Any $5 bills from great aunts go directly into savings. I give my three year old and will give my 6 month old cash deposits into their accounts for Xmas and Bdays.

When they are old enough to work, a yet-to-be-determined amount (50%?) of their earning will go to the account.

I’m not sure when I will dispense. I’ve got at least 18 years to decide.

College, house down payment, trust fund until they are 65? Who knows?

Ian

Every week I gather all the ones and quarters in my wallet and set them aside. It averages about $5 per week…sometimes a bit more (this week $10), sometimes a bit less. When she turns two I’m going to take her to open her savings account. Every month we’ll take her savings to the bank and deposit it together. I’m also saving some money from checks she’s received from grandparents to deposit. She won’t understand now what it all means, but I think exposing her to the idea now is a wonderful idea that can only help and definitely won’t hurt!

I agree with not giving a huge handout like enough to put a down payment on a house, that I think you appreciate more and teaches you better discipline to do it yourself. But I do remember that after I graduated from college (in 2000) my parents cashed in a whole life policy that they had for me, and I got $5000 – not a huge lump of money, but enough to put a down payment on a car, cover my auto insurance, and helped me cover bills for the first month and a half before I got a job. I would like to be able to give that kind of help to my son when he’s that old. Not hand him a lot of money, but just enough so that he’s not eating ramen noodles while working 3am at McDonalds with 5 roommates until he can land a job.

As a child, I had a savings account opened in my name at age 5 without a SIN number.
We wanted to teach our children the value of saving, but today’s generation probably doesn’t know what I’m talking about.

At age 18 I hoped I had taught my kids the tools and techniques to make (and keep) their own money.
- Spend less than they earn
- Save the difference (emergency fund, retirement)
- Avoid debt like the plague (except for a house and maybe a car)
- Work hard, get a good education (some debt here too) and keep learning

If they can grasp that – that’s much better for them in the long-run than a cash gift of $25k or so 20 years from now which will be worth very little after inflation over that period.

-Frank

How much more do you think you appreciate your house after working so hard to achieve homeownership? You’ve had to budget, save and sacrifice. You can compare your new home to the small apartment and appreciate it even more.

Teaching your kids how to plan and make goals is far more beneficial than handing over a lump-sum.

Alternate suggestion though: My parents put aside a bottle of poitin (Irish moonshine) when I was born, and gave that to me when I turned 18. It was great! The morning after, not so much …

The way we look at it is it’s a gift to them if they decide to blow it (hopefully not) it’s their own choice and they will discover later on how valuable a gift it was. If they use it wisely it can give them a huge jump start on their life something that wasn’t available to ourselves and hopefully put them in a much better position.

I had the same experience. I received no help from my parents but did get plenty of education in what not to do. They never actually sat me down and taught me about finances but they were great teachers by example.

I saw them constantly going into massive debt with a dozen+ credit cards and living paycheck to paycheck throughout my whole childhood.

Because of them, I’ve never maintained more than one credit card and it’s paid off month to month. I pay cash whenever possible. I’m well on my way to having 2mil+ for retirement by fully funding (well almost) my 401k and ROTH year to year.

Maybe if my parents were different and did give me a lot more help after leaving, I wouldn’t be in such good shape today.

I agree that all else being equal, it is a great idea to start tucking away a small, barely-miss-it-from-the-budget amount away. However, in my situation, we are dealing with an embarrasment of debt, so wherever I find those bits of money, eg the extra $20 a week, I am either paying off debt or tucking it into a small emergency fund. If we didn’t have any debts, or if I thought we were just going to keep running up debt as fast as we paid it off, then yes, I would siphon off a bit now for the kids. However, I am confident that we will get this paid off (in a few years), and once it is gone (except probably our mortgage), we can catch up all the “missed” savings with less than one year’s worth of the previous debt payments. I can do this because I know exactly how much I want to have saved for my children’s education — the exact amount that will maximize the matching grants on the RESPs. In my mind, this is an amount just like the mortgage or the credit card debt that must be paid eventually (although I will not beat myself up if we cannot do it — we already have more in the RESPs than I ever received as financial assistance from my parents, not including low or no interest loans from my parents which I paid back in full). Although delaying investments in the RESPs will decrease their growth potential, the lost growth is not likely to be more than the interest that we are paying now on current debts. Also, even if we do not contribute until the very last day they are eligible, my kids will still make a 20% return from the matching grants.

So my point is that I absolutely agree with the $20 a week plan, but in my situation, I believe I am better off getting my finances in order first.

@ nebraska jess. Same boat as you, my parents never talked about the responsibilities of money, just the hardships. I learned alot by just watching them. The thing is educating is just as important as saving for the child. Example: My wife grew up in a very financially well family. They paid for two years of her college and she opted out of the last two years of the help. Knew she needed to learn to save and work to a goal on her own. Basically said “No thank you” to free money. Her sister had the same options, an “open check book” to any university she wanted, flunked two years and is now at their house doing nothing. Her hand was held through everything and now lacks a drive to achieve.

My parents shoved me out the door at 18. They were on the verge of bankruptcy (which they filed later that same year), and did nothing in the way of financial education other than show me what NOT to do.

They did not have money saved up for me, but being a smart kid, I figured it out myself. And it made me a much better person than other kids my age, away at college on mommy and daddy’s money, not caring how it was used because they hadn’t earned it.

I think the idea of putting away some money for your kids is only a good idea if you have taken care of your own finances first. Get rid of your debt, control your spending, and make sure you have something saved up for retirement. The greatest gift you can give your kids is the security in knowing that when you get older, they will not have to spend the rest of their lives cleaning up after your financial mistakes.

Then, educate your kids and let them handle their own finances. Helping is great, but hand-holding creates a generation of people unable to take care of themselves. Give them wings, and then let them make their own decisions and mistakes from there.