Roth IRA for kids

[carlsbadworker]

OK. Putting a little bit more thoughts into this now that you mention it. I think there should be certain (perhaps most) housework that they do that shouldn’t earn them money. They need to learn responsibility as well rather than making everything a financial trade. But they would be rewarded extra for noticing things that we need help on and getting that fixed. Maybe fix the sprinkler, I can pay them 5x to 10x the material costs. I want them to discover problems and then fix them.

In fact, that’s something wrong with our society. I have numerous kids knocking my door asking for donation or sell me some junk, but why no one has knocked my door and told me my sprinkler is broken and offering fixing it. I would gladly pay 5x for the material cost too for their parents’ effort of raising the kids right.

[Coronita]

[quote=carlsbadworker]I think it is great. It certainly beats UGMA or 529. But I think you need to wait until they really start to earn their income. 1) It is really the right thing to do rather than lying to IRS 2) IRS could easily audit it if you claim that your two-year-old is making $5K a year.
[/quote]

I agree with this completely. I think the trouble I have right now is that I’m mainly W2 right now, this isn’t going to happen overnight, since I need to figure out a purpose to create a company and actually well, earn money or at least break even.

[quote]
3) Teach kids about how to earn money (I don’t like monthly stipend, I want my kids learn how to earn money by meeting people’s need, rather than becoming an entitlement). So, maybe $1 for taking out trash daily, I haven’t thought through this yet. It will start with earning my money, but eventually earning money outside by looking for “work” opportunity (e.g. I can teach them writing codes and they can do freelancing).
[/quote]

I’m trying to do this right now. Mixed results. 3rd/4th grader earns $2 for doing the dishes and emptying the trash into a bucket per week. Anything extra toy,craft,game,etc that the kid is responsible for using their own money. I have my kid record what goes into the piggie bank, what comes out, and when I forget to pay up, to send me note that I haven’t paid yet and am overdue. Mainly for the kid to start thinking about how much things cost, and what really is “necessary”. Doesn’t always work.

I’m in the process of explaining no you aren’t getting an iPhone even though some of your classmates have them already.

[Coronita]

[quote=carlsbadworker]OK. Putting a little bit more thoughts into this now that you mention it. I think there should be certain (perhaps most) housework that they do that shouldn’t earn them money. They need to learn responsibility as well rather than making everything a financial trade. But they would be rewarded extra for noticing things that we need help on and getting that fixed. Maybe fix the sprinkler, I can pay them 5x to 10x the material costs. I want them to discover problems and then fix them.

In fact, that’s something wrong with our society. I have numerous kids knocking my door asking for donation or sell me some junk, but why no one has knocked my door and told me my sprinkler is broken and offering fixing it. I would gladly pay 5x for the material cost too for their parents’ effort of raising the kids right.[/quote]

The rule I have is if the room is a mess and it’s not straigthened out, money comes out of the piggie bank to “pay for cleaning”. And the cleaner might “accidentally” throw things away or take them. This will probably backfire.

[an]

[quote][quote]
3) Teach kids about how to earn money (I don’t like monthly stipend, I want my kids learn how to earn money by meeting people’s need, rather than becoming an entitlement). So, maybe $1 for taking out trash daily, I haven’t thought through this yet. It will start with earning my money, but eventually earning money outside by looking for “work” opportunity (e.g. I can teach them writing codes and they can do freelancing).
[/quote]

I’m trying to do this right now. Mixed results. 3rd/4th grader earns $2 for doing the dishes and emptying the trash into a bucket per week. Anything extra toy,craft,game,etc that the kid is responsible for using their own money. I have my kid record what goes into the piggie bank, what comes out, and when I forget to pay up, to send me note that I haven’t paid yet and am overdue. Mainly for the kid to start thinking about how much things cost, and what really is “necessary”. Doesn’t always work. [/quote]I personally don’t like the idea of allowances. I expect my kids to be contributing member of the household. Which mean it’s expected that they clean up after themselves and help keep the family/household running. I don’t want them to get into a habit of thinking everything they do for people and contribution to the running of the household equate to a $. There are plenty of time to learn about making a $. I will provide the basics (or at least what I decide is basic needs). All the luxury things they want, either they have to save it from Christmas/Birthday/etc. or they can barter for it. At least this would be the case when they’re younger and can’t work. Once they’re 15, I expect them to get a job if they want stuff that I don’t provide. I also intend to teach them the power of compound interest. The sooner the better. Combined that knowledge, along with the concept of saving for the future, and the power of investing, I personally think that will go much further than teaching them that if they do x, they’ll get $x. In another word, teach them to get their money to work for them instead of them working for their money.

[quote]I’m in the process of explaining no you aren’t getting an iPhone even though some of your classmates have them already.[/quote]This is one of the reason why I live where I live. I could have live in fancier areas, but then I would have to deal with this exact thing. Instead of wanting a BMW/Benz when they’re 15 because their friends have it, they would be happy to get a car when they’re 16 because not everyone of their friends have a car. Same with an iPhone or any other high price luxury items.

[an]

[quote=carlsbadworker]4) Once they start earning money from the outside world, 80% of their money will need to go to Roth. I can cover their little expenses and co-pay for their bigger expenses up to a limit (kind of like insurance company to them, without insurance premium, again details not hashing out yet). Of course, they will have expenses that they don’t want me to know about (not “insurance” claimable) which they can use their 20%.[/quote]I totally agree with this and this was exactly what my parents did for me and is how I intend to transfer my $ to my kids when that time comes.

[Coronita]

Ok. So the consensus will be I suck at parenting.

Thanks 🙂

[Author]

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