DISQUS

LSD · 3 years ago

Q: Where Should Teens Stash Their Cash?
A: First $500 should go into a Kids savings account paying 10%
Details:
http://bankdeals.blogspot.com/2005/12/10-savings-account-for-kids.html
You can't beat 10% FDIC guaranteed return with anything else :P

Q: Money in kids name negatively affects his financial aid?
A: True. So, "get rid" of the money in his name right before the child goes to college. If the sum is not too large (and it shouldn't... common he's only a kid :P) you can just do a gift from the child to the parent in 1-2 years before applying for financial aid. Prepay things before applying for FAFSA. Money in a retirement account (ex: Roth) does not count against financial aid. Original contributions won't count, the gains in Roth would count as income. No need to pull those gains out if you can get a subsidized loan (defered until graduation).

Regarding the Roth, the kid can't contribute more than his active income (wages, etc). So as an incentive to work harder, you could say to the kid: "I'll match whatever you make by putting it into your Roth account." If the kid misbehaves, no more contributions

jim · 3 years ago

Emergency fund? No way, Roth first then emergency fund. Your parents are your emergency fund...