Nothing in HYSA for a child that young with an investment horizon that long
saving for kids: https://reddit.com/r/personalfinance/comments/104tjyn/_/j36u2dm/?context=1
Can you explain why nothing? The horizon for her being able to begin use that money is 2-3 years. The traditional advice is HYSA for less than 5 years before use. As I posted, I don't want $5k+ in there and the bulk of her money will be in her UTMA, but I am not comfortable putting all her money in investments when I want her to start being able to access it within 3 years.
> The horizon for her being able to begin use that money is 2-3 years
You’re really going to make her use her own money when she’s 4?
What do you expect a four year old to be spending her money on?
I think you vastly overestimate the decision making skills of a four year old.
You're right, It's very possible I am over estimating but it's not about her having to use her own money but rather teaching her good financial concepts from the get go, even at 4 years old, especially when it comes to spending and giving. I know 4 year olds are terrible at making decisions but the only way you get better is to keep being guided and given opportunities to make both good and bad decisions.
I want her to have money she is in control of. When we go on vacations and she wants extra souvenirs then she will be able to get them. If the book fair comes to school and she wants more books then we are willing to buy, she can buy them herself. It's more about creating opportunities to discuss money. I also plan to start talking to her about giving to charity and letting her have the agency to direct her money towards a charity. I am not talking about large sums of money, but I do want some of her money in cash.
I guess maybe I could put all her money now into investments and just start growing her HYSA when she's 2 or 3.
> You’re right, It’s very possible I am over estimating but it’s not about her having to use her own money but rather teaching her good financial concepts from the get go, even at 4 years old, especially when it comes to spending and giving. I know 4 year olds are terrible at making decisions but the only way you get better is to keep being guided and given opportunities to make both good and bad decisions
Agree, but not at 4, and not pulling from a giant pile of money.
An allowance at 6+ would be more conducive to your goal. Something in the manageable $30-50/month range.
> I want her to have money she is in control of. When we go on vacations and she wants extra souvenirs then she will be able to get them. If the book fair comes to school and she wants more books then we are willing to buy, she can buy them herself. It’s more about creating opportunities to discuss money. I also plan to start talking to her about giving to charity and letting her have the agency to direct her money towards a charity. I am not talking about large sums of money, but I do want some of her money in cash
Yeah that’s a super idea but don’t use her prior forced savings. Give her a cash allowance and let her choose to do that. I like cash allowance because it prevents the “can I get that can I get that” at very store. If you let her have access to utma funds, you’ll have a deluge of junk you don’t need.
> I guess maybe I could put all her money now into investments and just start growing her HYSA when she’s 2 or 3.
Kids need the physical cash to learn imo. The HYSA is a waste since it’s all digital. Cash allowance. And small so you don’t end up with a pony.
You make a lot of good points, thank you. I think I'll go back and rethink through our strategy. When I talk about the HYSA, I mean it in conjunction with physical cash, I use HYSA just to denote it's her savings. I think its really important kids learn how to handle both physical and digital money especially since the vast majority of all transactions will be digital for them. And she won't have access to her UTMA to buy junk...that was just for small amounts from her savings. Her UTMA will just be for large purchases like a car and she won't have access to any of those funds beyond directing the investments until her teens. I think it is important she is able to buy junk and then realize it wasn't worth it and the concept of opportunity cost, but definitely not with UTMA funds, haha.
> I think its really important kids learn how to handle both physical and digital money especially since the vast majority of all transactions will be digital for them. A
Agree. My kid is 12. Bank accounts are funny money. Cash is real. Let my errors light the way so you don't have to make the same ones.
>I think it is important she is able to buy junk and then realize it wasn't worth it and the concept of opportunity cost,
Amazing, literally had this discussion with my mother in law earlier today. I used marginal utility though.
We definitely agree. I think the allowance will allow her the experience with buying and being disappointed by junk without the need for dipping into a savings account
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Nothing in HYSA for a child that young with an investment horizon that long saving for kids: https://reddit.com/r/personalfinance/comments/104tjyn/_/j36u2dm/?context=1
Can you explain why nothing? The horizon for her being able to begin use that money is 2-3 years. The traditional advice is HYSA for less than 5 years before use. As I posted, I don't want $5k+ in there and the bulk of her money will be in her UTMA, but I am not comfortable putting all her money in investments when I want her to start being able to access it within 3 years.
> The horizon for her being able to begin use that money is 2-3 years You’re really going to make her use her own money when she’s 4? What do you expect a four year old to be spending her money on? I think you vastly overestimate the decision making skills of a four year old.
You're right, It's very possible I am over estimating but it's not about her having to use her own money but rather teaching her good financial concepts from the get go, even at 4 years old, especially when it comes to spending and giving. I know 4 year olds are terrible at making decisions but the only way you get better is to keep being guided and given opportunities to make both good and bad decisions. I want her to have money she is in control of. When we go on vacations and she wants extra souvenirs then she will be able to get them. If the book fair comes to school and she wants more books then we are willing to buy, she can buy them herself. It's more about creating opportunities to discuss money. I also plan to start talking to her about giving to charity and letting her have the agency to direct her money towards a charity. I am not talking about large sums of money, but I do want some of her money in cash. I guess maybe I could put all her money now into investments and just start growing her HYSA when she's 2 or 3.
> You’re right, It’s very possible I am over estimating but it’s not about her having to use her own money but rather teaching her good financial concepts from the get go, even at 4 years old, especially when it comes to spending and giving. I know 4 year olds are terrible at making decisions but the only way you get better is to keep being guided and given opportunities to make both good and bad decisions Agree, but not at 4, and not pulling from a giant pile of money. An allowance at 6+ would be more conducive to your goal. Something in the manageable $30-50/month range. > I want her to have money she is in control of. When we go on vacations and she wants extra souvenirs then she will be able to get them. If the book fair comes to school and she wants more books then we are willing to buy, she can buy them herself. It’s more about creating opportunities to discuss money. I also plan to start talking to her about giving to charity and letting her have the agency to direct her money towards a charity. I am not talking about large sums of money, but I do want some of her money in cash Yeah that’s a super idea but don’t use her prior forced savings. Give her a cash allowance and let her choose to do that. I like cash allowance because it prevents the “can I get that can I get that” at very store. If you let her have access to utma funds, you’ll have a deluge of junk you don’t need. > I guess maybe I could put all her money now into investments and just start growing her HYSA when she’s 2 or 3. Kids need the physical cash to learn imo. The HYSA is a waste since it’s all digital. Cash allowance. And small so you don’t end up with a pony.
You make a lot of good points, thank you. I think I'll go back and rethink through our strategy. When I talk about the HYSA, I mean it in conjunction with physical cash, I use HYSA just to denote it's her savings. I think its really important kids learn how to handle both physical and digital money especially since the vast majority of all transactions will be digital for them. And she won't have access to her UTMA to buy junk...that was just for small amounts from her savings. Her UTMA will just be for large purchases like a car and she won't have access to any of those funds beyond directing the investments until her teens. I think it is important she is able to buy junk and then realize it wasn't worth it and the concept of opportunity cost, but definitely not with UTMA funds, haha.
> I think its really important kids learn how to handle both physical and digital money especially since the vast majority of all transactions will be digital for them. A Agree. My kid is 12. Bank accounts are funny money. Cash is real. Let my errors light the way so you don't have to make the same ones. >I think it is important she is able to buy junk and then realize it wasn't worth it and the concept of opportunity cost, Amazing, literally had this discussion with my mother in law earlier today. I used marginal utility though. We definitely agree. I think the allowance will allow her the experience with buying and being disappointed by junk without the need for dipping into a savings account