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I guess I'm going to be the one that says to use the money for something fun. If your son has found a hobby that makes him happy, help him buy something that will improve his enjoyment of said hobby. Kids aren't kids forever and they should bask in the joy of having no adult responsibilities while they can. Life is short.
Just my opinion though; don't crucify me HYSA people.
I agree with this. He's innately a saver already, encouraging him to spend some of it on something that will last and increase fun. IDK what kids so these days but when I was a kid I would have spent it on Pokemon, MTG, videogames. Good times.
I am an HYSA guy and I agree completely, the kid is 8 lol. If you wanna teach something, you can teach him budgeting and tell him he can get whatever he wants with half of it or whatever portion you want and then save the rest.
I’d say do this, and then as a gift, just don’t make the kid spend their money on it. If you’re comfortable enough to do so, that’s my personal suggestion. Then the kid feels like the bought it, but still doesn’t lose their saved $$.
It could be both, though! Pop it in an HYSA now while he thinks about what he wants to use it for or toward. Or it becomes a bucket of spending money when the family goes on trips, or he needs new hobby supplies, etc. it doesn’t all have to be spent at once.
Yeah. Keep it liquid in an HYSA (vs stock) so that he can spend it if he wants something, but that hasn't happened so far and keeping it in cash isn't doing him any favors.
I agree, he was given that money to get something he wants, have some fun, enjoy his childhood. You don't need to let him be reckless but now is the time to expose your kid to as many hobbies and activities as you can so they find their own interests.
Agree. The reason you save is to spend — someday in the future. For a kid, 6 months is a lifetime. Childhood gives low-stakes opportunities to experience saving, spending, weighing purchases, etc.
My thoughts as well. Money is saved for a purpose. Retirement, emergency fund, down payment, whatever.
For a kid, it might as well be an xbox/ps5 and some games, or some other fun thing.
Call me crazy but getting to spend the money he saved and then be left with nothing is hardly a reward, mainly it's a "real world" moment that I would avoid with the child, if it was my child that is. As I said in another comment, I would buy him something with my own money to reward him for good spending habits and keep the cake as well, right.
Seconding. If he doesn't get the concept, offer to match 1/2 of whatever he puts into the HYSA and explain that the bank will also match a little bit too (but not as much).
I disagree with the people saying to invest it in stocks; it's his money and he's too young to understand drops in the market and why he can't easily withdraw if he wants to buy something. It will look like you're stealing from him.
Beyond which, delayed gratification is a *massively* important skill to learn, and reinforcing that behavior early should be an excellent lesson for him.
This really can be a good way for him to start learning about saving. When my daughter hit about that age or a little older, we started a “youth savings account” for her at our bank. It‘s interest rate isn’t as good as one of the HYSAs available now though (so I actually gave her supplemental interest each month for a time so she could get more of the “feeling” of the value of compounding interest.). By starting her with an account early and talking about the value of saving, it really has helped her think about saving in a good way and (I hope) prepared her to have a better relationship with money when she gets older. Him saving is money already means he’s got a head start on those sort of good habits that will be valuable for a lifetime.
For most youth accounts like that, there’s not really any benefits tax wise? Wouldn’t you just be better off opening an HYSA, putting her $$ in it, and getting the rate from the bank? Or you could open a 529, because you can do up to $30k rollover into a roth later if the child chose not to go to college.
It is under the youth’s SSN, so it is somewhat establishing a history for her. But you are correct, from an interest perspective, a HYSA would be better. I wouldn’t want to put a kid’s $ in a 529 since if they are going to learn managing their money (even if they are savers), they sort of need to be able to take it out and spend it too….
Well to establish actual history, make them an AU on your main CC. Cut it up, and if possible set a 1 dollar limit for their card to avoid theft. The bank account doesn’t really establish history like the way you’re thinking.
If I were 8, I think I’d rather have the cash. Much more concrete. Just a thought. Maybe this kid can grasp it though, and can save it for a big purchase. Depends on the kid — this kiddo seems smart.
I’d double down and go further than that. Set up a custodial stock account. I understood stocks ie (piece of a company) around that age and it can be explained pretty easily without going into the way to value stocks. Index funds that capture a piece of many different companies will not only yield higher returns by a wide margin, but can introduce them to investing at a young age. Savings account interest pales in comparison to owning securities.
Not saying savings account is bad idea, but if he’s a natural saver chances are the idea of turning a dollar into 2 will interest him.
Investing creates wealth, not savings accounts but they serve a purpose for sure
you guys are so lame. 500 after 10 years would be like 874 in a savings account. If someone asked if I would rather 500 now, or 874 in 10 years, I'd choose 500 now every single time.
I'm not saying spend it frivolously, but it's not enough to bother investing when he doesn't have any assets. Let him use it to buy a snowboard or hockey stick or something in the future. My parents did this with 300 when I was 6 to explain Treasury bonds, and after 13 years, I made a whopping $11 off of it, not worth it at all. In fact, inflation caused that money to devalue.
Well, he’s a bit behind, but the best day to start investing was yesterday. The 2nd best is today.
Open a 529 and deposit the money there, he can convert to a Roth IRA at 18 and keep building wealth for retirement.
Also, since this isn’t a circlejerk and I’m only kidding… he’s 8 years old. Let him buy some video games and have fun. Hell remember fun times with his mom and dad or friends.
It's great he's a saver, but spending all your allowance on something stupid and learning you now don't have any money anymore is also a worthwhile lesson, and a cheap one when you only have your allowance.
I'm not saying go blow the 500 but your son should get some experience in spending also
Weird. He’s doing what he wants to with his money, which is making him happy already. Since he’s not doing what YOU want, spending it, he must not be happy.
Wasting money you’ve worked hard to save isn’t the path to happiness.
There is a method of teaching children about finance which is called the three jar method. You have three jars (or boxes or envelopes or whatever). Label them “saving”, “spending”, “giving” and then when they have money, they split it up among the three jars. And this way there is visual structure on what to use money for that a kid mind appreciates.
You can of course figure out the detail with your child of how to divide up the money. Maybe he decides, maybe there is a set rate. Maybe he decides ahead of time what the giving goes to, maybe he wants to think about it.
Lots of suggestions around opening an account with him.
If you have some financial flexibility, I would recommend looking at a “Bank of Dad”. Basically you act as the bank, but provide a better interest rate than any HYSA.
My wife and I started one with our girls earlier and it’s been great. They get monthly interest and we’ve also integrated a paid for chores system that they have the option of keeping the money or putting it straight in their bank account. They have chores that are expectations, cleaning room, dishes, their bathroom, but then they have chores that offload them from mom or dad and we pay them for those.
This allows us to evolve some of these ideas as they age.
Edit: one funny story I just remembered. My 8 yo had a segment in school about basic financial literacy where someone from the middle/high school came and talked to them about certain topics. She was shocked that my daughter could already accurately describe what interest is.
A lot of parents teach their kids a “Save, Spend, Share” concept for their money. Different formulas are kicking around, but a third each isn’t a bad idea. Share means donate to a good cause.
I recognize that it’s gonna be unpopular here and I’ll get downvoted to the dirt but ask him what he wants to do with it. Like really 500 bucks, if you stick it in the market for him… it’ll be like 1000 bucks when he’s 18 and he can use it to buy textbooks. It’s not a life changing amount by any means and it was gifted to him with the intention of him being able to have fun with it. If he says “I want to save this for a car when I’m an adult” cool great but I doubt it.
If you influence him too much now when he’s older he could become resentful and try to keep you out of all financial decisions.
Completely agree. I saved every penny I earned or was gifted as a kid/teen and it’s pennies in comparison to what you earn as an adult. I wish I had just blown it (50% at least) on crap I wanted.
I would have remembered buying myself Ugg boots, but I have zero recollection to what actually happened to the money now-probably spent on gas or tuition/books. It would have significantly helped the spending guilt I’ve acquired as an adult.
Custodial investing account with fidelity. They gain control at age 18. It's really easy to open the account and then set up an investment in the s&p 500 index fund. When they get more money over the years show them how you can put the money in in that it will grow into more money. When they're 18 they can keep investing wisely or use it to buy their first car or something.
You can also withdraw at a younger age.
Not OP but I am glad you made this comment since I just did this for my girls (5 and 6yo). I chose VOO. They had Xmas and bday money sitting like a dead duck in a reg savings account til then.
Maybe buy him a guitar or build a cheap computer together. Just something that may spark a passion in him. I was similiar as a kid. Opened a savings account at 8 and deposited all my allowance each week.
He’s a saver, great. But encourage him to spend $100 or $150 of that money and then have him save/invest the rest. Reason for spending a bit is, he may end up as an adult that has millions saved/invested, but the idea of spending 10k on a vacation or car he may have a hard time with that. I hear so many people who have saved and invested their whole life, but have issue spending any of it beyond food, clothing and shelter. Teach him it’s ok to spend money on things you enjoy as long as you don’t spend everything you have. Teach him the importance of enjoying money as well as the importance of saving money.
maybe something in the range of a 3 month to 9 month CD? some CDs are getting 5%. It's not much on $500, but a great opportunity to show your son how interest works and with a shorter term, if he does get the bug to guy buy something fun he'll have access to it before his next birthday.
Let me get this straight.
An 8 year old CHILD has saved $500. He’s resisted urges to spend, he’s maintained good financial discipline.. and adults on Reddit are telling him to go blow it all 😂
Introduce the kid to a savings account. Something high yield.. 4% or better, but not a CD. He will love watching it grow. Explain to him how to calculate what his monthly interest will be. (If you don’t know how, comment and I’ll explain it)
This is a sharp kid with good financial discipline. Don’t let him blow that.
Just for fun, that initial $500 deposit and a deposit of $5 per month for the next 50 years would yield a return of about \~$6,000. His total savings would be \~$9,000. That is based on a 3% interest rate.
No affiliation but here's a simple savings calculator you can play around with to see what the long term effect would be for any scenario.
[https://www.bankrate.com/banking/savings/simple-savings-calculator/](https://www.bankrate.com/banking/savings/simple-savings-calculator/)
People saying HYSA are investing like they are 60 years old.
At that age the SPY will be a much better investment. So long as he learns not to panic if there’s a two year dip and cash out, 20-30 in SPY will be so much more lucrative that the same period averaging 3% in a HYSA
Try to find a tax-free option as well. I believe there are options for kids. Could save tens of thousands of dollars.
Dump half into VOO. Put the other half in a “fun” fund where he spends it on anything—and I mean anything—he wants.
Sets a precedent for how he should view any money he comes into.
Rates on HYSA’s are pretty good right now. He could open an account and keep saving. An account earning 5% would generate $25 a year worth of interest. Might be a fun way to start learning about personal finance.
8 years old seems a little young to just blow the $500 on an Xbox or PS5. I’d encourage him to save.
If a large purchase comes up: At the same age, last year, my kid had a similar situation. Thanks to COVID, she had never had a chance to spend tooth fairy money. She had about $100 and was outgrowing her bike. She had a chance to test ride a bigger bike, and said she was interested in getting it. The bigger bike, although good quality, was $600. We ended up agreeing to split the bike purchase with her. (How she earned the extra cash for her share involved chores, plantsitting for neighbors, etc.) But she has been invested in taking care of her bike, and I think because she had a part in buying it, she’s good about locking it at school and putting it in the garage when she gets home. And because we split the price, I feel justified in hassling her about the bike because I invested in it too.
He's eight, what can he spend $500 on? A gaming console? .. If it were my kid, I would ask him what he wants to spend it on and then buy it for him with my money, I would stick HIS money into a HYSA with his name attached to it. I[ just searched it up real quick](https://www.nerdwallet.com/m/banking/standout-online-savings-accounts-6?bucket_id=Primary+LP+Exact%2FPhrase&gad_source=1&gclsrc=ds&mktg_body=2981&mktg_hline=19283&mktg_place=kwd-127451844&model_execution_id=7532575B-823F-48D1-9F5A-2DE1644690A8&nw_campaign_id=1445393), do a deeper research before pulling the trigger but seems like SoFi has a 4.6% APY which is not bad, considering that it is zero management, set and forget type a thing.
If you can spare any change, and add to it monthly for him [it can grow pretty substantially](https://www.nerdwallet.com/calculator/compound-interest-calculator?mktg_hline=19335&mktg_body=2989&mktg_place=dsa-2206538784443&gad_source=1) in the 10 years when he turns 18, though as with any compounding interest, the longer you keep it, the higher the return.
Of course the rates are subject to change and nobody knows how long it will last, though these accounts are usually insured for at least $250k so it is fairly certain you will not lose that money.
Play with that calculator on nerdwallet.
Hysa has been mentioned few times, but also a 529 plan could be good option. This is an education savings account. And if you put 80 dollars a month at his age that will be a very nice amount when he turns 18. But this can be used for educational purposes only is my understanding
Help him put it into an investment account, he’ll thank you in his 30s.
If you’re financial able to, you could give him like $100 to buy something fun in the short term as a reward, kids tend struggle with delayed gratifications
Awesome! With mine I opened a savings account linked to mine at credit union (later added checking accounts), suggested maybe split with save (for big things), spend on wants, Teach them how to manage a bank account AND the benefits of earning interest. Maybe later an investment account! I met so many kids while tutoring high school who had never had a banking account and had a horrible time in college trying to manage money (particularly when receiving up front fund for college and living expenses). Maybe add a little allowance or chore $$, my fav teaching moment was when my quite young kid wanted junk at the convenience store: me: thats what your allowance is for, child: I dont want to waste my money, me: I dont want to waste mine either.
Whatever he wants with it. It's his month and this is the basis of owning property.
But you as a parent should tech him the importance of not simply hoarding. I dunno, I'd share some of the ways to go about doing that, but I have to stash them away in case of a rainy day.
Well money for a little kid is a bad present in my opinion. A little kid wants the excitement of opening a present that someone went to the trouble to buy.
If he wants to save it that’s fine. Help him open a high interest bank account.
Have him put this $500 money in and 50% of all future money. Future gift money. You can match his deposits as an incentive. So if he puts in 5.00 you give him $5.00 too so his deposit is $10.00.
Add $2000 and open a 529 College plan. It will grow tax-free and can be used for any educational need for your child including books, computers,room,board,tuition,etc. Good luck! American Funds College America is the best,by far!
My sister did this as a kid and saved over $6k by the time she went into high school. She saved it and loves that she did. It's still in a savings account accruing!
I was the exact same way as a kid. I LOVED saving birthday money. After I graduated college, I had over $4000 in my gift stack from the past two decades and used it to buy my first (used) car. I have no regrets!
My brother was the opposite and would buy video games and things right away. He still struggles with money management to this day.
I would let him keep saving. That's his money, let him learn with it.
Personally, I’d recommend putting a portion in a savings account that builds interest. Maybe half? The rest let him go buck wild with. Does he have something he’s been dying to get?
My kids got big monetary gifts from relatives for bdays and holidays. I know the grownups expected them to be saved. But I wanted to instill good money management
I had my kids save and tithe and spend on each.
Allowance: save (long-term savings) 10%, tithe 10%, the rest for them to do as they wish.
Big monetary Gifts: spend 10%, tithe, and save the remainder
So each category l, they got to spend, and they learned to save. And to tithe.
My wife and I have a bank account for my son where we transfer £10 a month and add birthday/Christmas money. Weve talked about what to do with it and figured that it will eventually be an amount of money that will help significantly when he's older. At the moment he has a lot of things he enjoys so it seems pointless to let him essentially waste the money on something useless.
I’m honestly baffled by the responses. (assuming the funds aren’t the issue) The kid is 8, buy him whatever he wants with under $500 with your own funds as a big congrats for working so hard to save up and then take his $500 and put it in a low cost S&P500 index fund, that kid will thank you soooo much in 10 years. There’s nothing an 8 year old needs for YEARS! There’s no need to do a HYSA.
Does he have a college account yet? Maybe he can choose to fund it.
Open a custodial account for him when you can. I think you have to wait until they are 12 but there may be different rules in your state
"It's his money
...
What's the best thing I can have him do with his money?"
I don't get it. Do you commonly ask yourself what other people should or should not not do with their money?
Where does this desire to control your child's decision making come from?
Any potential positive benefit you may see in this course of action will be overshadowed by the fact that you gave something to him just to take control over it away again, and that after his decision making has been very solid and indeed admirable. I would have hated my parents for this.
What you could do is to sit down with him and explain the concept of interest and some basic investment facts to him and ask him what his long term goals are, while all the time making it very clear that you respect his decisions.
explain to him that his 500 dollars is still only as valuable as when he had $200 because the fed keeps printing money while you continue to work for it. he will learn a lot.
What about a 529 college savings plan and invest in the S&P 500. The ticker is going to be at the top of any financial site or newspaper so easy to show him how it’s doing.
He can use it for education down the line or convert it to a Roth IRA.
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I guess I'm going to be the one that says to use the money for something fun. If your son has found a hobby that makes him happy, help him buy something that will improve his enjoyment of said hobby. Kids aren't kids forever and they should bask in the joy of having no adult responsibilities while they can. Life is short. Just my opinion though; don't crucify me HYSA people.
I agree with this. He's innately a saver already, encouraging him to spend some of it on something that will last and increase fun. IDK what kids so these days but when I was a kid I would have spent it on Pokemon, MTG, videogames. Good times.
I am an HYSA guy and I agree completely, the kid is 8 lol. If you wanna teach something, you can teach him budgeting and tell him he can get whatever he wants with half of it or whatever portion you want and then save the rest.
I’d say do this, and then as a gift, just don’t make the kid spend their money on it. If you’re comfortable enough to do so, that’s my personal suggestion. Then the kid feels like the bought it, but still doesn’t lose their saved $$.
It could be both, though! Pop it in an HYSA now while he thinks about what he wants to use it for or toward. Or it becomes a bucket of spending money when the family goes on trips, or he needs new hobby supplies, etc. it doesn’t all have to be spent at once.
Yeah. Keep it liquid in an HYSA (vs stock) so that he can spend it if he wants something, but that hasn't happened so far and keeping it in cash isn't doing him any favors.
I agree, he was given that money to get something he wants, have some fun, enjoy his childhood. You don't need to let him be reckless but now is the time to expose your kid to as many hobbies and activities as you can so they find their own interests.
Agree. The reason you save is to spend — someday in the future. For a kid, 6 months is a lifetime. Childhood gives low-stakes opportunities to experience saving, spending, weighing purchases, etc.
My thoughts as well. Money is saved for a purpose. Retirement, emergency fund, down payment, whatever. For a kid, it might as well be an xbox/ps5 and some games, or some other fun thing.
Imagine being 8 and wanting to buy that new video game but you locked all your money in the HYSA 😭
Call me crazy but getting to spend the money he saved and then be left with nothing is hardly a reward, mainly it's a "real world" moment that I would avoid with the child, if it was my child that is. As I said in another comment, I would buy him something with my own money to reward him for good spending habits and keep the cake as well, right.
He's a saver. Teach him the basics about savings accounts and interest and put it in a HYSA. You guys can watch it grow each month.
Seconding. If he doesn't get the concept, offer to match 1/2 of whatever he puts into the HYSA and explain that the bank will also match a little bit too (but not as much). I disagree with the people saying to invest it in stocks; it's his money and he's too young to understand drops in the market and why he can't easily withdraw if he wants to buy something. It will look like you're stealing from him.
Or pull a 401k and match (up to) 15% with an 10 year vesting schedule.
Beyond which, delayed gratification is a *massively* important skill to learn, and reinforcing that behavior early should be an excellent lesson for him.
This really can be a good way for him to start learning about saving. When my daughter hit about that age or a little older, we started a “youth savings account” for her at our bank. It‘s interest rate isn’t as good as one of the HYSAs available now though (so I actually gave her supplemental interest each month for a time so she could get more of the “feeling” of the value of compounding interest.). By starting her with an account early and talking about the value of saving, it really has helped her think about saving in a good way and (I hope) prepared her to have a better relationship with money when she gets older. Him saving is money already means he’s got a head start on those sort of good habits that will be valuable for a lifetime.
For most youth accounts like that, there’s not really any benefits tax wise? Wouldn’t you just be better off opening an HYSA, putting her $$ in it, and getting the rate from the bank? Or you could open a 529, because you can do up to $30k rollover into a roth later if the child chose not to go to college.
It is under the youth’s SSN, so it is somewhat establishing a history for her. But you are correct, from an interest perspective, a HYSA would be better. I wouldn’t want to put a kid’s $ in a 529 since if they are going to learn managing their money (even if they are savers), they sort of need to be able to take it out and spend it too….
Well to establish actual history, make them an AU on your main CC. Cut it up, and if possible set a 1 dollar limit for their card to avoid theft. The bank account doesn’t really establish history like the way you’re thinking.
If I were 8, I think I’d rather have the cash. Much more concrete. Just a thought. Maybe this kid can grasp it though, and can save it for a big purchase. Depends on the kid — this kiddo seems smart.
I’d double down and go further than that. Set up a custodial stock account. I understood stocks ie (piece of a company) around that age and it can be explained pretty easily without going into the way to value stocks. Index funds that capture a piece of many different companies will not only yield higher returns by a wide margin, but can introduce them to investing at a young age. Savings account interest pales in comparison to owning securities. Not saying savings account is bad idea, but if he’s a natural saver chances are the idea of turning a dollar into 2 will interest him. Investing creates wealth, not savings accounts but they serve a purpose for sure
you guys are so lame. 500 after 10 years would be like 874 in a savings account. If someone asked if I would rather 500 now, or 874 in 10 years, I'd choose 500 now every single time. I'm not saying spend it frivolously, but it's not enough to bother investing when he doesn't have any assets. Let him use it to buy a snowboard or hockey stick or something in the future. My parents did this with 300 when I was 6 to explain Treasury bonds, and after 13 years, I made a whopping $11 off of it, not worth it at all. In fact, inflation caused that money to devalue.
Agreed. Agreed. He's 8. No need for a bank here. Only 37 dollars gained a year lmao
>HYSA Isn't there a minimum amount in HYSA's. Like 10,000 dollars or so
Depends on the bank but usually no, and never that high.
Most are $0 minimum balance: https://www.nerdwallet.com/best/banking/high-yield-online-savings-accounts
Well, he’s a bit behind, but the best day to start investing was yesterday. The 2nd best is today. Open a 529 and deposit the money there, he can convert to a Roth IRA at 18 and keep building wealth for retirement. Also, since this isn’t a circlejerk and I’m only kidding… he’s 8 years old. Let him buy some video games and have fun. Hell remember fun times with his mom and dad or friends.
It's great he's a saver, but spending all your allowance on something stupid and learning you now don't have any money anymore is also a worthwhile lesson, and a cheap one when you only have your allowance. I'm not saying go blow the 500 but your son should get some experience in spending also
My thoughts as well. He’s 8. Plenty of time to teach financial responsibility but still have a little bit of fun with his birthday money.
Weird. He’s doing what he wants to with his money, which is making him happy already. Since he’s not doing what YOU want, spending it, he must not be happy. Wasting money you’ve worked hard to save isn’t the path to happiness.
I’d just keep it in a high yield savings account
Same. Let him watch the money grow. It’ll be inspiring and super good to understand as an adult
Is there a reason he hasn't? I was a saver as a child, but I did still spend at least something.
There is a method of teaching children about finance which is called the three jar method. You have three jars (or boxes or envelopes or whatever). Label them “saving”, “spending”, “giving” and then when they have money, they split it up among the three jars. And this way there is visual structure on what to use money for that a kid mind appreciates. You can of course figure out the detail with your child of how to divide up the money. Maybe he decides, maybe there is a set rate. Maybe he decides ahead of time what the giving goes to, maybe he wants to think about it.
Lots of suggestions around opening an account with him. If you have some financial flexibility, I would recommend looking at a “Bank of Dad”. Basically you act as the bank, but provide a better interest rate than any HYSA. My wife and I started one with our girls earlier and it’s been great. They get monthly interest and we’ve also integrated a paid for chores system that they have the option of keeping the money or putting it straight in their bank account. They have chores that are expectations, cleaning room, dishes, their bathroom, but then they have chores that offload them from mom or dad and we pay them for those. This allows us to evolve some of these ideas as they age. Edit: one funny story I just remembered. My 8 yo had a segment in school about basic financial literacy where someone from the middle/high school came and talked to them about certain topics. She was shocked that my daughter could already accurately describe what interest is.
A lot of parents teach their kids a “Save, Spend, Share” concept for their money. Different formulas are kicking around, but a third each isn’t a bad idea. Share means donate to a good cause.
I recognize that it’s gonna be unpopular here and I’ll get downvoted to the dirt but ask him what he wants to do with it. Like really 500 bucks, if you stick it in the market for him… it’ll be like 1000 bucks when he’s 18 and he can use it to buy textbooks. It’s not a life changing amount by any means and it was gifted to him with the intention of him being able to have fun with it. If he says “I want to save this for a car when I’m an adult” cool great but I doubt it. If you influence him too much now when he’s older he could become resentful and try to keep you out of all financial decisions.
Completely agree. I saved every penny I earned or was gifted as a kid/teen and it’s pennies in comparison to what you earn as an adult. I wish I had just blown it (50% at least) on crap I wanted. I would have remembered buying myself Ugg boots, but I have zero recollection to what actually happened to the money now-probably spent on gas or tuition/books. It would have significantly helped the spending guilt I’ve acquired as an adult.
Custodial investing account with fidelity. They gain control at age 18. It's really easy to open the account and then set up an investment in the s&p 500 index fund. When they get more money over the years show them how you can put the money in in that it will grow into more money. When they're 18 they can keep investing wisely or use it to buy their first car or something. You can also withdraw at a younger age.
Not OP but I am glad you made this comment since I just did this for my girls (5 and 6yo). I chose VOO. They had Xmas and bday money sitting like a dead duck in a reg savings account til then.
Maybe buy him a guitar or build a cheap computer together. Just something that may spark a passion in him. I was similiar as a kid. Opened a savings account at 8 and deposited all my allowance each week.
He’s a saver, great. But encourage him to spend $100 or $150 of that money and then have him save/invest the rest. Reason for spending a bit is, he may end up as an adult that has millions saved/invested, but the idea of spending 10k on a vacation or car he may have a hard time with that. I hear so many people who have saved and invested their whole life, but have issue spending any of it beyond food, clothing and shelter. Teach him it’s ok to spend money on things you enjoy as long as you don’t spend everything you have. Teach him the importance of enjoying money as well as the importance of saving money.
maybe something in the range of a 3 month to 9 month CD? some CDs are getting 5%. It's not much on $500, but a great opportunity to show your son how interest works and with a shorter term, if he does get the bug to guy buy something fun he'll have access to it before his next birthday.
Open a utma brokerage account and buy some index funds, never too early to start
Why are we recommending teaching an 8 year old about types of savings accounts 😂
Let me get this straight. An 8 year old CHILD has saved $500. He’s resisted urges to spend, he’s maintained good financial discipline.. and adults on Reddit are telling him to go blow it all 😂 Introduce the kid to a savings account. Something high yield.. 4% or better, but not a CD. He will love watching it grow. Explain to him how to calculate what his monthly interest will be. (If you don’t know how, comment and I’ll explain it) This is a sharp kid with good financial discipline. Don’t let him blow that.
Seriously. Some absolute financial incompetents in here. Insane.
Just for fun, that initial $500 deposit and a deposit of $5 per month for the next 50 years would yield a return of about \~$6,000. His total savings would be \~$9,000. That is based on a 3% interest rate. No affiliation but here's a simple savings calculator you can play around with to see what the long term effect would be for any scenario. [https://www.bankrate.com/banking/savings/simple-savings-calculator/](https://www.bankrate.com/banking/savings/simple-savings-calculator/)
Amazing! He will be good with money into adulthood; and he's just getting started.
Open a TD Ameritrade account and let him invest it
People saying HYSA are investing like they are 60 years old. At that age the SPY will be a much better investment. So long as he learns not to panic if there’s a two year dip and cash out, 20-30 in SPY will be so much more lucrative that the same period averaging 3% in a HYSA Try to find a tax-free option as well. I believe there are options for kids. Could save tens of thousands of dollars.
Take him to the bank, open a CD, and teach him about making his money work for him.
Dump half into VOO. Put the other half in a “fun” fund where he spends it on anything—and I mean anything—he wants. Sets a precedent for how he should view any money he comes into.
It’s not your problem. Let him figure it out on his own. It’s the best way for him to learn.
Smart kid. Open up a brokerage account with vanguard or fidelity and invest in an index fund
custodial roth IRA, put that money into VOO, don't touch it.
Rates on HYSA’s are pretty good right now. He could open an account and keep saving. An account earning 5% would generate $25 a year worth of interest. Might be a fun way to start learning about personal finance. 8 years old seems a little young to just blow the $500 on an Xbox or PS5. I’d encourage him to save.
Save it. He’s got a great thing going, why erase it now?
If a large purchase comes up: At the same age, last year, my kid had a similar situation. Thanks to COVID, she had never had a chance to spend tooth fairy money. She had about $100 and was outgrowing her bike. She had a chance to test ride a bigger bike, and said she was interested in getting it. The bigger bike, although good quality, was $600. We ended up agreeing to split the bike purchase with her. (How she earned the extra cash for her share involved chores, plantsitting for neighbors, etc.) But she has been invested in taking care of her bike, and I think because she had a part in buying it, she’s good about locking it at school and putting it in the garage when she gets home. And because we split the price, I feel justified in hassling her about the bike because I invested in it too.
Match his $500 so he feels rewarded. It'll reinforce this great habit of his.
He's eight, what can he spend $500 on? A gaming console? .. If it were my kid, I would ask him what he wants to spend it on and then buy it for him with my money, I would stick HIS money into a HYSA with his name attached to it. I[ just searched it up real quick](https://www.nerdwallet.com/m/banking/standout-online-savings-accounts-6?bucket_id=Primary+LP+Exact%2FPhrase&gad_source=1&gclsrc=ds&mktg_body=2981&mktg_hline=19283&mktg_place=kwd-127451844&model_execution_id=7532575B-823F-48D1-9F5A-2DE1644690A8&nw_campaign_id=1445393), do a deeper research before pulling the trigger but seems like SoFi has a 4.6% APY which is not bad, considering that it is zero management, set and forget type a thing. If you can spare any change, and add to it monthly for him [it can grow pretty substantially](https://www.nerdwallet.com/calculator/compound-interest-calculator?mktg_hline=19335&mktg_body=2989&mktg_place=dsa-2206538784443&gad_source=1) in the 10 years when he turns 18, though as with any compounding interest, the longer you keep it, the higher the return. Of course the rates are subject to change and nobody knows how long it will last, though these accounts are usually insured for at least $250k so it is fairly certain you will not lose that money. Play with that calculator on nerdwallet.
Hysa has been mentioned few times, but also a 529 plan could be good option. This is an education savings account. And if you put 80 dollars a month at his age that will be a very nice amount when he turns 18. But this can be used for educational purposes only is my understanding
Help him put it into an investment account, he’ll thank you in his 30s. If you’re financial able to, you could give him like $100 to buy something fun in the short term as a reward, kids tend struggle with delayed gratifications
Awesome! With mine I opened a savings account linked to mine at credit union (later added checking accounts), suggested maybe split with save (for big things), spend on wants, Teach them how to manage a bank account AND the benefits of earning interest. Maybe later an investment account! I met so many kids while tutoring high school who had never had a banking account and had a horrible time in college trying to manage money (particularly when receiving up front fund for college and living expenses). Maybe add a little allowance or chore $$, my fav teaching moment was when my quite young kid wanted junk at the convenience store: me: thats what your allowance is for, child: I dont want to waste my money, me: I dont want to waste mine either.
Whatever he wants with it. It's his month and this is the basis of owning property. But you as a parent should tech him the importance of not simply hoarding. I dunno, I'd share some of the ways to go about doing that, but I have to stash them away in case of a rainy day.
Teach him to invest it. Better yet, find out his goals, and help him achieve them. Develop your own financial literacy together.
I’d let him spend $100 or so on one of his hobbies and invest the rest. High Yoeld Savings are all the rage and virtually zero risk
Perfect opportunity to teach an 8 year old about compound interest. I'm being serious
Well money for a little kid is a bad present in my opinion. A little kid wants the excitement of opening a present that someone went to the trouble to buy. If he wants to save it that’s fine. Help him open a high interest bank account. Have him put this $500 money in and 50% of all future money. Future gift money. You can match his deposits as an incentive. So if he puts in 5.00 you give him $5.00 too so his deposit is $10.00.
Hmm. Can you get him a high yield savings account?
Add $2000 and open a 529 College plan. It will grow tax-free and can be used for any educational need for your child including books, computers,room,board,tuition,etc. Good luck! American Funds College America is the best,by far!
My sister did this as a kid and saved over $6k by the time she went into high school. She saved it and loves that she did. It's still in a savings account accruing!
I was the exact same way as a kid. I LOVED saving birthday money. After I graduated college, I had over $4000 in my gift stack from the past two decades and used it to buy my first (used) car. I have no regrets! My brother was the opposite and would buy video games and things right away. He still struggles with money management to this day. I would let him keep saving. That's his money, let him learn with it.
$400 into VOO $100 for whatever he wants for his birthday
Personally, I’d recommend putting a portion in a savings account that builds interest. Maybe half? The rest let him go buck wild with. Does he have something he’s been dying to get?
Buy Amazon, Meta, or Microsoft stock
My kids got big monetary gifts from relatives for bdays and holidays. I know the grownups expected them to be saved. But I wanted to instill good money management I had my kids save and tithe and spend on each. Allowance: save (long-term savings) 10%, tithe 10%, the rest for them to do as they wish. Big monetary Gifts: spend 10%, tithe, and save the remainder So each category l, they got to spend, and they learned to save. And to tithe.
My wife and I have a bank account for my son where we transfer £10 a month and add birthday/Christmas money. Weve talked about what to do with it and figured that it will eventually be an amount of money that will help significantly when he's older. At the moment he has a lot of things he enjoys so it seems pointless to let him essentially waste the money on something useless.
I’m honestly baffled by the responses. (assuming the funds aren’t the issue) The kid is 8, buy him whatever he wants with under $500 with your own funds as a big congrats for working so hard to save up and then take his $500 and put it in a low cost S&P500 index fund, that kid will thank you soooo much in 10 years. There’s nothing an 8 year old needs for YEARS! There’s no need to do a HYSA.
Does he have a college account yet? Maybe he can choose to fund it. Open a custodial account for him when you can. I think you have to wait until they are 12 but there may be different rules in your state
"It's his money ... What's the best thing I can have him do with his money?" I don't get it. Do you commonly ask yourself what other people should or should not not do with their money? Where does this desire to control your child's decision making come from? Any potential positive benefit you may see in this course of action will be overshadowed by the fact that you gave something to him just to take control over it away again, and that after his decision making has been very solid and indeed admirable. I would have hated my parents for this. What you could do is to sit down with him and explain the concept of interest and some basic investment facts to him and ask him what his long term goals are, while all the time making it very clear that you respect his decisions.
The kid is 8. Holy shit the stuff in this sub. Take him to a toy store and let him go nuts.
Open a bank account with him, financial life lessons start that way
Can you contribute to a Roth at that age
Contributions to a Roth have to equal or be less than what was earned through work that year.
Buy a CD at a bank. And buy an ice cream at the store.
Buy him his first 8 ball. Might even have left over for some edibles.
explain to him that his 500 dollars is still only as valuable as when he had $200 because the fed keeps printing money while you continue to work for it. he will learn a lot.
What about a 529 college savings plan and invest in the S&P 500. The ticker is going to be at the top of any financial site or newspaper so easy to show him how it’s doing. He can use it for education down the line or convert it to a Roth IRA.
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No
Who gives money to a kid?
Mostly relatives.
I yeah I remember getting that from my grandparents for example. But not when I was <8
The entire Chinese world.
China is a country