Teaching financial responsibilities to kids is crucial. It is unfortunate that most states do not require financial education during school.
Financial knowledge is a vital skill. It is never too early to start saving for your kids. College costs keep creeping up. If your child has a job, you can start a retirement account for them. One of the major advantages kids have is that money has a long time to grow, given they may not need the money for retirement for another 50-60 years.
Some accounts to consider are :
529s: every state offers them. Some states also offer tax deduction benefits. However, the major benefit of these accounts comes from tax-free growth and tax-free withdrawal. One of the major expenses in this country is taxes! This will help avoid that.
Roth Retirement account – Again, major benefit being tax-free growth and withdrawal. These accounts are also wonderful in that you do not have to reach retirement age to use them. You are maybe able to use some portion towards buying your first house.
UGMA and UTMA are similar to irrevocable trusts. The money does not belong to you anymore, and full control transfers over to the children at age 18 or 21 depending on the state.
Other regular custodial investing accounts are also allowed for kids. They can learn to purchase their favorite companies like Disney.
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