No. of Recommendations: 8
Somewhat different from Charlie, I believe that there are certain areas in which my children must take instruction. They will learn to read, they will achieve a certain literacy in music, etc., and they will learn more than a basic financial competency. Of course, as adults they can do whatever they want.
From birth, my three children had UTMA accounts to which I and their grandparents contributed annually. I managed the investments in these accounts.
By age 18, each had over $600,000 in their accounts. In addition, they all started Roth IRAs as teenagers which they manage (although they can always run ideas by me).
They paid for their college tuition and expenses from their UTMAs with the understanding that whatever they don't spend will be their money.
It is remarkable how motivating that was for them to voluntarily rein in expenses, choose a non-frivolous major, and to graduate early or on-time. The money became theirs to control at age 21. They were told that they could let me continue to manage the accounts and I would review/discuss all decisions with them, and they would discuss all withdrawals with me - or - they could move the money and change account passwords. If they chose the latter, it would mark the end of further parental and grandparent funding.
They understand the goal is for them to continue to learn and to takeover when they are in their 30's.
Their relatively smaller Roth IRAs have allowed them to speculate, take risks, learn things the hard way, and to also have some remarkable successes.
The UTMA approach was a bit of a gamble, an early bet that we would raise mature and responsible children.
I will let them know about this board so they can ask opinions from someone other than their Dad.
Smufty
