newadventure

I am thinking about setting up a bank account for our eldest daughter (aged 13). She seems to have more disposable income than I do, and is now smart enough not to invest in Daddy Units. Does anyone have any recommendations for banks that might be more child-friendly, or is it just the usual suspects?

kodokan

Some banks do High School Checking accounts from the age of 13; my son has one with Chase. It comes with a debit card, so they can buy stuff in shops and make online purchases (computer games on Steam, in Son's case), but no check book, so they can't go overdrawn. Chase has a very nice banking app, and he's got very responsible about monitoring his balance and checking before making any purchases.

He also has a linked Chase savings account, which has some hundreds in and gives him 1c a month interest. We're using thst one to teach budgeting and money management rather than the marvels of compound interest

Yorkieabroad

Ours all have accounts at Wells Fargo, mainly because we do. They do a "cash card" account for under 12's, then a regular debit card account for 13+. The parent can control spending - daily limits, no overdrafts, and I think max transaction limit, although we don't use any of those (except the overdraft prohibition) as they are only allowed to maintain a small balance in that account, with the bulk in their savings accounts that they have to ask me to access.

I haven't found any of the childrens bonus type accounts that are (or were) commonly available in the UK where they get elevated interest for regular savings etc.

BunnyGirl

Me either, used these regularly in the UK. I am thinking about starting a 529 account for my son though as he's only 6 so we have plenty of time to pay into it.

kodokan

Not sure we have spending controls like that; granted, he's my financially sensible one, so I've never looked. I'm a co-signatory on the account, and can transfer money in (and out!), view it online along with my own Chase accounts, etc.

I've never found Children's Savings Accounts with decent interest either. I have a Barclays Savings account online which pays 1%, some of which is nominally designated as theirs.

My teen is becoming interested in shares, but so far just wants a few units in a tracker within my own brokerage account, that we call 'his'. I'm only just getting to grips with investing and taxes here for myself; I don't want to start adding minor accounts into the mix!

kodokan

I'm just using regular taxable brokerage accounts for mine; the tax benefits on the 529 weren't good enough to risk locking the money up when they might get scholarships, might study overseas, etc.

Yorkieabroad

We have 529's for all of ours, although we have stopped contributing to the eldest (now 13) as we don't want to "overload it" and get stung on penalties if he doesn't use it all for educational costs, although any surplus can be passed down to the younger sibs. Little and often from that age and you'll be fine. We started at 2yo with our eldest, and birth for the next 2.

Yorkieabroad

Bear in mind that they funds don't have to be used for US education - a lot of overseas universities are approved for use with 529 accounts. Well, a lot of UK unis anyway, I haven't looked at other countries.

Yorkieabroad

Why not set up a dummy trading account on something like Yahoo Finance and let him play with it. Ours did that a few years back in School, and they had a blast. My eldest is still running his, and doing pretty well, so now wants to do it "for real".. we haven't quite figured that out yet.

kodokan

Good suggestion - he's more at the embryonic stage of just wanting a better return than a bank account but without much effort, but I'll keep that in mind for the future.

I tried to interest them this year in stocks for their birthdays - Hasbro for my daughter in place of My Little Pony toys, etc - but no dice...

sir_eccles

My understanding is that there are other clever ways to remove money from a 529 if they get scholarships or don't go to uni. I can't remember the details but it is something along the lines of taking out an equivalent amount in lieu. My financial adviser explained it but it was approximately a week after the birth and my mind was elsewhere. All we need to do now is actually put money in, something which we have been a little slovenly with.

kodokan

True; much of it was that they were 12 and 8 when we came so we missed much of the early compounding, and we don't have the sort of stability that lends itself to planning for long term futures.

For example, we're currently in AZ; thought we were staying here for a decade to see them through high school; bought a house, etc. Oldest was looking at ASU; he won a place last year in their selective Honors College summer program for high schoolers, they're actively courting him, and he would go with an almost full scholarship from his grades and test scores. Then boom - hubby gets laid off from his 'rock solid for nearly 15 years' corporate employer, so now we don't know where we'll be living shortly other than contiguous USA, where son'll be graduating from, where he's likely to go to college, etc.

The remaining few years of tax free growth isn't worth the inflexibility trade-off to us. We're planning to early retire - well, we were... sigh... - so can hopefully manipulate capital gains taxes that way instead. I think some part of college has to be paid from non-529 funds to qualify for certain tax credits.

If I'd been here with tiny kids and was thinking reeeeeaaalllly long term, I'd have looked at a Coverdell account, for the flexibility of using it for school as well as uni expenses, and the ability to roll it down generations.

Sorry, OP - drifting off the point a little.

BunnyGirl

Could you recommend one or are they all roughly the same? Googling brings back so many websites, don't know if what I'm looking at is legit

kodokan

Aren't they state-specific or have to be state-approved in some fashion, if you want to get the deduction against state taxes? So try adding Texas to your search; I know when I looked into it briefly, there were only a couple of likely contenders in AZ.

sir_eccles

I believe you can invest in the 529 plan of any state that allows non-residents to invest and there may be tax/contribution advantages in doing so. For some reason I want to say ours in is Virginia but I don't remember.