Financial Tip of the Day

[175gr7.62]

$16 per day. Start looking in your couch cushions, avoid the biggie size drinks, stop smoking/dipping and let off the accelerator just a little.

If you had to give up some of the above in exchange for 4.5 million given to your kids in 50 yrs, would that be worth it? Looking at things through that financial lens can be effective.

Uh, no. My kids can make their own money. I plan on my last check bouncing. My kids can deal with the $35 overdraft charge.


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[scott123456789]

I’m not positive how you do this for your children, need to figure out though when my 1 year old is old enough to sit on a lawn mower.

But For anyone wondering but how do you do this for themselves.

Go to Vanguard.com
Open a Roth IRA
Move $6000 from your sock drawer to the newly opened account.
Buy 34 shares of VTI which is a total stock market fund with extremely low fees and about 7% growth over the life of the account.
January 1st move $6000 more and buy however many shares of VTI you can.

[RMW]

Funny you mention this. I am in the process of buying a school curriculum for my son’s school. It is the only way I could convince them to add it to the 8th grade curriculum and again in 12th grade. I hope they see the benefits and maintain it on a go forward basis.

That’s awesome!

[jaspermac]

I’m just trying to live until 59...I have pretty much decided my saving will make my wife’s next husband rich.

[Codie]

Any knowledge of if that annual contribution into my child’s Roth IRA is tax deductible on my end each year up to the $6,000 amount?

[ShockValue]

Love this and all high school kid should be taught compounding interest in investing.

Question though. Your scenario has big balance at the end but who in their right mind is paying their 59 year old kid $6000 year? Or getting them to cut your grass?

[Ksbowhunter]

Any knowledge of if that annual contribution into my child’s Roth IRA is tax deductible on my end each year up to the $6,000 amount?

It’s post tax money going in. The tax savings is in the end. The earnings or growth of funds invested will not be taxed when withdrawn after the age of 59.

Basically you are funding your kids retirement. This only makes sense if you have more than enough to retire yourself. If you are maxing you’re 401ks and your Roth and your spouses Roth and there is $ left over it could be a good start for your children.

[Pedernal]

Awesome info here. The educational side of it is worth more than the investment itself IMHO. I am a firm believer that kids should should be cut off of the cord as soon as they are out of the house.

[jlopez]

Good stuff

[glen]

You have to wait until they are filing taxes. I tried. But both mine got jobs at 15 and I made sure they have gotten their maximum benefit. Even if you start your kid in a traditional and put in $25 a month it is substantial

[Reel cajun]

I didn’t have anything set up for college for my son, so a few years back I put $5,000.00 in stocks and set up automatic $500.00 a month to go to this account.
I will pay for college and he now has $60,000.00 in a UTMA Fidelity account that I will encourage him to hang onto and add to it as he gets older but it’s there if he needs it.

[TWOHunter]

Quick calculation.

Do $6k in the Roth for them from age 7 to age 18 and then don't put another dime in it ever and it will be darn close to $10m at age 65 w/ a 10% annualized return.

[Roger]

I always thought they should teach investing in school but they don’t. I started when I was 14 with the help of my aunt. Got my kids started early also. Everyone should be taught this.

We do have financial math classes, mainly for seniors, at the 3A high school I teach at. Not everyone takes it, however, as there is also accounting as an option and others are in calculus.

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[kenner27]

My 401k is ROTH, I haven’t seen anyone directly refer to this. It’s the right choice correct? The company I work for matches nothing. Also, I believe maxing out a 401k is 18,600/year? If I were to get to max this out, I then need to open an IRA up and max it out too?

[MossyRockRanch]

Our kids work at the ranch throughout the year and log every job they do and we pay them for that . Money goes into there savings account then we transfer to the Roth . They even started asking about the returns this year and how we have invested it. They are learning the true value of work and savings which is really hard for most kids today.