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Lessons for Future Millionaires

by • January 1, 2015 • 2015, Big Kids, Expert Advice, Home Life, January 2015, Money Matters, Teens and Pre-Teens

Giving Kids a Better Understanding of Money and Finances

How do you give your children or grandchildren the right attitude about money? And a good financial start? While you can gift your child up to $14,000 a year tax-free, consider these options, wrapped up with financial lessons.

Roth IRAs. If your child has a job, why not encourage saving for retirement with one of these accounts? Your child can contribute to the Roth IRA, and so can you. An individual can put up to $5,500 in a Roth IRA during a single year, but you cannot contribute more than the child or grandchild will earn annually from his or her job.

529 plans. These are state-based college savings accounts, and federal laws now make all investment gains in these plans tax-free (provided you use the money for education). Each year, a married couple can put in up to $28,000 per beneficiary without triggering gift taxes. Plans vary by state and you do not need to choose the plan from your state.

Stock. Grandparents and parents might think about gifting stock shares from a well-known company to a child – preferably, a company the child knows about and has an interest in. Over time, a child can follow the progress of the stock and the company, and learn lessons about the economy and the markets.

Computer games. Consider The Sims 2: Open for Business, a computer game in which a child can set up and run a mock chain restaurant, hair salon, fashion boutique, or almost any other kind of small business – even a lemonade stand. Most likely they’ll have fun and not even realize they’re learning valuable financial lessons.

Most importantly, start talking candidly to kids about money as early as possible. Too often children have little or no information about finances until they’re forced to deal with them. By sharing your knowledge now, you can take the fear out of financial matters and help your child plan for a more secure future. M

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Securities and advisory services offered through National Planning Corporation (NPC), member FINRA/SIPC, a Registered Investment Adviser. Integrated Capital Management and NPC are separate and unrelated companies.

These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information. 

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