at Ameriprise, each child has an account that is a "simcha fund". That's where I save MY money on a monthly basis (as much as I can; some months it's $50/kid, some months it's $200/kid) where I intend to use for their weddings and simchas. That money belongs to ME and I can do what I want, but it is earmarked for them. If I have extra after their weddings, I hope I'll have enough for myself so that I can give it to them.

BTW... I started these accounts when they were YOUNG. Babies. The sooner you start saving, the better.

Edited to add: all of these are stock accounts, not bank accounts. They earn a lot more interest over the years than bank accounts, which don't even cover inflation. If you are saving for a young child, open a stock market account.

amother

Tuberose

Sun, Jul 07 2024, 6:48 pm

amother OP wrote:

we save but not with any particular purpose in mind. My husband drills our kids on economic responsibility until it's coming out of their ears. once they are "adults" they will get the money and if they want to squander it that's their problem. we aren't paying for their wedding though and we made that very clear. my husband's not the type of father that you squander the money and then come and beg him to pay for your wedding. he's fine with you having a minyan and being done with it and no amount of begging and talking about social norms will change him... really he's hoping they will have simple weddings and use it to buy a house, save for retirement type of stuff but it's their decision.

amother

Amaryllis

Sun, Jul 07 2024, 10:03 pm

You hope they understand and you raised them well. That is the money to get them married off and the expenses for the whole things included clothing for the whole family etc. If they don't respect that, if they touch it, then they will have to fend for themselves come marriage. By the same token, if they spend frugal for the simcha, and there is extra it goes to them iyh for a down-payment on a house.