Saving for your children

Today I saw this Tweet, and wanted to highlight it here:

I opened an account for my daughter and every time I get paid money automatically transfer to her, I’m going to give her control of the account on her 18th birthday and she’ll have over 6 figures to do as she please when she goes off to college and is ready to enter the world.

— Shay 🩷 (@Cravingshay) August 15, 2022

There are a lot of responses to her (some in good faith, some not). I’m glad that she is also prioritizing her own retirement accounts! I’m guessing the account she mentions is a custodial (UTMA/UGMA) account; that’s a good way to save a relatively small (couple thousands?) amount of money for a child, but if you have Lots Of Money ™, you should really consider other vehicles, such as a trust. I suspect that as this woman’s nest egg for her daughter grows, she will take stock of the situation and adjust her investments accordingly.

Most 18-year-olds would not be able to handle a sudden influx of cash like that. However, if you do a good job of explaining money and savings and delayed gratification to your child, then this sort of savings can be a gift, rather than a burden or a source of regret and pain. While I’m hesitant about the idea of “here, have money!” upon turning 18, my guess is that someone like this Internet person would have done all the legwork to make sure that her kid would have the skills to handle that money, not just have the money itself.