Kids Ain't Cheap

Why You Shouldn’t Pay for Braces in Full to Save

January 20, 2022 | Leave a Comment

From about the time my oldest was six, I knew that he would need braces. His teeth were cramped and crooked. We were on a tight budget, and I was concerned about the cost. When our oldest was 11, our dentist suggested he get a consult with the orthodontist. The orthodontist told us what we already knew—he would need braces, and it was going to be expensive. When the orthodontist gave us the various payment options, I saw that there was a discount if you paid for the treatment upfront. After much investigation, we learned there are several reasons why you shouldn’t pay for braces in full to save.

How Much Do You Save by Paying in Full?

In our case, we would have saved $150 off the total $5,000 cost of braces by paying in full.

Why You Shouldn’t Pay for Braces in Full to Save

We decided not to pay in full for several reasons.

Impacts Your Finances

Because we were on a tight budget, paying $5,000 out of pocket at once would hinder our finances. We couldn’t justify upsetting our finances and struggling for a few months financially to save $150.

Payment Plan Is Available

Many orthodontists have payment plans available. These payment plans often are offered at zero percent interest. We paid our orthodontist a $500 down payment and then paid $125 monthly for 36 months. The monthly payment was small enough that it didn’t affect our budget.

We also had a flexible spending account, and each month, we submitted the $125 payment for reimbursement.

Had we paid for the braces in full, we wouldn’t have been able to get all of the money reimbursed from our flexible spending account because those have a yearly limit (currently $2,850).

The Orthodontist May Close His Practice

When we researched whether we should pay for his braces in full, someone warned me that the orthodontist might close his practice while our son was getting treatment. If that happened, all the money we paid upfront would be gone.

I listened to the advice but didn’t think this was a serious concern. How many orthodontists suddenly close their practice? My son completed his orthodontic treatment successfully.

Then our oldest daughter got her braces with the same orthodontist. One year into the pandemic, he pulled me aside to tell me that his business had taken a hit and he was closing down his practice. Thankfully, we hadn’t paid upfront with our daughter, either. I can’t imagine being out all that money, but now I know that unforeseen circumstances can arise, and orthodontists can and do close their practices.

Final Thoughts

If you’re a bargain shopper, you may like the idea of saving some money by paying in full for braces. However, we learned you shouldn’t pay in full for braces to save because you can’t fully utilize your flexible spending account. More importantly, your orthodontist may go out of business as ours did during the pandemic. Then you would have lost all of the money you paid upfront, which is no savings at all.

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Financial Benefits of Optimally Spacing Childbirth

January 6, 2022 | Leave a Comment

The average American family has children spaced 2.5 years apart. But is that ideal? What are the financial benefits of optimally spacing childbirth?

Financial Benefits of Optimally Spacing Childbirth

People argue about what is the optimal time between children. Here are some of their arguments for having kids close together and having them four or more years apart.

The Financial Benefits of Having Kids Close Together

Proponents on this side have some good arguments as to why having your children spaced close together is good.

Initial Costs for the Second Child Are Minimal

Because your kids are so close together, you have everything you need for the second child. You don’t need to buy more baby clothes or baby gear because you already have everything you need from the first child.

Parental Careers Are Less Interrupted

If one parent chooses to stay home to care for the children, she doesn’t have to stay home as long if the children are spaced closely together. If your children are only 18 months apart and you want to stay home until they’re both in preschool at age 3, you are only out of the workforce for 4.5 years. However, if you have kids four years apart, in the same scenario, you’re out of the workforce for seven years.

You Get Discounts with Multiple Children

Proponents of having kids close together acknowledge that you may face large expenses at once, such as daycare and college. However, these parents note that you’ll get a discount. When you have two children at the same daycare, you likely get a percentage off the second child. If you have two kids in college at the same time, you’ll receive more financial aid to offset the added expense.

The Financial Benefits of Spacing Kids Four Years Apart

Others argue to reap the financial benefits of optimally spaced childbirth, children should be four years apart. These are some of the benefits you reap with larger spacing.

Only Pay One Large Expense at Once

The best benefit of having kids four years apart is that you pay big expenses one at a time. Some of the largest childhood expenses are daycare, braces, and college. Because your kids are four years apart, by the time your first child finishes daycare, your second begins. The same is true with braces and college. While these expenses remain constant for eight years since you’re paying them back-to-back, you never face the expense of having two in braces at once or two in college at once.

While those who have kids only two years apart argue that there are discounts for daycare and college when you have two children enrolled, you’re still paying more than if you only had one child enrolled. If you space your children four or more years apart, you avoid a few intense years of high expenses that those with kids close together experience.

My Experience

I have three kids. The first two are 4.4 years apart, and the second and third are just 17 months apart. If I look from a strictly financial standpoint, the first two are optimally spaced. The oldest was able to attend preschool while I worked full-time and my husband went to graduate school full-time. However, after we had the last two 17 months apart, we could no longer afford for me to work. The cost of two kids under two in daycare in one of the largest cities in the United States cost almost as much as my salary. I would have been working to pay for my younger two kids to be in daycare.

Likewise, my oldest was out of braces when my middle child started them, so we only had to pay for one child at a time. (Thankfully, my youngest doesn’t need braces!)

Other Factors to Consider When Spacing Children

However, our choices in life are rarely entirely about finances. When determining how to space your children, you also need to consider other factors besides money.

Non-Financial Benefits of Having Kids Two or Fewer Years Apart

Despite the added expense, there are good reasons to have kids two or fewer years apart.

Children Tend to Be Closer

While this isn’t always true, children who are closer in age tend to have a closer relationship. If you want your siblings to rely on one another and be friends, you have a better chance of that happening if your children are closer in age.

They Have Similar Interests

If your children are close in age, they are developmentally at the same stage. If you want to take them to see a movie, your pick is easy because they’re at the same developmental age. This isn’t true if their sibling is four or five years older. In that case, picking an activity that is age-appropriate for the younger child often means the older child is bored because he’s no longer at that developmental stage.

Non-Financial Benefits of Having Kids Four or More Years Apart

In my experience, having children closer together is better from a non-financial standpoint. My younger two have a close relationship. However, my oldest and middle child, who are 4.4 years apart, only recently started developing a closer relationship as the middle one reached her teen years and started to share interests with her brother. My youngest still does not have a close relationship with the oldest.

However, there are some non-financial benefits to spacing kids further apart.

You Have More Time to Recover

When kids are spaced four or more years apart, you have more time to recover from pregnancy and the sleepless newborn days. Honestly, when I had two kids 17 months apart, the first two years are a blur because I was so exhausted. That didn’t happen when my second joined the family.

Easier to Give Each Child Attention

With this age gap, giving each child individual attention is easier. You can read and play with the older child while the younger one naps. You can play with the younger child while the older one plays independently.

Final Thoughts

If you space your kids four years apart, there are financial benefits of optimally spacing childbirth. However, your decision when to add to your family is rarely only a financial one. You should consider all factors to make the best decision for your family.

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6 Frugal Activities for Kids During Winter Break

December 23, 2021 | Leave a Comment

Kids around the country are enjoying winter break. While the early days of winter break are likely busy with holiday activities and preparations, the last week can be quiet and a bit boring. If you want to find frugal activities for kids during winter break, look no further than our list. These activities can help your kids relax, have fun, and spend time building memories with family.

Frugal Activities for Kids During Winter Break

Have a Movie Marathon

If your kids don’t get a lot of screen time during the school year, take one day this break and have a movie marathon. Pick two or three movies the family wants to watch, and then camp out on the couch with yummy snacks and the blinds closed. Have a great time watching and then discussing the movies.

Have a Chopped Challenge

Have your kids watched the cooking show, Chopped? If so, why not have a kids’ Chopped challenge at your house. Give the kids three or four items with which to create a meal. Then, you decide which of the kids wins the competition. (As a bonus with this activity, you have one less meal you have to cook this week!) If your kitchen is small, you may want to have one child cook one night with the ingredients and another child cook the next night.

Decorate Cookies

Who says Christmas cookies have to stop when Christmas is over? Have a fun afternoon making and decorating cookies. Make it extra fun by turning traditional cookie cutters into other objects. For instance, instead of making a gingerbread man with that cookie cutter shape, turn it into something else like a unicorn.

Go Sledding

Some of the best fun I’ve had with my kids is sledding with them. Bundle the family up, head out to the nearest large hill in the neighborhood, and go sledding. Stay out for an hour or two, and then come home and enjoy a nice mug of hot chocolate while you warm up.

Build a Snow Fort

Likewise, don’t send the kids out alone to play in the snow. Instead, go out with them and build a snow fort. You can even take a break for a snowball fight. The kids will love you spending time with them and being a kid again with them.

Play a Board Game

Photo by National Cancer Institute on Unsplash

During the busy school week, you may not have time to play games with your kids. During winter break, set aside some time to play board games with your kids. Some of our favorites include 10 Days in the USA, Battleship, Yahtzee, and The 5-Second Rule.

Final Thoughts

While taking a family vacation during break is nice, don’t feel bad if you don’t have the money to do so. Your kids will appreciate you spending time with them and enjoying any of these frugal activities for kids during winter break.

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Free Games to Teach Kids About Coding

December 9, 2021 | Leave a Comment

My 11-year-old wanted to take a coding class this year. We signed up for one with a virtual school in our state. I have a long dislike of computer science, so I was happy to outsource this subject from our homeschool. To my surprise, she LOVED coding and is taking the second installment of the class next semester. However, she wants to do even more, so I searched for free games to teach kids about coding. Because coding is popular, there is no shortage of games available.

Scratch

My daughter’s teacher had the students spend some time on Scratch, a free coding community. Since then, she has spent several hours a week immersed in the Scratch world. Students can create games and animations and share them with others in the community.

This site is for kids ages 8 to 16 and is free.

Blocky Games

Blocky Games offers several games that teach programming. If your child has trouble with internet access, you can download the material, so he can work offline. Like Scratch, this site is for ages 8 to 16 and is perfect for beginners. It is also free.

Tynker

Tynker offers 20 games for free, which will give you and your kids a chance to try out this site. This site has a broad appeal for ages 5 to 18.

If you decide you like this site enough to pay, you can access all levels and 65 courses for around $10 a month. This popular site is used by more than 50,000 schools and 32 million students!

Code Combat

Your child can play in Code Combat for free with a class code from his teacher, or he can play as an individual. This game has several levels; you have to be proficient in one level before moving on to the next one. The first level, Kithgard Dungeon, teaches syntax, methods, parameters, strings, loops, and variables.

Code Combat is for ages 9 to 16. Kids can play alone or with others. Like Tynker, this is a popular site. It is used in 190 countries with 20 million kids!

Code Monster

This intuitive program helps teach your child Javascript. Perfect for ages 8 to 12, simply click on the monster to get instructions. The monster teaches your child coding through a variety of actions such as increasing the numbers in a code to see what happens next.

A nice feature of Code Monster is that you only need internet connection to load the website. After that, you can use it completely offline.

Final Thoughts

If your child wants to learn more about coding, encourage her! Then, help her get started with some of these free games to teach kids about coding. She may find a fun hobby, or she may have a passion that develops into a career like web design, computer programmer, or computer systems engineer. The demand for these jobs is expected to increase in the future, which makes coding an excellent skill to learn.

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Save Money on Entertainment with Reciprocal Museum Passes

November 25, 2021 | Leave a Comment

Recently, I took my children to our local art museum. It was the first time we went, and we enjoyed it. Buying a yearly pass was twice the cost of one-day admission, so we decided to upgrade. We knew we would be back, so the passes will pay for themselves after our next visit. But then, I found out the passes offer us reciprocal admission to many museums around the country! Those passes will save us a lot of money and give us an affordable entertainment option throughout the year.

What Museum Associations Offer Reciprocal Passes?

The museum we bought the yearly passes for is part of the North American Reciprocal Museum Association (NARM). There are over 1,175 museums in this network, all of which we have free access to with our museum pass. These museums are in the United States, Canada, Bermuda, El Salvador, and Mexico. In our state alone, there are 12 museums to which we will have access.

NARM is just one of many museum networks. You can also choose from the following organizations:

Art Museum Reciprocal Network (AMRN),

Association of Science and Technology Centers (ASTC) Travel Passport

Time Travelers (This pass offers free entry to some participating museums, but others only offer discounted entry with the pass.)

Smithsonian Affiliates, (Note that not all museums on this list choose to participate in the reciprocal agreement. While there are seven museums on this list in my state, only one participates in the reciprocal agreement.)

American Horticultural Society (AHS),

Association of Zoos and Aquariums (AZA), (Membership gives you 50% off at most zoos and aquariums on their reciprocal agreement.)

Reciprocal Organization of Associated Museums (ROAM),

Association of Children’s Museums (ACM), (Membership gives you 50% off the 200 children’s museums in the reciprocal agreement.)

Museum Alliance Reciprocal Program (MARP)

How to Save Money with Reciprocal Museum Passes

If you want to get the most for your money, choose the reciprocal program your family will use most frequently.

As mentioned above, read the fine details. Some reciprocal programs get you free admission to any of the participating programs. Others only offer discounted admission. Some have many participating museums in your state, others only have a few.

If you’re planning on taking a vacation during the year, check which programs have museums you’d be interested in visiting during your trip. Using a reciprocal pass can be an excellent way to reduce your vacation costs.

If You Can’t Afford a Museum Pass

Save Money with Reciprocal Museum Passes

Photo by Caroline Hernandez on Unsplash

Buying a season pass to just one museum in one of these reciprocal associations can make visiting museums throughout the year extremely affordable. However, some people cannot afford a season pass to even one museum. For those individuals, consider the Museum for All program.

Museums for All offers SNAP (Supplemental Nutrition Assistance Program) recipients free or discounted admission to 700 museums throughout the United States. Where I live, if I go to a local science museum with my three kids, I will pay $30 for admission. However, a SNAP recipient will just pay $12 for her and her three kids to enter, so the savings can be significant.

Final Thoughts

I hope these strategies help you save money on entertainment with reciprocal museum passes. We’re excited we’ll be able to visit our local museum several times this year AND visit other museums in our state that are part of the same group.

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Where to Find Financial Support for Single Dads?

November 11, 2021 | Leave a Comment

When you think of single parents, you likely think of single moms struggling to raise their children and working full-time to support their families. While it’s true there are more single mothers than single fathers in the United States, the number of single fathers is growing. According to Statista, “In 2020, there were about 15.31 million children living with a single mother in the United States and about 3.27 million children living with a single father.” Yet, many of the support programs such as WIC are dedicated solely to women and their children. What financial support for single dads is available?

Where to Find Financial Support for Single Dads

Unfortunately, single dads don’t have specific financial programs for them as women do. Yet, 25% of single dads live in poverty and need financial assistance (Fatherhood). Thankfully, resources are available for any parent living at or below the poverty line.

Food Assistance

One of the most important needs for single parents is providing their kids with enough nourishing food. These programs can help.

National School Lunch Program

You can sign up for the National School Lunch Program at your child’s school. If your household income is below 130% of the poverty level or you receive SNAP or TANF (more on those later in this post), your child qualifies for a free lunch every day. If your household income is 130% to 185% of the federal poverty line, your child qualifies for a reduced-priced lunch.

Summer Food Service Program

This program is run during the summer when school is out and children no longer have access to free lunches. ANY child 18 and under can receive a free meal. No registration is required. Food distribution sites are typically at your local school district. You can go here to find a location near you.

Supplemental Nutrition Assistance Program (SNAP)

SNAP provides money for low-income families to purchase approved foods. To qualify, you must apply at your local state office. Generally, SNAP qualification is based on your income (gross income must be below 130% of the poverty level), your assets, and the number of people in the family.

The Emergency Food Assistance Program (TEFAP)

TEFAP is another safety net that provides food at no cost to eligible recipients. If you qualify for and receive SNAP, you automatically qualify for TEFAP. If your gross income does not exceed 185% of the federal poverty level, you also qualify.

To apply, you must go to your local TEFAP distribution site, bring your driver’s license, and answer a few basic questions.

Food Pantries

Photo by Aaron Doucett on Unsplash

Another place to go when you’re having trouble providing food for your family is a local food pantry. Most food pantries are allowed to give one family food once a month or sometimes twice a month. Many families take advantage of this when they have a week or so left before they get their next month’s SNAP benefits and they are running low on food at home.

Soup Kitchens

Don’t forget that you can also get a hot meal at your local soup kitchen.

Medical Assistance

Medical care is expensive but should not be neglected. These agencies can help provide financial support for single dads when it comes to medical costs.

Medicare

Medicare is typically for individuals 65 and older, but if you have a disability or your child has a disability, you or your child may qualify for Medicare. (You can learn more about qualifying here.) If you are under 65 and receive Social Security Disability, you are qualified for Medicare.

Medicaid

Eligibility for Medicaid varies based on which state you live in. Medicaid provides coverage for low-income families, qualified pregnant women and children, and people who receive Supplemental Security Income (SSI). To learn more, go to your state’s Medicaid website.

Other Assistance

Besides food and insurance expenses, a single father may have other financial needs depending on his income and family size. These programs are also available to eligible recipients.

Low Income Home Energy Assistance Program (LIHEAP)

Depending on your location, winter heating bills or summer air conditioning bills can cause financial hardship. The Low Income Home Energy Assistance Program tries to fill that need. However, the earlier you can apply, the better. When the program runs out of money for the year, even qualified applicants do not receive funds. On average, 20% of the people who qualify receive the funds.

The applications are accepted and reviewed through your local LIHEAP office. Some offices automatically qualify people who receive SNAP, TANF, or SSI. Others do not, so you’ll need to contact your local office to determine what you need to qualify and how much relief funds you may receive. Some offices also set aside funds to help you with weatherization, so you’ll pay less in the future.

Child Care Subsidies

Child care can be a family’s most expensive bill, often even more expensive than monthly rent or mortgage payments. To assist with this need, the federal government gives each state money to subsidize child care. Go here to see what your state offers.

This program mainly helps low-income families where the parent works full-time but earns less than 165% of the federal poverty level, teen parents enrolled in high school or GED programs, people currently living in a homeless shelter, and those who are unable to work due to a disability.

Final Thoughts

Being a single parent isn’t easy! Thankfully, there is financial support for single dads, but you will have to apply to many different agencies to get the variety of aid available. Educate yourself about what is available and apply as early as possible, so you have the best chance of getting aid. Also, don’t be afraid or embarrassed to take advantage of the available services. Remember, your financial situation may be temporary. In another few years, you may have a much better-paying job and be able to pay for more of your needs on your own.

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5 Ways to Buy Legos at a Discount

October 21, 2021 | Leave a Comment

A few years ago, my daughter began a Lego obsession. She asked for Lego Friends sets for her birthday, and she was surprisingly quick at putting the sets together. Not long after, she advanced to Lego sets for teens like Lego Architecture sets with hundreds of pieces. If your child is a fellow Lego enthusiast, I don’t need to tell you how quickly the prices for these sets add up. Luckily, there are several ways to buy Legos at a discount.

How to Buy Legos at a Discount

You can buy Legos at a discount, but you have to be patient and use one or more of these methods.

Buy on Sale

Yes, Legos do sometimes go on sale. Often, especially during the holiday season or when a Lego model is discontinued, you can find the sets for 20% off. The best places to look are Target, Walmart, and Lego.com.

In addition, Lego.com sometimes offers free small Lego kits when you buy a set from them. Last Easter my daughter got two free, small sets when she purchased a larger one.

Buy at Costco

Costco doesn’t always carry Legos, but they do during the holidays. These sets are cheaper than you can buy them elsewhere, but they do sell out quickly. Keep an eye out for Lego sets in October at Costco.

Join Buy Nothing Groups

If you’re not looking for a particular set but just pieces, consider joining a local Buy Nothing group. People frequently sell large bags of miscellaneous Lego pieces at a low price. This can be an excellent way to start a Lego collection.

Other Things to Consider

You can utilize two other strategies to lower the overall price of Lego sets.

Help Your Child Save for a Lego Set

One of my friend’s sons wanted to buy a Lego Star Wars Millennium Falcon kit. These retail for about $130. My friend didn’t want to spend that much on one set, so she made a deal with her eight-year-old son. If he saved $65 for the set, she would chip in the other $65. She was impressed with how hard he worked and how much he saved to afford the set.

If your child wants an expensive set and you have the money to split the cost with him, this agreement can be an excellent way to teach your child how to save.

Can Sell to Recoup Money

Remember, your child won’t always want to build Legos. When she is 16, she may have outgrown Legos. If she has kept all the pieces to her sets as well as kept the boxes in good condition, she should be able to sell the sets and recoup some of her money, unlike many other toys.

Final Thoughts

If your child wants some expensive Lego sets, try utilizing some of these strategies to save money. But remember, start your search earlier. You’ll likely need some time to buy the Lego set at a discount. You’ll need to search the sales and perhaps offer your child a money matching proposition to be able to afford the larger sets.

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Should Your Teen File a Tax Return for a Summer Job?

October 7, 2021 | Leave a Comment

Getting a summer job may be the first taste of freedom for your teen. She likely now has more money coming in than she did when she was only receiving an allowance. However, with increased freedom comes increased responsibility. Your teen may now also need to file a tax return. Whether she needs to file a tax return for a summer job will depend on several factors.

Should Your Teen File a Tax Return for a Summer Job?

The quick answer is, it depends. Here are a few factors to consider:

How Much Did He Make?

First, consider how much your teenager earned in a year. According to the IRS, if a single filer earned less than $12,550 in 2021, he does not need to file a tax return. (This new amount represents an increase to account for inflation, up $150 from last year.)

However, you must answer another question to know whether or not he needs to file taxes—did he have taxes taken from every paycheck?

Did She Have Taxes Withheld?

When your child starts a new job, she has to fill out a W-4 form. On that form, she has to determine whether or not she will have taxes deducted. If she thinks she will earn less than $12,550 in a year, she can claim “exempt,” and no taxes will be taken out of her paycheck. If no taxes were pulled from her paycheck and she earned less than $12,550 a year, she likely won’t have to file a tax return. To be certain, you can utilize the IRS’ free tool, Do I Need to File a Tax Return?

You may consider having your child go ahead and have taxes withdrawn from her paycheck for two reasons.

First, having taxes withdrawn from her paycheck is a good life experience. When she’s older and working full-time, taxes will be withdrawn. Learning that her entire salary is not her own because her employer will withdraw things like taxes and insurance is a good experience.

Second, some states have different standard deductions. If you live in Arizona and are a single filer, you have a standard $12,550 state deduction just like the federal deduction. However, if you live in Iowa, the single standard state deduction is only $2,130. If your child works in Iowa and earns more than $2,130 in a calendar year, she will owe state taxes if she claims “exempt” on her W-4. If you don’t know what your state’s deduction is, having taxes withheld is easier.

One Exception

An important exception is if your child is an independent contractor, a.k.a a freelancer, and earns a 1099-MISC for his work. If he is a freelancer, he will need to pay self-employment taxes regardless of how much he makes in a year. In this case, he will need to file an income tax return every year.

Final Thoughts

Whether or not your child needs to file a tax return for a summer job depends on several factors. If you’re still not sure, the IRS tool should help you determine the answer.

Getting your child into the habit of having taxes withheld and filing a tax return is excellent practice for adulthood and the responsibilities that come with it.

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Save Money & Keep Kids Entertained by Rotating Streaming Services

September 23, 2021 | Leave a Comment

If you’re a parent, you probably feel like your life is constantly juggling between caring for your family and working to make ends meet. It’s easy when it comes to entertainment because the options are endless, but this can add up in cost quickly. So if you want to save money and keep kids entertained at the same time, you can try rotating streaming services. With a variety of movies and TV shows, you’ll have something new every week without going over budget!

The Benefits of Rotating Streaming Services

Rotating streaming services offers three main benefits.

Save Money

If you have several streaming services, the costs can add up quickly. In our family, Netflix is approximately $15 a month, Hulu is $7 a month, Disney+ is $8 a month, and Peacock is $5 a month. Sure, each service is not unreasonably priced, but together, they add up to $35 a month. Keep in mind, we get the most basic of the basic services. If you want to pay more to avoid commercials or bundle streaming services, you’ll pay more.

Recently, we cut Netflix and Peacock, so our monthly streaming costs went down to $15 a month. The $20 savings doesn’t sound like a lot, but over the year, we’re saving $240.

Limit Boredom

How is this for irony? When my kids had all four streaming services, they constantly told me there was nothing to watch. Then, I cut Netflix and Peacock about four months ago. They dug around Hulu and Disney+ and found shows to watch. They were happy for about three months.

Once they started complaining, I cut Hulu and reinstated Netflix. They were so excited because during the time we weren’t paying for Netflix, several new seasons of their favorite episodes had dropped. Now, they are happily watching their favorite shows in the evening. However, my daughter is already planning when we should cut Netflix again and reinstate Hulu.

Maximize Your Usage

When you have many streaming services, your kids can just gloss over what’s available. Because they have so many choices, sometimes they feel overwhelmed. I know as an adult, I used to feel overwhelmed by 200 cable channels when we had cable. Because there’s so much available, you don’t know where to start.

When you limit streaming services to two as we did, your kids have to dig deeper into each service to find shows they want to watch. This allows them to maximize what they get out of each streaming service.

Then, when it’s time to rotate, they can dig through the next streaming service. My kids have found shows they enjoy that they never would have tried if they continued to have so many streaming services available.

Final Thoughts

Streaming services are a luxury. Because each one is affordable, many people buy several streaming services at once. However, limiting and rotating streaming services can be better for your wallet and your kids. You limit their boredom, and they can maximize each streaming service. If you haven’t tried rotating streaming services yet, I highly recommend it.

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Better Ways to Gift Money to Children

September 10, 2021 | Leave a Comment

Children are the future, and one way to invest in them is financially. Gifting money to the children in our lives can help not only this generation but future generations. This generational wealth can cause a positive ripple effect in a person’s family tree. Manage your money correctly, so you can help the next generation. Then they can help the generation after them. However, you must first determine the best ways to gift money to children.

5 Ways to Gift Money to Children

There are five different ways to gift money to children. You might decide on one way or utilize several. Which you choose depends on your goals for the money, the children’s interests, and the children’s ages.

Give Cash

The most basic way to give money to kids is to give them cash.

Pros

Giving cash is desirable for two main reasons. First, it’s easy to do. Second, the child gets instant gratification. I still remember how much I loved getting cash when I was little because there were so many possible ways to spend the money!

Cons

However, there are also cons to giving cash. Because the money isn’t invested, it can’t grow and earn interest as it could if you gifted the child money in an investment vehicle. Second, you don’t want to give the child too much cash at once. A cash gift is usually suitable if it’s a smaller amount, which isn’t helpful if you want to gift more money. Third, most kids like to spend cash, so they may not keep it long term as you might want them to.

Contribute to a 529 College Savings Plan

One of the best ways to gift money to children is through a 529 college savings plan.

Pro

The major pro with this strategy is that the money can grow throughout the child’s entire childhood. Whether you give a lump sum early in the child’s life or give yearly to a 529, with compounding interest, this gift could pay part or all of the child’s college expenses. Also, there’s no limit to how much you can contribute annually to a 529 plan. However, if you gift more than the allowable yearly gift amount (currently $15,000 for 2021), you will need to pay a gift tax.

Con

However, there is one major con to this type of gift. If the child doesn’t go to a private school sometime during kindergarten through 12^th grade or doesn’t go to college, the child can’t withdraw the money tax-free. Instead, he’ll have to pay a tax penalty since the child won’t be using the money for an educational expense.

Contribute to a Roth IRA

For a less traditional gift, consider giving to the child’s retirement. You can do this by contributing to the child’s Roth IRA if the child is employed and making some money yearly.

Pro

Imagine if you had put money in a Roth IRA when you were 16, and it had grown for 50 or 55 years? The pro here is easy to imagine—compounding interest.

Even if you made one lump sum contribution to the child’s account and didn’t contribute anymore, at retirement, the child would still have easily 20x more money than when you made the initial contribution. That’s a gift that keeps on giving.

Cons

There are a few cons to this gift. First, you can only contribute as much as the child makes working. So, if the child only makes $3,000 in a year, that is all you can contribute to their Roth IRA. The second problem is that even if the child makes $10,000 a year, you can only contribute to the maximum yearly contribution limit of $6,000 a year for a person under 50.

Contribute to a UGMA

A more flexible choice is to gift the child money through a UGMA (Uniform Gift to Minors Act) account.

Pros

If you’d like to gift a child a large amount of money, this is a perfect account to do that because it has no limit. In addition, the money is not earmarked for one particular expense such as a 529, which can only be used for educational expenses.

Con

The major con with this type of gift is that you have no control over the money when the child is of age. If he uses the money to buy an expensive sports car, you can’t do anything about that. Also, once you give the gift, it is irrevocable. Make sure you want to gift the money before you do. Finally, as the money is technically the child’s, the account can affect her ability to get financial aid when she goes to college.

Contribute to an ABLE Account

If you have a child or grandchild with special needs, consider contributing to an ABLE account for them. A child can have an ABLE account set up if she was younger than 26 when the disability was diagnosed. She can open and maintain the ABLE account at any age.

Pros

Many kids with disabilities receive government services and funding. While this is a blessing, this funding often comes with strict rules. For instance, once the child is an adult and working, she cannot make more than a certain amount or she loses services and funding. However, relatives can put money in an ABLE account for the child to use. This money does not count against the amount they’re allowed before losing benefits.

Cons

The con is that the child can only receive $15,000 per year in her ABLE account. So, if you’re the grandparent and the child’s parents contribute to her ABLE account, you need to coordinate with them so that the child only receives $15,000 total in a year.

Final Thoughts

Investing in our children is one of the best things we can do for our kids and for our future generations. If you are a parent or grandparent or even an aunt or uncle, you can use one or more of these five ways to gift money to children. Which way you choose depends on the child’s needs and goals.

Best Ways to Save on College Needs

5 Ways to Prepare Kids for College

Editors Note: If you are investing for your children, you might consider actually teaching them how to invest. A good place to start is a very good article by How Much Is That In Tacos titled “Teach Kids About Early“. Check it out of you have a chance.