There are many ways to go about establishing the right habits and foundation for one’s children. Here are some of the routes I have chosen to take with my two:
It all starts with Education for me. Planning well in advance and making lump sum and monthly contributions into my children’s 529s will hopefully serve them well, providing for college flexibility. As hockey season bleeds me dry (just kidding), this is an account they will surely appreciate. No, I am not planning on any scholarships. In my opinion, most people should not.
I love tax-free investing, and especially love it for young children who earn some monies, however minimal. Roth IRAs are only second to HSAs in terms of their value, in my opinion. As a small business owner, I pay my two young children as “models.” They appear on websites, emails, and regular communications, etc. It’s not a lot of money, yet that provides a nice foundation for them until they work their teen summers on the horsefarm and start maxing their Roths out.
And lastly, I started UTMA accounts. This is where all the birthday, graduation, etc gifts go. It ensures that monies meant for them are used for their benefit. Shelby’s UTMA funds cannot be used for Maddie (and vice versa). I talk to them about the different options – “Save, Spend, Invest, or Donate.” And I offer matching for everything but ‘spending’. It’s a good educational and foundational exercise, similar to when parents take their kids to the bank to deposit their monies. I never understood why people deposited kid’s monies in the bank. Maybe that’s why there are banks on every street corner. Why wouldn’t you want to be more aggressive with these monies that they may not access until their first home purchase?
Financial accounts are great of course, yet my favorite accomplishment is still my Personal Letters to my children. I want them to have that emotional foundation and confidence (and Dad’s voice on their shoulder) in case I am gone. When times get tough, they’ll be able to re-read my letters and not wonder how I felt about them. I hope you have some way of communicating to your loved ones that extends beyond your attorney’s Estate Documents. We are happy to help hold you accountable get this done. Just read my original post about the structure of the letter and off you go.
