This post is the ninth in a series of 10 that covers each point of the MSN Money top 10 mistakes and hopefully will elaborate and add a little new parent thinking to the equation.
Money Mistake 9:
Saving in a child’s name
Many parents try to eke out more tax savings by opening a savings account in their child’s name under the Uniform Gifts to Minors Act.
There are several reasons to save for your child’s future, but saving for your child in your child’s name can cause problems. The most obvious of those problems is that the money becomes wholly the childs when the child turns 18. Another of the pitfalls of saving in a child’s name is that the money counts agains the child when the child applies for fianancial aid for college. A 529 or Coverdell would be better option if the money is for college.
This is another of the mistakes that I very well could have made. My wife and I will be sure to sock money away for our child if at all possible, but in our names not theirs.
Part 8: Overlooking tax benefits for parents
Part 10: Oversimplifying the work vs. stay-at-home question