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How to make sure kids don’t waste their holiday cash


Don’t underestimate that $20 bill your child got in a holiday card this year. Put to use, it can teach them a lot.

The start of the new year – and this round, new decade – is a good time to teach your kids about the power of compound interest and the dangers of debt. Experts say the best way to make these lessons stick is to put them into action.

Don’t worry about beginning too early. Some of our financial behaviors are formed by the time we’re 7 years old, according to a study by researchers at the University of Cambridge.
Here are some steps to help your child be financially savvy and secure in the future.

The investment accounts, which are named after Section 529 of the Internal Revenue Code, are offered through states to encourage people to save for college.

The main benefit: withdrawals put toward qualifying education expenses are tax-free.

The advantages of the accounts are hard to overstate. Studies show that children with the savings plans are more likely to attend college.

And if you start to contribute to a plan at your child’s birth, about a third of your savings goal could come from investment earnings alone, according to calculations by Mark Kantrowitz, publisher of

You’ll need to open a separate 529 account for each child, Kantrowitz said.

Aim to save $250 a month for an in-state public college, he said, or $550 a month for a private college.

It might be hard to get your 8-year-old excited about such a far-off goal. “Delayed gratification is a difficult concept for adults, much less kids,” Kantrowitz said.

Still, explain to them that you’re saving to help them fulfill their dreams, whether that’s to become an astronaut or to save the planet…Read more>>