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Home › Articles › Your Toddlers › Tiny Investors

Tiny Investors

Getting Children on the Road to Financial Security

By Deborah Ng

Pages:  1  2  3  4  

  • College Fund: "The best planning tool for a child's financial security is stressing the importance of their education," says Bartmasser. "Numerous studies have shown that the more intent children are in furthering their education, the more financially secure they will become as adults." Bartmasser recommends parents invest in 529 Plans, Coverdell Education Savings Accounts or penalty-free IRAs. Parents can decide which plan works best for their lifestyle.

    Donald Dederick of Mastic Beach, N.Y., opened savings accounts for his children's education when they were both very young because he felt it better to think in the long term. "Money for college is a very big expense," he says. "With four-year colleges costing tens of thousands of dollars, it's not something that can be accumulated in a short period of time, at least not for the average family."

    • Custodial Accounts: Custodial accounts allow for parents to save for their children without having to worry about those funds being withdrawn until the designated age. (It varies by state.) Once funds are transferred into a custodial account, they can't be taken back, which means the money can't be touched until children are old enough to withdraw. The downside to this, of course, is that once a child is 18 or 21, they're free to do whatever they want with the money. Unless the child is extremely trustworthy, savings can get partied away or blown on bad investments. Something else to keep in mind is that money in custodial accounts can be counted against financial aid for college.

    No matter what plan you choose to invest in for your children, parents and experts both agree: The key to a financially secure future is education. Children who learn good saving and spending habits are more likely to carry these habits into adulthood. Consider it a gift of responsibility.


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