Saving Strategies You NEED To Know!

Are you ready for the next question? Yes, ma'am. This is from Stephanie. She says, do you have any recommendations for how to save for a child's future wedding? Our daughters are 10 and 7 years old. A custodial brokerage account, a high-yield savings account. What do you think? I mean, this brings up the broader question of long-term savings that aren't retirement, you know, like for your kids. What should they be thinking about? How old, 10 and 7? 10 and 7. That's great. Brent, I'd be curious, right, obviously, because your kids are older than my kids. How have you approached this? And I'll talk about how I've approached it. We'll see if they're similar or different. Now, Stephanie, we have to do the right thing. And to remind you, in the financial order of operations, this would definitely fall under a step eight. Prepaid future expenses, which a wedding is. Abundance goals is the good time rock and roll name for it. But here's where, and by the way, I did this with both of my daughters, is because, you know, the favorite account out there is we'd love to have Roth accounts for our kids. But remember, they have to have earned income to do that. So, you know, you're not going to be able to start with that type of account. There's also 529s that are great for education funding goals. And I would encourage you to look there if you want to make sure you're maximizing all the education. But there will come other goals. And you gave the example of a wedding. Some people also like to help with that first down payment because, you know, affordability of housing is not exactly getting easier. And if you want to save for those type of future events, I do like custodial accounts. I mean, I know I set up custodial brokerage accounts for both of my girls. And then I started off, I'm trying to remember if it was $100 a month. I think it was an event. At some point, it might have been 50. But at some point, it's gotten up to, I never went beyond $200 a month. And what I find amazing, Stephanie, is that these accounts, just like everything else, because I did let them automatically buy into index funds every month. It's really amazing where they are now. And all through just the good behavior, it wasn't a ton of money. The big heavy lift is actually an army of dollars being invested, growing upon themselves through the power of compounding growth. So that's kind of hearing the feedback and the items that I just covered, that's probably where I would do some due diligence. Yeah. So my strategy is just a little bit different. Same type of behavior, just the method and mechanism that I use is a little bit different. You know, I've got two of my three kids are girls. I'm planning on at some point, Lord willing, having to pay for two weddings. And in my mind, the wedding is going to be a gift from me to them, to the newly wedded couple. But my guess is it's probably going to happen after the age of 18. Well, one of the issues that I think there is when a child becomes 18 and they're in an UTMA account, the dollars in the UTMA account technically become their dollars at age 18. Nothing wrong with that. And I'm certain that I probably will use UTMAs at some point in the future. My daughters decide they want to start saving and putting money to work. And if we're not doing custodial ROS, then we may do an UTMA account. But specifically for an expense, I know that I'm going to bear. This is a step eight abundance goal that I'm going to bear at some point in the future. I'm just saving for that in my brokerage account. Those dollars are building up my normal after-tax fluid-liquid brokerage account so that whether my daughters get married at 24, 34, or 44, those dollars will be there in my control that I can then deploy. I want to let the UTMA account be something that they are participating in with me as opposed to something that I'm just funding for their benefit on their behalf. In my mind, when I think about weddings, that's the way that I approach that. But I love UTMAs and I think they're amazing tools, especially if you're going to use it because you said your kids are 10 and 7. This is a great time to start talking with them about how money works and how to make wise financial decisions and how you can put money to work. Because if you do open up an account and you just start putting birthday money in there or chore money in there, whatever kind of money in there, and letting them see that and talk to them about what's happening to it and how compound interest works, it's going to be amazing. Those lessons they learn at 10 and 7 are going to take them through 13, 15, 17, 20, 30 years old, and you will have started that conversation now, which I think is amazing. I do think it is important to have the conversations because I'll just go ahead and tell you the rest of the story is when your child does start working that first job. Once again, I remind everybody or encourage everybody, get your kids in fast food or food service as soon as they possibly can so that way they see how crazy the general public is. And that's good. They'll also figure out how to start appreciating hard work and all the other good things that go into building success. But when my daughter started babysitting and then she moved on to Chick-fil-A, we started doing a dollar for dollar match into her custodial Roth account. Now, here's why I'm bringing this up with Stephanie's question is that if you use the same custodian that you set up the custodial Roth account, when you set up user ID and password so your child who's now involved with the process can track their custodial Roth and all their contributions. Because what I loved is that my daughter was coming into more money. She would be like, hey, is it okay if I give you this so that I can get more money into that account? And I loved encouraging, but I also had to have because as soon as we set up the user ID and password, she saw that custodial account. It's tied to her social security number. So that's why it is important to have good conversations about how money works, what's expected, what kind of the context of what money it can and cannot do for you. So that when she sees it, she was empowered by, man, this is great. And she actually went to moneyguy.com slash resources, played around with our wealth multiplier tool and get really excited. Then when you're thinking an account about the custodial Roth, plus also this savings account for the future, that's a positive thing, but you just don't want to have it be a surprise. You have this big, you didn't realize when you're setting up that Roth account that they could see their custodial account too. You just need to be aware that that's an unintended consequence sometimes. That's why education and involvement is very important. Teach your children to be good with money. Love it.