When Should We Tell Our Kid About Their $250,000 UTMA Account?
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Published 2024-07-05
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All Comments (13)
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My parents saved for my education but kept it a secret from me. They let me take out loans and work full time while going to school to cover living expenses. The day I graduated I got a card saying that as a gift for my accomplishments they would pay off my loans. My brother dropped out and had to pay back his own loans.
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I have custodial accounts for my kids (10 and 7). We have personal finance conversations frequently, and I try to make it fun and basic for now. We’ll see how it works out, and the conversations will evolve over time. They’re now asking me to put whatever money they get as gifts into their accounts — so far so good.
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Did well with this one. One point: don't tell them what it might be when they are 21, tell them what it is today and how much you put in. Let them see it grow over time. Teach them where it came from and show them how it fits into your multigenerational financial planning. Show them on the plan what the money is intended to do, what it expects them to do in their life, so on and so forth. If you don't have such a master plan and don't communicate it, then you should not expect the money to be used wisely, as even you can't think of wise things to do with it.
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One thing you might do with children is put one child in charge of tracking each household bill. The child in charge of the electric bill will look at it each month, see what the usage is and how much it costs, and keep records from month to month. I'll bet that before you know it, that kid will be turning off lights and telling the other kids not to hold the door open!
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That is insane, I hope they have a massive retirement as well. I am 37 and dont have a $250k net worth yet. 😂
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My kids will have $25,000 each around 18. Not nothing but a great start. Also a great way to show them how investing works. If I want to help more for a downpayment or college that will be still my choice at that time since it will be in my name still. My kid is in 2nd grade and sees the portfolio that is 100% in the S&P 500. He is amazed that he made money doing nothing.
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Can I also add, pay attention to how child handles money because it could lead to problems / may want to take measures to "protect" that money from them. My daughter has a good grasp on saving money and budgets fairly well (so far). My ADD son, however, oof. He "knows" what to do but if the money is there, it's gone. Tried no less than a dozen different budgeting techniques through the years with him and nothing has stuck yet.
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Sheesh I pray they understand what that 250k can become if they just let it compound until they retire.
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i am a little ambivalent about increasing my son's utma balance. i think he is getting it too easy already. he so far has 10K in his utma at 20. he knows once he finishes college that he'll get 35K in his roth over the years from his 529. i am about to read Die with Zero. maybe, I will change my mind but he is getting it too cushy. with a nice round figure we have been playing with compound calculators and he is getting excited.
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How much should I start an UTMA account with? My daughtes 7 years old and her older siblings all graduated H.S. with full scholarships and I gifted them $25K. I wish I was smarter about investing or putting this kind of money in a HYSA.
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I'd say they should know when they understand how to handle money. Just ask what they would do if they got $10K, $100K, 250K, $500K, $1MM. They also need to understand what it takes in terms of time and money to go from $0 to each of these figures. Once they have a strong mindset of preferring to hold on to $250K so that it can turn into $500K, and hold on to $500K so that it can turn into $1MM and beyond, they are ready. If they see the $250K and think, wow, I have a lot of money, there is a high chance that they will drop the baton. If they see $250K and think, wow, I have a great head start, they have successfully taken the baton in the relay rat race.
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Isn't this account for the child's education? So why is this an issue? They should always know that this account is only for college if you need it. If there is money left over after college, then they get to choose what they want to do with the remaining funds.
