Recently, I asked the BuzzFeed Community to share the best ways to set a kid up for financial success, and their answers are fascinating. Of course, this is not financial advice, just an interesting thing to read about; so, please, enjoy!
Also, of course, all of these ideas are things people do when they're able to. And yes, it's nice to be able to. So, with that, read away:
1. "My mom added me to her credit card when I was 16. It was mainly so I could run errands for her without trouble since we have different last names, but it helped establish my credit with a high enough score that I was able to buy a fairly nice car at 22 and a house at 27 without a co-signer. Granted, this was VERY different economic times and both of those things are way harder now, but I still plan on doing the same for my 6-year-old son when he’s older to give him as good of a starting point as I can."
2. "This will be the last year we buy Christmas presents for our 21-year-old son. We're going to encourage him to open a Roth IRA or similar this year, and for Christmas 2024 we will deposit the amount we would have spent on presents for him [into that account]. As an incentive to set up automatic deposits, we'll offer to match any amount he deposits over the year."
3. "I all but forced [my son] to take a few college classes before high school graduation. He did very well, [and] those grades saved his college scholarship when he earned a D in a course. I fronted the money for him to retake the course, but [told him] he had to repay me."
4. "I don't know if this counts, but I used to raid my mom's old clothes for vintage [clothing] and she said she saved them for us. I recently cleaned my closet of all the clothes that I'm never going to fit into again and donated most of [them], but set aside the best pieces for my daughter so she can have her own vintage closet one day, or she can sell them on the apps (because I'm never going to). I also decided she only gets second-hand [clothing] until she stops growing, so I've put around $50 a month since she was born in a high-interest savings account instead, and [it totals] more than my own savings account now. I can't touch it, and she will still need student loans one day, but I'm teaching her that SHE saved the money by not buying [her clothes] new."
5. For younger kids: "I met a woman in a store once who had what I thought was an interesting strategy: she gave her kids an allowance. [And] when they wanted to buy something, they had to use the allowance. They counted their money to make sure they had enough for the item, then while the woman watched, they would take the item to the cashier, interact with the cashier, count out the money needed for the item being purchased, and pay for it."
6. "My parents set me up for college, and [were able to pay] for the whole thing. Granted, they insisted that I had to go, no other options. But I’m glad that I did, even though I didn’t want to at first. I was able to get a BA in psychology and then paid for my own Master's Degree so I could become a therapist. It means everything to me, I love what I do. It’s my passion and my purpose in life. I didn’t always make great money like I do now, but there’s nothing else I’d rather do."
7. "I don't have kids, but my father was a consumer lender when I was a kid and has been working in the loan department at a bank in some form my entire life. So growing up I always had his knowledge and his lectures about how credit worked, how your credit score is determined (aka, the 5 'Cs' of credit), how everything works together, and why it's all so important."
8. "My eldest son started working at 14 years old, just a clerical job, work from home. After school he would put in a couple of hours, then more on the weekends and when he was off school. All his earnings go to a Roth IRA; he's reached the yearly contribution limit for 2023! He's allowed to spend the difference, but he doesn’t. Now, at 16 years old, if he stopped contributing today towards this Roth IRA account, at a 10% rate of return, retiring at 65 years old would get him well over $700K."
9. "Building their credit [as a minor]. [I added] them as an authorized user on my credit cards, which will lock down their credit with the 'big three.' I don't plan on physically giving them a card, and I pay the balance in full weekly. They already have longer credit history [that's longer] than they have been alive, with a 750+ credit score."
10. "We invested in an education savings plan starting when the kids were born. We’re in Canada, where the Registered Education Savings Plan gets an immediate 20% match from the government, so we were able to boost our savings really quickly! It won’t necessarily be enough for all of their education expenses, but every bit we were able to save will be a gift when they are ready to choose their post-secondary path."
11. "We set up a savings account when our (only) kiddo was born and set up an automatic transfer of $20 to it it every payday. [That amount is] big enough to add up but not big enough to hurt the budget. That, combined with any checks sent for him for Christmas and birthdays, means my 5-and-a-half year old has over $6K to his name."
12. "Use compound interest in the kids favor: when they are born put some money into a new account which is invested in stock market index funds. For example, putting $100 into their account every month for two years."
13. "We are millennials. Many of our friends had parents who bought them condos right out of college. [Their parents] paid their down payment and a fraction of the mortgage until [their kids] could afford it themselves. Most were able to sell those condos for two or three times their purchase price when we were of age to be getting married, and they used that to start their families and buy their own homes. While most of them fail to recognize the leg up their parents gave them, we see it, and that's why we plan to pay off our house so that our children can have something to live in for free or we can sell and use the proceeds to help them purchase their own first homes one day early in adulthood so they can watch it appreciate before they have their own families."
14. And finally, one that I know you're all itching to comment: "Have wealthy parents."
—Anonymous
Well, there you have it, from tried-and-true to nifty and new. I hadn't even thought about some of these before! If you have anything to say about setting kids up financially (whether you are the parent or the kid in your scenario), let me know down below! Or, if you like, you can share in this anonymous Google Form. Your story may be featured in an upcoming BuzzFeed Community post!
Please note: some responses may have been edited for length and/or clarity.