Saving for Children.

[fruitbowlk]

What are ways the you'll are saving for your child?

[Joan.of.the.Arch]

For some reason, when I saw your title, I thought you were going to ask about saving money ahead of having children, in order to afford them.

Honestly, we did not do any saving for our child (almost 20 y/o) to be spent for specifics like college, if that is what you mean. We knew we had to take care of our own hopefully lengthy life after retirement and raise our child in a way that he could successfully take care of himself. For us, that meant spending resources on a superb education before college. Yep, spending, not saving, though I could make the case that we spent surprisingly little.

We are willing to spend enough per year now to pay tuition at a state school, but we did not have it saved and set aside. We were also willing to spend the same amount to get our child started in a business around age 18-20 if he preferred that to college. Really, we thought he would want college, and we took the risk that he would be able to get good scholarships. (But we only took that risk because it looked pretty clear that he would be able to receive them. Otherwise we would have saved in a dedicated account such as a 529.) Fortunately, we were right. So we parents will continue a similar level of support to our adult child while he is in college as we did before college. The money we continue to provide is for housing and transportation, which a 529 would not be usable for anyway. Oh, and we stock his kitchen about 3 times per year. He knows he is lucky to get all this and does not squander the opportunity we and his scholarships provide, thank goodness.

So my answer is that we made no savings for him; we just always lived frugally, and taught our child to live so. Living frugally along with having decent employment allows us to pay for important things in the present. We do not really divvy up our savings into different accounts for this or that.

[maat55]

Every person born on earth has the right and responsability to abtain their own happiness. As parents, we are to feed them, house them and cloth them, in addition we love them and teach them to be good humans. Helping them with an education is optional, but it's every humans responsability to achieve their own goals, with exception for the handicapped and mentally challenged who cannot provide for themselves.

Some parents do to much for their children, thus leaving them improperly prepaired to provide for themselves. Others, ignore their children altogether.

This may not apply to the posters question, but just came to mind.

[Snave]

Obviously we are saving for college for our son who is 2, but outside of that, we have a savings account where we put money he gets for birthdays, or other holidays, etc... His grandparents throw $1 or $5 in Valentines cards, etc... All of this goes in. We also will throw in the change in our change drawer every few months. We use this as more of a savings account for him that we will have control over for such "bigger" items like a bike when he is older, etc...

We laughed one day when his grandma sent him a card with a dollar and we sent a card back "from him," that said thanks for the $1, but now I only have 59 cents now that mom and dad made me send you a thank you card with this stamp on it.

[PrincessPerky]

Our kids each have a savings account in a 'real' bank that earns interest, and we talk of how it is for 'big life things' car maybe, education as needed and house if you can.

My oldest now also has a 'bank of mom' account. where he has spending money or money for scouts, but not in his currently missing wallet. That way he has cash for needs in between holidays (all their money comes from relatives at holidays and such) but he doesn't risk losing it quite as badly.

I will create one for my other kids when they have a non waste use for money too.

We do not save any of our money for the kids...two reasons, 1. we don't have it to spare, 2. We agree with Joan.

[aida2003]

We are not saving for our children either. Whatever we're saving/investing are in our names as a means to prevent complexities at tax season and having control over that money.
We hope to have the same current or better jobs in the future, continue living frugally, save/invest as much as we can w/out depriving us of some indulgences and teaching kids to do the same. Consequently we hope to have enough money to spend for their educations (now we're spending on the daycare) later in the future. If they obtain sholarships or grants, that would definitely be an icing on the cake .

[Like2Plan]

The money we continue to provide is for housing and transportation, which a 529 would not be usable for anyway. Oh, and we stock his kitchen about 3 times per year.

Joan,
Actually, you can use a 529 plan for housing and food.

Qualified education expenses. These expenses are the amounts paid for tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution (defined in the next column).
They also include the reasonable costs of room and board for a designated beneficiary who is at least a half-time student. The cost of room and board qualifies only to the extent that it is not more than the greater of the following two amounts.
1. The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
2. The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.

Link to IRS Qualified Tuition Program (QTP) publication

Each state has different rules about withdrawing the money, but in my state it is not too late to establish an account even after the kids are enrolled in college. The advantage to this is there is a state tax write off for the contributions made to the 529 fund (about 5% savings).

[Like2Plan]

What are ways the you'll are saving for your child?

If you are thinking or saving a large amount of money, I wouldn't recommend a custodial account.

Firstly, it is considered the child's money. If you later have to spend it for some reason, you need to keep a good audit trail that it was spent on the child beyond normal maint. (like housing, food, et'c).

Secondly, at age 18 the money belongs to the child. Think about all those years of carefully saving and sacrificing in order for your child to have something--like college or a down payment on a house or starting a business. However, your child may have other ideas like buying a bright shiny red sports car. Or, converting the money into one dollar bills and giving it away to the first few thousand people who walk by....

Then, there is the kiddie tax issue. Congress just raised the age to 24! Let's say your child goes off to college and you can claim them as a dependent on your taxes. The unearned income above $1800 (for 2008), is taxed at the parent's rate until the child reaches the age of 24.

I do believe retirement savings come first, but if I still had the ability to save for my child, I would save in a 529 plan.

The 529 plan has many benefits. You maintain control of the funds (as long as you set yourself up as account owner). You can transfer funds to another eligible family member if you child elects not to attend college. If the money is used for a qualified expense, the earnings are tax free!
If your child gets a scholarship, you can withdraw a like amount of money from the 529 plan and you only pay taxes on the earnings--with no penalty on the earnings.
The risk you take with a 529 plan is if your child elects not to attend college and you cash it out. There are no taxes or penalties on the contributions, but you pay taxes and a penalty on the earnings.

Other than that, I would save money in my name. It could be a separate savings account. Or, another interesting option might be to buy stock in my name and then transfer it over to my child at the appropriate time. He pays the capital gains on the stock at his rate (assuming he is not still in the kiddie tax age) But, I would keep control of the asset until I am ready to transfer it. (This assumes I pick a good stock that goes up in value--and also that the capital gains tax treatment is still pretty favorable--- I'm not saying this plan is not without risk ).

I

[SnoopyCool]

We put $5 per child each week away at a CU. It is only if they decide to serve missions later. If not, it goes to our retirement. We are doing our best to teach them self-reliance. We both put ourselves through college, and such will be their fate.

[Spud]

We laughed one day when his grandma sent him a card with a dollar and we sent a card back "from him," that said thanks for the $1, but now I only have 59 cents now that mom and dad made me send you a thank you card with this stamp on it.

That's funny.

We save money for our kid (and will do so for future children) in a 529 plan each month. But that's it.

[cptacek]

Every person born on earth has the right and responsability to abtain their own happiness. As parents, we are to feed them, house them and cloth them, in addition we love them and teach them to be good humans. Helping them with an education is optional, but it's every humans responsability to achieve their own goals, with exception for the handicapped and mentally challenged who cannot provide for themselves.

Some parents do to much for their children, thus leaving them improperly prepaired to provide for themselves. Others, ignore their children altogether.

This may not apply to the posters question, but just came to mind.

dynobyke and his parents should heed your advice. Sorry, couldn't resist