Smart ways to start managing money your children receive as gifts.
Holidays. Birthdays. Religious celebrations. Graduations. They are special occasions that allow you to show your love and appreciation for friends and family members. If you are a parent of a young child, it can also be a time to make a big decision: what to do with the money your children receive as gifts from many generous friends and family members.
Do not toy around. When it comes to spending that money, your child probably has no shortage of short-term ideas on how to spend it. A new computer game, the latest electronic gadget or some other toy may all be on their list of must-haves. But you can actually use the money for a long-term benefit that really is a must – teaching your children the importance of saving, and building a nest egg for the things they will need later on in life.
Here are just some of the options available to you:
You can start by opening a BeMoney Smart savings account in your child’s name. You can show them how to make a deposit, and help them track their account balances online. If they have an allowance, you can encourage them to deposit a portion of it. With a savings account, you can ensure your child’s money is NCUA insured.
Another secure option is to take the money and purchase U.S. Savings Bonds, which offer exceptional returns. In 10 years, these bonds double their values. After 10 years, you can redeem them and reinvest the money, since they do not earn any more interest after 10 years. To save you time, you might even ask friends or relatives to give your children bonds instead of cash or checks.
Another option would be to take the money they receive and deposit it into a 529 Savings Plan. This tax-advantaged vehicle allows you to build savings to be used specifically for higher educational expenses, such as college tuition.
If you want to teach your children about the stock market, you can purchase individual shares of stock in their name. This is a great way to introduce your child to investing. Tracking a stock’s performance together is a fun and enjoyable learning experience for both of you (provided you pick a winner).
If you use the money gifted to your children to teach your children about the importance of smart savings, you will be using it to invest in their financial futures. For more information on savings vehicles available to you and your child, stop by at any of our eighteen convenient UCCU branches or call us today at (801) 223-UCCU (8228).