Custodial accounts are often used as a way for parents or relatives to set aside money for a child’s future or make it easier to transfer generational wealth. Understanding custodial accounts is essential for anyone looking to secure a child’s financial future or efficiently transfer generational wealth, making it a pivotal topic for financial planning and long-term stability. Custodial accounts serve as a powerful tool in building a solid financial foundation for the next generation.

In this article, we’ll cover:

• How custodial accounts work
• Types of custodial accounts
• Benefits of custodial accounts
• Disadvantages of custodial accounts

How do custodial accounts work?

Custodial accounts allow an adult to open an investment account on behalf of a child and add money and other assets to it. This allows the adult to transfer assets to a minor without the cost and complexity of establishing a formal trust. While parents or other relatives commonly open custodial accounts for children, any adult is allowed to open one for a minor beneficiary.  

Once it’s set up, a custodial account works just like any other type of brokerage account. The custodian can add money and manage the investments; they can even take money out of the account as long as the funds are used for the minor’s benefit. 

Income from a custodial account is taxable, just like income would be from an adult’s brokerage account. If the account generates taxable income, the custodian is usually responsible for filing a tax return on behalf of the child and paying any taxes owed. The custodian may be able to report a custodial account’s taxable income on their own tax return instead if they meet certain conditions defined by the IRS.  

Though the custodian makes the decisions about how to invest the money, the assets in the account belong solely to the beneficiary. The beneficiary cannot withdraw any of the funds until they reach the age of legal adulthood, also called age of majority, which varies from 18 to 25 depending on the state and type of custodial account. At the age of majority, the beneficiary takes control of the assets. 

Contribution limits and tax treatment in 2023

When it comes to contributing to custodial accounts, you have a good amount of freedom – there are no strict limits on how much you can put in and contribute. That said, contributions may trigger a gift tax if they exceed $17,000 for an individual or $34,000 for a married couple.

It’s important to keep in mind that contributions to custodial accounts are not tax-deductible, which means that they don’t provide immediate tax benefits. Additionally, unlike some other investment vehicles, custodial accounts do not offer tax-free growth.

That said, there can be some tax advantages with a custodial account. Because all the assets in the account are the legal property of the young beneficiary, a portion of the income generated by the account is either untaxed or taxed at the minor’s tax rate (kiddie tax rate). This “kiddie tax rate” is nearly always lower than an adult’s rate and can lead to potential tax savings.

As of 2023, the rules state that the first $1,250 of unearned income is untaxed, the next $1,250 is taxed at the child’s rate, and anything over $2,500 is taxed at the parent’s marginal rate.

Investment options

Custodial accounts can invest in a variety of assets, though the specifics vary by account type. Generally, investment options for custodial accounts include stocks, bonds, mutual funds, cash, and other financial assets. UTMA custodial accounts, discussed below, allow for a wider array of investments. 

Types of custodial accounts

There are two main types of custodial accounts: Uniform Gifts to Minors Act (UGMA) accounts and Uniform Transfers to Minors Act (UTMA) accounts. Both types of investment accounts were established by federal laws that states can choose to adopt if they wish. While all states have done so, many have made modifications to the legislation and the specific rules governing the accounts. Custodians will need to understand the details of their specific state’s UGMA and UTMA implementation before making any investment decisions.

Both types of custodial accounts function in the same way. The main difference is the assets that can be held in the accounts. 

UGMA account

Uniform Gifts to Minors Act (UGMA) accounts are a bit more restrictive than UTMA accounts, which we’ll cover next, in terms of what types of investments they can hold. A UGMA account can only hold financial products such as:

• Stocks: Ownership in companies, which can offer the potential for high returns but also come with higher risk.
• Bonds: Loans to governments or companies, providing regular interest payments and eventual repayment.
• Mutual Funds: Professionally managed collections of different investments, offering instant diversification.
• Cash: Money market funds or cash equivalents, which are safer but typically provide lower returns.
• Certificates of Deposit (CDs): Time-bound savings accounts with fixed interest rates and maturity dates.

UTMA account

Uniform Transfers to Minors Act (UTMA) accounts are even more flexible than Uniform Gifts to Minors Act (UGMA) accounts. With UTMA, you can invest in things like real estate, artwork, collectibles, and even things like patents and royalties. This is great for passing down a wider range of assets to a minor.

One of the unique features of UTMA accounts is their handling of gifted assets, such as bonds, that have maturity dates extending beyond the minor’s age of majority. 

For example, let’s say someone gifts bonds to a UTMA account for a child. If these bonds have maturity dates that go beyond the age at which the minor gains control over the account, these bonds don’t automatically become accessible once the minor reaches adulthood. Instead, these bonds or other time-bound investments can keep growing until they reach their maturity dates.

This feature can be pretty helpful for managing investments with longer timelines. So, if you’re considering UTMA accounts, remember that they can offer this unique advantage of letting certain investments reach their full potential, regardless of the minor’s age.

Invest in a child’s future.

Give them a head start with a custodial account.

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Benefits of custodial accounts

Custodial accounts are incredibly flexible and much simpler than establishing a trust fund. There are no withdrawal penalties and no limitations on contributions or income. While any funds the custodian withdraws are required to be used for the benefit of the child, the parameters can be vague; that money might be used for clothing or living expenses, as long as the beneficiary receives the benefit.

• Simpler to establish than a trust fund: Trust funds involve legal intricacies and administrative costs that custodial accounts typically avoid. This simplicity makes custodial accounts accessible to a broader range of individuals.
• Lots of investment options: A wide range of investment choices allows you to align the investment strategy with the minor’s financial goals and your preferences.
• No withdrawal penalties: Custodial accounts don’t impose penalties for withdrawing funds. This means you can access the money when needed without worrying about extra charges.
• No income or contribution limits: Without income or contribution limits, you have the freedom to invest as much as you’d like to support the child’s future financial needs. Just keep gift tax in mind.
• Up to $2,500 taxed at a lower rate: A portion of the income generated within custodial accounts is often taxed at the minor’s usually lower tax rate. 
• Flexibility in using funds for child’s benefit: The money can be used for various purposes that contribute to the child’s well-being, such as education, clothing, living expenses, or even extracurricular activities.

Disadvantages of custodial accounts

One of the main disadvantages of custodial accounts is that because they count as an asset for the beneficiary, they can affect a child’s ability to receive college financial aid and potentially reduce the amount of assistance for which they’re eligible. Additionally, once a beneficiary is established, the account cannot be transferred to another beneficiary. Gifts or deposits made to the account are irrevocable; they become the property of the beneficiary forever. 

• Could affect financial aid eligibility: When applying for financial aid, the value of the custodial account is considered as part of the child’s assets. Having a substantial custodial account can reduce the amount of aid the child is eligible for.
• No change in beneficiaries: Once a beneficiary is established for a custodial account, it’s not possible to change it.
• Gifts/deposits are irrevocable: Once the funds are transferred, they become the property of the beneficiary, and the custodian no longer has control over them. This means that the custodian cannot take the money back for their own use or redirect it to a different purpose. 

Investing in your family’s future

Whether opening a custodial account is a good idea depends on your circumstances and goals. Many parents, for example, find that a custodial account can be an effective way to invest money on their child’s behalf to get a head start on saving for things like college. Some people also see a benefit in passing down wealth without the hassles of creating a trust fund. As you explore investment opportunities for your family, you may find that a custodial account makes sense for you. It’s never too early to start saving, and you open a custodial account to get a head start on securing your child’s future.

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Custodial account FAQ

1. Are there different types of custodial accounts?

Yes, there are two types of custodial accounts; depending on the state you live in, the account may fall under one of two legal frameworks:

• Uniform Gifts to Minors Act (UGMA), which can contain only financial assets, like stocks, bonds, and insurance products
• Uniform Transfers to Minors Act (UTMA), which allows investments in more types of assets, like real estate

In most states, only one type of custodial account is allowed. Stash offers custodial accounts of both types, so you can choose whichever is allowed by applicable law in your state.

2. Who can open a custodial account?

Opening a custodial account isn’t limited to biological parents; it’s a flexible way for any caring adult to contribute to a child’s financial journey and set them up for a secure future. Any adult–grandparent, aunt, uncle, godparent, chosen family member, supportive teacher or mentor, and so on—can open one. To be clear, the adult who opens the account is the custodian of the account, not necessarily the child’s custodian.

The custodian will need some information to open the account, including the child’s full name, date of birth, and social security number.

3. Do custodial accounts impact taxes or financial aid?

They might. If you plan to open a custodial account, you may want to learn more about the tax implications and the potential impact on the child’s ability to get financial aid for college. Learn how you can best save for college without impacting financial aid.

The post What Is a Custodial Account? appeared first on Stash Learn.

Life insurance can help protect your loved ones against loss of income and other financial uncertainties in the event of your death. In fact, purchasing life insurance can be an essential part of a smart financial plan, according to some experts, which should also include regular saving and investing.

And purchasing life insurance while you’re young can have particular cost benefits.

Here are five reasons why looking into life insurance is likely to be a good idea.

1. Your premiums can be lower.

The younger you are when you purchase life insurance, the lower your monthly premiums are likely to be. When considering term life insurance, your monthly premium is a fixed amount that stays the same for the term of the policy.

2. It can help replace lost income.

Your wages and salary are essential to your family. Life insurance can help your spouse, partner, or children replace the income you contributed when you were alive. That can include day-to-day expenses, monthly bills, and other common financial obligations.

3. It can help with burial costs.

It may be unpleasant to think about, but the average funeral costs up to $10,000 today. Life insurance can help offset some of those costs.

4. Paying for educational expenses.

If you have children, you’ll want the best for them, especially after you’re gone. A life insurance policy can help fund their educational expenses, whether that’s in a custodial account, or some other educational account, such as a 529. The money can also cover the cost of your remaining student loans, which can be really helpful if you had a cosigner.

5. Paying outstanding debts.

You and your spouse or partner may have a mortgage or other debts, such as credit card or other loans you co-signed together. Life insurance could help with those loans.

Planning your financial future is always a challenge, and the future is filled with unknowns. Life insurance could help your family manage their expenses without you. And the sooner you consider a policy, the cheaper it’s likely to be.

Ready to get covered? Click here to learn more from our partner Bestow.¹

The post How Buying Life Insurance When Young Can Help You Plan Your Future appeared first on Stash Learn.

Item #1. Automate your savings

We have the best intentions when it comes to putting money aside for the future. We promise ourselves we’re going to put money aside every week. But often, we don’t.

Automation can make saving easier. Recurring Transactions puts it into action for your investments. It’s part of The Stash Way.

You can also now schedule recurring transfers into your debit account! You choose the amount of money to transfer into your Stash debit account and the frequency. 

By automating sums of money into your savings or investments, on a regular basis, you’re reinforcing good money habits.

Item #2. Get rid of hidden banking fees

A dollar here, $20 there—these bank fees can really add up. In 2016, for example, consumers were charged $34 billion in overdraft fees—and that’s just one of many kinds of fees many banks charge.

Stash debit doesn’t cost you anything to set up, there are no minimum balance requirements, and we won’t charge you any monthly or annual fees to maintain the account1.

Item #3. Start saving for retirement

There’s a wonderful life to be led after you stop working. You don’t need a lot of money now to start saving for retirement. Worried you don’t have enough money (or that you’re too young to get started)? Trust us, the best time to start is today.

Consider your retirement savings are a love letter full of cash for when you need it most.

Item #4. Protect your family

We get it. Buying life insurance seems like a really adult decision. But a long-term life insurance policy can provide a financial safety net for partner or kids. in case of your unexpected passing.

It can help your family pay the bills, outstanding student loans, medical debt, or other outstanding expenses. It could be the most important decision you make for your family.

Item #5. Give a child you love a financial head start

Send a child you love into the world with money in their pockets and a solid financial education.

With a custodial account, you can start contributing to it when they’re young–and teach them all about investing along the way. Once they’re over 18 (or 21 in some states), they can use it for college, a down payment for a home or they can take it over and keep contributing to it.

Item #6. Protect your stuff

Good news for homeowners and renters: It doesn’t cost a lot of money to protect your stuff. You can insure all your valuables in case disaster strikes (think fire, busted pipe, or burglary). It can even pay for a hotel if you have to be out of your apartment or home for a while.

The post Change Your Financial Life With These 6 Steps appeared first on Stash Learn.

Let’s start with the basics.

What is life insurance, anyway?

A life insurance policy can provide a financial safety net for your dependents or loan cosigners. 

Who are dependents?  Dependents are anyone that depends on you financially (your partner, kids, an elderly parent, younger sibling). A life insurance policy can help pay the bills if anything should happen to you.

What types of life insurance are there?

There are a few different types of life insurance, including term, universal and whole life, and variable life insurance. Each policy differs in regards to how long it covers you for (your entire life vs. a set period of time) or potential financial benefits in addition to your monthly premium. But all provide coverage in the event that something happens to you.

What is term life insurance, anyway?

It’s called term life insurance because it insures you over a particular period of time, and typically pays out upon your death.

Term life insurance may be a good option compared to whole life for those who are looking for an affordable way to obtain a policy that covers you for a set amount of time. Generally, this can be 10 years, 20 years, or more, depending on what you choose. 

I’m young and healthy. Do I really need life insurance?

If you’ve got dependents or loan cosigners, life insurance can be a good idea.

Here’s the positive news: The younger (and/or healthier) you are, the more affordable your life insurance is likely to be. Plus, you can lock in a good rate that will stay the same for the entire term, or time period, of your policy.

What can my dependents use the money for?

There are no restrictions on what the money can be used for. Your family can use the proceeds to cover funeral costs, mortgage payments, child care, and day-to-day living expenses. It can also help you settle unpaid medical bills or any tax debt that would ultimately be the responsibility of your co-signer.

Is it really expensive?

People generally tend to overestimate the cost of term life insurance. For example, a healthy 35-year-old could get $500,000 of coverage for 10 years for $26 a month from Bestow. 

I like it, but I hate paperwork

You can get a term life insurance quote online in seconds and apply in minutes for an instant decision.

Ready to get covered? Click here to learn more from our partner Bestow.

The post A Quick Guide to Term Life Insurance (And Why You Should Consider It) appeared first on Stash Learn.

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What does it mean to be a smart shopper?

Here’s the thing: It’s not always being an extreme couponer, buying in bulk, or stacking your gift cards.

Being a smart shopper can mean using technology to get discounts on things you need, buying sunglasses or winter coats at the end of the season, or avoiding being tempted by sale items (just because they’re on sale).

In this episode, Trae Bodge, a shopping expert who has appeared on the “Today” show and CNBC, and many others, talks about shopping lists, bad deals, smart strategies, avoiding aggressive ads, using credit cards wisely, and how to shop at big box stores without wasting your money.

Thanks for listening to Teach Me How to Money. Send us your questions at teachmehowtomoney@stash.com, and we’ll try to answer them on a future episode.

The post Podcast: How to Be a Smart Shopper with Trae Bodge appeared first on Stash Learn.

Here’s the thing. Many of these things we want (and need) cost money. This activity can teach kids how they can save for their goals and learn how long it takes (and how awesome it is) to achieve a goal.

No need to get fancy or be boring. All you need is a plan, plus four jars and a few simple craft supplies.

Teach your kids about saving and investing

Download the activity sheet

Let’s get started

Each jar will have a label for each “Stash” to be labeled: Needs, Wants, Goals, Causes.

What’s a “need?” – Something kids will use every day. Maybe new sneakers for basketball or a new writing journal.

What’s a “want?” – Something that’s special that may take a little while to save for. Think a new guitar or a tickets to see a favorite team.

What’s a “goal?” – Does this child want to get better at something? Or be something special when he or she grows up? A goal could be years into the future. Maybe foreign language camp? Or a fancy set of turntables to become an amazing DJ? Goals take time, this jar may take a while to fill.

What’s a “cause?” – Kids want to make the world a better place. Maybe he or she wants to donate money to support finding a cure for a disease or keeping their public library open. A little bit of change over the course of a year can make for a big donation. It’s never too early to be a philanthropist!

Final note! Consider rewarding your child for their great saving habits by matching their contributions in their Stash custodial account. You can use Stash dollars to signify each deposit!

What You Need

• Wants, Needs, Causes and Goals activity sheet — Download and Print [PDF]
• 4 jars or containers
• Scissors
• Tape or glue
• Writing or drawing utensils, decorations (optional)

Instructions

1. Brainstorm a list of wants, needs, goals, and causes that the child cares about.
2. Use scissors to cut out each label.
3. Adhere one label to each jar using tape or glue. (Optional: personalize your jars with decorations)
4. Place your jars somewhere safe, but in plain sight (so you don’t forget!).
5. Add money, loose change, or Stash dollars to them regularly. Spread the money among your four Stashes.

Talk to your kids

How is a want different from a need? Is clothing a want or a need?

What’s the difference between a need and a goal? Is owning a house a need or a goal?

How much money do you need for your Wants? Needs? Goals? Causes?

How much time do you have to save for these?

How much money should you contribute each day?

How will you spread your money across all four jars? Are some jars more important than others?

The post Got Four Jars? You Can Teach Your Kids About Money appeared first on Stash Learn.

More American dads are excited about fatherhood and are just as likely as moms to say that parenting is extremely important to their identity. If only someone gave dads (and moms!) a financial planning guide for how life with a new baby can change things.

Clothes, formula, baby food, and diapers—so many diapers—all add up, say these new dads who went from loose budgeting, if any budgeting at all, to keeping a tight rein on spending.

Check out these anecdotes and money lessons from these dads who fell in love with fatherhood (and learned how to budget while doing it).

Mike Watts, 41, Studio City, California

Before baby Madelynn was born, Mike Watts and his wife were taking full advantage of all New York City had to offer.

There were Broadway plays, baseball games, and expensive dinners out with friends.

“We obviously made sure we had enough for rent and the regular bills, but anything beyond that went right back out the door,” Watts said. “Having a baby changed everything.”

Big eye-opener? Daycare alone was $330 per week.

“We had to cut back significantly and make sure that all the money we had, went into making sure the baby was taken care of,” he says.

Once they had it figured out, along came baby Hudson. By that time, Madelynn was seven and they had moved across the country to California. And once again, they were faced with an onslaught of diapers and daycare expenses.

Watts sets up his paychecks so that a couple hundred dollars go directly into a savings account. “I can’t spend what I don’t see, right?” he says.

Watts also changed careers, leaving the media world to become a certified financial planner, which has helped not just his clients, but his own family.

“We continue to save for higher education for the kids,” he says.“It’s harder than you think, but we’re trying to become more diversified.”

Watts’ top money hack: “When I go to the grocery store, I refuse to use a shopping cart or basket, I only buy what I can carry,” he says. “It keeps me from buying items we really don’t need.”

Advice to new dads: “Set up a ‘baby savings account within your bank and just leave it there, even if you are months away from the baby actually arriving, Watts says. “While you don’t get a great return from a regular savings account, just starting the process can force you into re-thinking your budget and your spending priorities,” he says.

David Kiner, 34, Enfield, Connecticut

When David Kiner’s daughter was born six months ago, he and his wife put a serious hold on their dinners out and weekend getaways.

The money he and his wife, Gina, save goes directly toward their daughter’s care and supplies, with most of that, he joked, being spent at Target.

But staying home instead of painting the town is actually okay with him. “You’ll want to stay home to support the mother of your new baby,” he said. “Plus, more likely, you’ll be pretty tired.”

Kiner did, however, recently get a chance for his first night out with friends since his daughter was born. What began as a low key and low-cost night out at a local brewery nearly ended in (minor disaster) after he got pulled over for speeding.

His first thought was how he’d already blown his budget before he even got there.

“I could only laugh to myself as I thought, ‘Great, my first night out in quite a few months and it’s going to be an expensive one,’” he said. “Luckily, I was able to get away with only a warning.”

Kiner’s top money hack: Have your employer directly deposit a portion of your paycheck into an account that is not used to pay bills, Kiner says. One of their top financial priorities is saving for a bigger house, so they can expand their family.

Advice to new dads: “Prioritize your spending really fast–it’s not even an option–diapers are expensive,” Kiner says.

Travis Shock, 33 Pekin, Illinois

Before his son was born, Shock said his financial priorities consisted mostly of contributing to a 401(k) and, “how much golf I could get in during the summer without annoying my wife.”

Shock was in for a shock.

“Everyone tells you how expensive babies are,” Shock says. “We did not take it into true consideration.”

While Shock and his wife, Molly, entered into parenthood without a formal budget, they now keep track of weekly line items for everything from supplies to clothes to daycare.

Shock’s top money hack: To increase their savings they are “dropping a few things that are not necessary, such as our country club membership and cable.” That money is going into saving for a family trip to Panama Beach, Florida and making improvements to their house.

Advice to new dads: “Be ready and excited to give up certain things in your life,” he says. “It’s actually pretty easy to do.”

Welcoming a new little person into your life can be overwhelming in the best way possible, but it can also stress you out financially.

With good budgeting and financial planning—and these tips from other dads—you can spend less time worrying about your wallet and more time enjoying your new family.

The post New Dads Give Their Best Money Hacks appeared first on Stash Learn.

They are also often our go-to for financial advice, both solicited and not, on everything from budgets to savings accounts to the big picture of life.

This Father’s Day we celebrate dads who have given us the best and the worst financial advice of our lives.

The Good: Start saving

“Start an IRA the minute you have a tax-paying job,” Shannon Bolin-Elfers, a 33-year-old mother of two from Slidell, Louisiana, says was the advice she got from her retirement-conscious father.

It was good advice — even just $1,200 per year, or $100 per month, into a traditional IRA starting at age 18 could be worth about $423,000 if you retire at age 65.

The Good: Building credit

And unlike most dads, Jill Castro’s father was quick to shove a credit card in her hand as a teenager, with a few caveats.

“My dad co-signed a credit card when I went to college and told me to use it once or twice a month,” said Castro, a 40-year-old middle school teacher who grew up in Binghamton, New York. “I had to pay it off each month, so I was building my credit from the time I was 18.”

That advice paid off. When Castro bought her first car at age 22, which she says was a “very sensible Toyota Corolla,” her credit score was a stellar 820.

The Good: Negotiate

Car advice is definitely a “dad thing”. Michelle Gonsalves’ father taught her that debating a car price at the dealership comes down to one magic phrase: “Is that the best you can do?”

“Then be prepared to walk away when they say yes,” Gonsalves, 40, remembered her father telling her. “You won’t get far.”

It’s advice Gonsalves, now living in Naples, Florida, took to heart when she recently bought her prized limited edition Green Flash Camaro she named “Wicked.”

“I did use his advice. The dealer and I argued for several hours over the price past closing time of the dealership,” she said. “In the end, it was me, the dealer, the finance lady and the security guard left.”

“Have a champagne taste on a beer budget.”

The Good: Stay on your budget

Spending habits were chief among the advice given to Michelle Owens, 39, of Burlington, Vermont.

Her father told her to “have a champagne taste on a beer budget.”

Living within your means is great dad advice, “although, I live in Vermont,” Owens said, “the capital of expensive, but awesome, beer.”

The Bad: Don’t Have Kids

Mande Kelly’s dad just put it all out there when he handed down this dubious advice.

“The ‘best’ worst financial advice my father ever gave me was to never get married and never have kids,” said Kelly, 33, from Mandeville, Louisiana.

Kelly, now the mother of a young daughter, chose not to take her dad’s advice.

The Bad: Don’t Buy a Home

Julie Robb also ignored her father’s less-than-productive financial advice to never buy a house.

“You’ll be stuck in one place forever,” he told her,” and you’ll lose your edge.”

Robb, 55, grew up in Ridgecrest, California, but is now living in a Tulsa, Oklahoma house she happily bought with her husband. (She says that she still has her edge.)

“He didn’t believe in bank accounts either,” she added. “Basically his whole philosophy on money was ‘Buy books and scotch. You can always get an extension on your rent.’”

The Bad: Never investing (but lots of spending)

Jami Puckett-Rome got bad advice from her father and her stepfather in the form of bad examples.

“My mom and step-father never invested and didn’t have bank accounts or credit cards,” said the 53-year-old Nashville, Indiana native. She added her father had lots of expensive hobbies and spent every dime he made from his own business.

“I never saw a happy balance of living well and saving,” Puckett-Rome said.

The Ugly: A (near) criminally bad dad joke

Sometimes good advice comes with very bad form.

“My dad took me to the bank to open my first account and promised the lady we weren’t there to rob them,” said Megan Kahrs.

As Kahrs, then just 15 or 16 at the time, stood there trying not to smirk or say anything else incriminating, the bank teller replied only with an uncomfortable, “ummmmmm….”

“It took a long time and the majority of it was her looking around and watching every move he made,” said Kahrs, now 34 and living in Louisiana. “We finally opened the account and I’m pretty sure we didn’t see her much anymore.”

Thanks, dads!

Thank you, dads, for your (mostly) good advice over the years! We try to pay off our credits cards every month, we know we should be saving for retirement, and we’d love for you to come to help us haggle for a good deal at the car dealership.

Just please don’t wear socks with your sandals.

Want to invest in something your kids will never outgrow? Learn more about how you can set up a custodial account for a child you love.

The post Financial Advice From Dad: The Good, the Bad, and the Ugly appeared first on Stash Learn.

A word of advice: Start saving for retirement now!

There’s a retirement savings crisis in the U.S., and the sooner you start putting money away, the better.

About half of the consumers think it’s likely that Social Security won’t be there for them when they need it

The depth of the crisis is demonstrated by a new study from Northwestern Mutual*, a part of the bank’s most recent Planning & Progress survey. Northwestern is based in Milwaukee, Wisconsin.

Here’s what Northwestern found:

• One in five people in the U.S. have no retirement savings at all.
• Baby Boomers, the generation now closest to retirement, have between $0 and $25,000 saved on average.
• A quarter of survey respondents reported they had $200,000 or more saved, and 16% have between $75,000 and $199,999, according to CNBC, which took a deeper dive into the survey numbers.
• On average, U.S. consumers have about $85,000 in retirement savings.

Social Security might not be there

Here are some other things to keep in mind: about half of the consumers think it’s likely that Social Security won’t be there for them when they need it. A further 66% say it’s likely they will outlive their retirement savings, while 55% say they will have to work past 65, primarily because they won’t have enough money saved to live comfortably.

Of course, how much you need to retire depends on a variety of factors, including where you retire and what your expected spending will be like when you no longer work.

A general rule of thumb is that you’ll need to replace between 70% and 80% of your pre-retirement income. For someone making $40,000 a year, that comes out to $1.8 million for a 30-year retirement, according to American Association of Retired Persons (AARP).

The Northwestern Mutual survey was based on a Harris poll of 2003 adults, 18 years old and over, conducted in March 2018.

Retirement accounts can help you save

So if you haven’t started saving for retirement,  or you’re nearing retirement and realize how far behind you are, don’t despair. Now is the time to start.

Two retirement accounts most anyone can open to start saving for retirement are traditional individual retirement accounts, or IRAs, and Roth IRAs. Both can have various tax advantages.

The post No Retirement Savings? You’re Not Alone. Here’s How You Can Fix It. appeared first on Stash Learn.

Yet, year after year, partners, husbands, and kids manage to mess up spectacularly.

Moms all over the world have gritted their teeth and smiled upon receiving “are you kidding me” gifts on the day where they’re supposed to feel special.

Our moms know us best—so how come so many Mother’s Day gifts are so tacky, tasteless, clueless, or just plain rude?

Without further ado, here is our round-up of cringe-worthy Mother’s Day gifts:

(Don’t) Say it With a Gift Card

Pam Rosario of Katy, Texas, was eight months pregnant and living on a remote Marine base away from her family and friends when she got her very first—and very worst—Mother’s Day gift.

Her husband gave her a gift card so she could buy a rocking chair and ottoman.

Strike one: the impersonal gift card. Strike two: the gift card was for furniture she already planned to buy for the baby.

Then came strike three.

“I then had to put the damn thing together myself because he had to work that day,” says Rosario.

A blooming failure

You may be thinking, “How could you go wrong with flowers?” You’re going to want to keep reading.

Los Angeles mom Kathleen Laccinole was given flowers from her ex, about a week after he left her for a younger woman, with whom he’d been having an affair.

“All the previous years I was gifted with various appliances with which to cook and clean the house,” Laccinole says.

Deja Vous

Here’s a tip. It helps to remember what you got her last year you so you don’t get her the exact same thing again.

“I received the same necklace he had already gotten me and he didn’t remember,” said Connecticut mom Karen Nadeau.

The gift?  A three-diamond drop necklace that is supposed to represent her past, present and future. Which shows that the past can literally repeat itself.

Breakfast in bed … at 7:30 a.m.

Once again, it’s a nice idea—with failed execution.

“For years I would tell my family that all I wanted was to sleep late and have the morning and afternoon to myself for reading and relaxing,” says Seattle mother of two Nicole Neroulias Gupte. “ Instead, they would make me breakfast at 7:30 a.m. and jump all over me.”

“Finally, last year, I got just what I wanted and it was glorious,” she added.

Strep throat.

Technically, this wasn’t a gift, but it still ruined the lovely Mother’s Day Danny Williams had planned for his wife, Kim.

Williams booked a beach weekend in Orange Beach, Alabama for the entire family. It seemed to be the perfect weekend until their son Andrew came down with a severe case of strep throat.

“We spent Mother’s Day morning finding an urgent care that was open, waiting for little Andrew to be seen, then waiting for hours at a drugstore for the prescription to be filled,” Danny Williams said. “Not exactly how I’d planned the weekend to go for her, a joyous reminder of the harsh reality of motherhood!”

Nothing.

That’s right—zip, nada nil. Not even a card. You will notice, however, that most of these thoughtless non-gift givers are now ex-husbands.

“My ex would never get a gift for me [because] I wasn’t his mother,” said Louisiana mother Janet VandeVoorde. “He’s an ex for many reasons.”

Fellow Louisiana mother of two Valerie Borden came up similarly empty-handed, and not just on Mother’s Day.

“Everything was, ‘It’s just another regular day,’” she recalled her ex telling her. “Birthdays, same thing.”

La’Ketra Luckett went a few years without getting a Mother’s Day gift before her (still current) husband wised up.

“I got nothing for my first official Mother’s Day,” she said. “I didn’t get anything the Mother’s Day before that, while pregnant..”

Luckett, who is now pregnant with the couple’s second child, said her husband has made up for it in the four years since. “No room for error,” she joked.

Flowers. Again.

My own mother, Susan Netter, chimed in with worst Mother’s Day gift she ever got. It took her all of 5 seconds to remind me of Mother’s Day 1995.

“The worst one was when I had a broken leg and my Mother’s Day gift from you and your dad was flowers, and I had to go on crutches to the flower place to pick out my own flowers,” she said. “And then I had to plant them by myself. And you took off to your boyfriend’s house.”

Oops. Sorry Mom! Love you.

The post Why Tho? Moms Share Their Worst Mother’s Day Gifts appeared first on Stash Learn.

No need to wrack your brains to figure out the perfect Mother’s Day present. Luckily, what we really, really want doesn’t cost a penny.

That’s right, some of the best Mother’s Day gift ideas are absolutely free. You could be a hero to your wife, girlfriend, sister or the mother in your own life for zero dollars.

Take notes and remember to read the fine print. Be sure to include a card, because, come on, it’s your mom.

1. Sleep.

I spoke to lots of moms about their ideal Mother’s Day gift and quality shut-eye was the top request.

It seems so simple, but it’s a treat that many mothers aren’t able to give themselves. There are diapers to be changed, breakfasts to be made, piles of laundry to get started, and dishwashers to unload. Why, oh why can’t the kids just make themselves a bowl of cereal and watch cartoons like we did in the ‘70s and ‘80s?

“I don’t want or need anything too big for Mother’s Day, but if my husband could get up and deal with breakfast and keeping the kids entertained in the morning, it would be amazing,” said Shana Westlake, a Washington D.C.-area mom of a 5 year old and a 2 ½ year old.

Erika Holmes, a Tampa, Florida mother of two toddlers, concurred: “Just let me sleep.”

The fine print: Sleep means actual unconsciousness when you are unaware of what’s happening around you. Letting the kids run around outside the door while you tell them to knock it off or letting them yell “When is mom getting up!?” does not count. Let her sleep til noon if you can and try not to have a million catastrophes waiting for her when she opens the bedroom door.

2. Free babysitting.

Massages and pedicures are popular Mother’s Day gifts, but when are moms actually going to get to do those things? That’s where free babysitting comes in.

Paying for a babysitter to go enjoy life’s luxuries not only sucks your wallet dry, but it also affects your guilty conscience. You start thinking about all the other things you could be spending that money on, or feeling bad that the kids are parked in front of the TV, while the babysitter updates her Instagram account on your dime.

That’s why having a partner, a best friend, a mom, a grandmother —anyone who offers, really—watch the kids for a few hours is such a gift.

Alice Gomstyn, a New Jersey mother of two young sons, said she’d love to work someday with a musician to realize her side hobby of writing song lyrics. But with two kids in school and extracurricular activities, a husband with a monster commute into New York City and a full-time job, it’s a dream that seems unattainable without some help.

Massages and pedicures are popular Mother’s Day gifts, but when are moms actually going to get to do those things?

That’s why this year for Mother’s Day, Gomstyn would love someone to come babysit her 5-year-old and 7 years old — for free. The time spent creating, she joked, it would benefit the whole family.

“The kids really don’t need to hear all of mommy’s angsty masterpieces,” she said.

The fine print: This gift is best given without any strings attached by a partner, friend, or even a grandma or grandpa. That means you can’t take mom on a guilt trip six months later to get time to yourself. Offer a few nights or afternoons and etch them in stone on both your calendars.

3. Quiet time

… alone. Mothers devote almost all of their waking hours to keep their kids healthy, fed, entertained and enriched. But those moms need all those things too.

“I would love alone time to sit and finish reading a book,” said Danielle Dreger-Babbitt, a Seattle mom of a 3 ½-year-old. “Or even time to read a chapter.”

Just to be clear, Dreger-Babbitt was referring to a book without pictures in it.

The fine print: As with sleeping in, quiet time means actual quiet. Preferably with everyone out of the house. Putting a movie on for the kids is not quiet time. Give her a time frame every week where she knows she can pull out that paperback for an hour.

4. Dinner duty handled.

Dinnertime is a mom’s ultimate Kryptonite. They may have big plans at the beginning of the day for a well-rounded meal that the whole family will enjoy, but the reality is that by the end of the day when she’s exhausted, the kids are whiny and the dog needs to be fed, that dream of a delicious dinner turns into a nightmare.

Cooking dinner for the mother in your life, then packaging up leftovers, doing the dishes and cleaning up the kitchen is worth way more than that trip to Bath & Body Works you might have been planning for her.

And you’ll get major bonus points if you do it for an entire week.

The fine print: A nice dinner means protein, some kind of veggie and a side dish. Handling dinner does not mean ordering pizza or Chinese. No, french fries do not count as a vegetable.

5. Appreciation from the kids.

Moms don’t do it all for the glory. In fact, there is actually very little glory in day-to-day parenting. We do it because we love our children and want to see them become happy, productive and kind human beings.

But a little thanks goes a long way. This is especially important to single mothers who don’t have the help of a spouse. Helping a child come up with a gift is a win-win.

“I am a single mother and rarely get Mother’s Day gifts. I hate to complain because it’s not my son’s fault no one has helped him do Mother’s Day,” said Debby Florence, a mom living in Montana with her 16-year-old son. “The best free gift I could get is if someone helped my son come up with nice little free things to do for me so he can experience what it is like to surprise his mom with something nice.”

The fine print: Let the child take the lead on this one. Helping the child make a drawing or art project, or come up with something nice all on their own will make mom melt every time.

The bottom line, mothers say, is that they’d love a break. Something that’s just for them. Something that shows them they are valued and loved.

That is worth more than anything money could buy.

Want to help a mom start saving for a child’s future? Setting up a custodial account is a snap.

The post 5 Free (Yes, Free) Mother’s Day Gifts She’ll Actually Want appeared first on Stash Learn.

What’s a custodial account?

Custodial accounts are essentially brokerage accounts for children—with some investing and tax benefits—that you control until they are no longer minors. (That’s usually between 18 and 21 years old, depending on state law.)

Custodial accounts have been around for decades. They’re also known as Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts.  Generally speaking, different states typically allow one versus another. UTMAs allow for investments in more types of assets, including real estate. UGMAs confine themselves to more traditional securities, such as stocks and bonds.

Stash will automatically choose the right account based on state requirements, so you don’t need to do anything here.

How long will the process take to open the account?

We clocked the entire online application process at about 30 seconds from start to finish. You will need each minor’s name, address, social security number, and date of birth. Since you already have a Stash account, we have most of your information, so it’ll be super easy.

After I set up a custodial account, what do I do next?

First, feel proud! You’re helping a child save for his or her financial future. Next, keep adding money to the account on a regular basis, or whenever you can. You can turn on Auto-Stash and set a transfer frequency and amount that you feel comfortable with.

If the child is old enough, start talking to him or her about what the account is and how it works, and how it will help them later on. The education that they can get by understanding investing and saving will be theirs for life!

How many accounts can I open?

There is no limit to the number of accounts you can open—you can open as many as you want. You can open them for your own kids, as well as the children of extended family members. You can even set up accounts for your friends’ children, or any other child whose financial life you’d like to support.

Can you take the money out of a child’s account?

Nope. Here’s something really important to keep in mind: Once you’ve set up a custodial account for your child, it’s considered a permanent gift. They own it immediately and control it once they become adults. In other words, you can’t take the money back and use it for yourself—it’s their money from the moment you set up the account. But it’s your job to oversee the account and make sure you invest what’s in it wisely.

If you decide to pull money out of the account, it must be for the child’s exclusive benefit and not your own. That means you can’t use it to pay for things like the family grocery bills, rent, or a family vacation. You can use it for things the child’s school expenses, music lessons, even athletic or computer equipment.

Why do you need the minor’s info and SSN?

We don’t want it, but federal regulations require us to provide it. We also need it to transfer the account to the child when they are of legal age.

When the minor becomes an adult, how do they get the money?

When the minor becomes an adult, the account will become theirs, and they can use the money for whatever they need. That can mean paying for higher education, buying a first home or renting, books, travel, even a first car.

Are there other ways to get money into each custodial account I open?

For now, the money will need to come from your linked bank account. We plan to offer more options in the future.

What if Stash gets sold or goes away?

Stash does not hold your securities or cash. Apex Clearing, our custodian, does. You are buying real securities with your money. SIPC would return up to $250,000 in cash and up to $500,000 for non-cash investments such as stocks and ETFs in the event of fraud or bankruptcy. It’s important to keep in mind however, SPIC does not protect your investments from market value changes. So basically, you’re covered.

How do I learn more:

Here’s additional information about custodial accounts if you want to learn more:

• What Are Custodial Accounts?
• How Custodial Accounts Can Help Your Kids Learn About Investing
• What’s a Custodial Account? Two Things to Know

Again, you’re awesome for giving a child a stronger financial future.

Brandon Krieg

CEO – Stash

The post Stash CEO Answers Your Burning Questions about Custodial Accounts appeared first on Stash Learn.

“As we got closer, we realized it was our roof,” Milam says.

They sped toward their house in Hammond, Louisiana and breathed a sigh of relief to find Milam’s mother-in-law standing in the yard with their two children. While their family was safe, the house they were renting was heavily damaged by both fire and smoke.

And with no renters insurance, Milam, 30, and her husband were left bearing the full financial brunt of replacing their belongings. The damage: About $50,000.

Less than half of people have insurance

Only 41 percent of renters have insurance, compared with 93 percent of homeowners, according to a 2016 poll conducted by the Insurance Information Institute, even though the average annual renters insurance premium is just $188.

While the landlord’s insurance will cover the exterior of the building structure and things like plumbing and electrical work, it will not cover a renter’s personal belongings in the event of fire, theft or storm damage, according to the Insurance Information Institute.

Renters insurance is one of the most cost-effective ways to protect your belongings, according to the National Association of Insurance Commissioners. In addition to fire and theft, most policies also cover damage from vandalism, windstorms, lightning and certain types of water damage, such as burst pipes.

The fire that displaced Milam’s family was caused by faulty wiring, Milam says.

“We have tried to save some special clothing, books, and wood furniture, but it all must be sent to specialists to evaluate if it can be saved,” she said.

They found a new rental house shortly after the fire and immediately began researching renters insurance policies.They found a policy for under $40 per month, and they found peace of mind.

“The cost of the insurance is minuscule in comparison to the losses you could incur,” Milam says.

No insurance, big costs

Nate Masterson also learned about renters insurance the hard way, after accidentally leaving an old electric heater turned on in his Riverdale, New York apartment one cold, winter morning about two years ago.

The appliance overheated and the carpeting caught fire. While the fire department was able to save the apartment and the building from being a total loss, Masterson’s belongings weren’t so lucky. He lost his TV, XBox, speaker system, couch and his prized coffee table, a family heirloom bought at the 1893 Chicago World’s Fair.

“I had to go a good year without these things until I could save up enough cash to replace them,” Masterson says, adding he also had to pay his landlord nearly $15,000 for all the damages to the apartment.

Masterson, 28, hadn’t even considered renters insurance until a friend told him how inexpensive it was and how much money it could have saved him. He began to research and said he “flipped” when he realized how cheap a policy would have been. He now has a renters insurance policy for about $20 per month.

“The moral of the story is to always get yourself covered before moving into any apartment as you’ll at least have some kind of buffer in place in case you’re stuck in an emergency situation,” he said.

Extra insurance for special things

Renters insurance not only covers loss of property due to theft, but it’s also possible — and probably prudent— to get what’s called a floater policy for additional coverage for expensive or high-value items such as jewelry or musical instruments.  

Joanie Knight’s property was totally uninsured when she returned home to find that her babysitter had cleaned out her house in Bogalusa, Louisiana.

“I had returned to work after being a stay-at-home-mom and had only been working for two weeks. I knew the babysitter because her granddaughter and my daughter went to school together,” Knight said. “When I returned on that day, everything in my house was gone or broken, even clothes and bathroom supplies. We recovered some of the major appliances, but lost so much more. We ended up filing for bankruptcy almost one year to the date.”

Knight, 29, and her husband had been researching renters insurance and were waiting for her first paycheck to buy a policy. While the babysitter was prosecuted and Knight received a modest amount of restitution, it wasn’t enough to make up for all they’d lost.

She says they will never be without renters insurance again.

“Anything can happen,” she said. “Even by people you thought you knew.”

It’s a great time to take an inventory of all of your major possessions, including electronics, bikes, furniture, dishes and kitchen appliances, clothing and expensive jewelry.

Knowing how much you stand to lose will ensure you get the right coverage, and it will set you up for a smooth claims process if your possessions do get damaged or stolen.

Masterson said he doesn’t want other tenants to learn their lesson the hard way, as he did.

“For anyone in the position of tenant, it’s imperative for them to have renters insurance,” Masterson said.

The post How Renters Insurance Can Save the Day From Disaster appeared first on Stash Learn.

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Procrastination. Confusion. Intimidation.

New York Times science writer John Schwartz was confident writing about infrastructure, rockets, and climate change but when it came to his personal finances, he just couldn’t face it.

How can we be so smart in life but willingly turn a blind eye to our money lives? Actually it’s pretty easy to put things off. Until you can’t.

John Schwartz, author of “This is the Year I Put My Financial In Order,” has been through it all: High interest credit card debt, foreclosure, career volatility, and putting two kids through college.

He knows what it’s like to be forced to eat a $2 lunch because that’s all that’s in the budget. He didn’t want to face his retirement fears. Can we blame him?

But from tough times comes a lot of great practical lessons. John has emerged intact and talks to me about facing up to it. We talk making a will, life insurance, real estate nightmares, and how to get ahead when you feel like you’ve been behind your whole life.

Ready to start investing?

The post Podcast: Face Your Financial Fears with John Schwartz appeared first on Stash Learn.

Does it really matter what happens to your stuff once you’re gone? The answer is yes.

You don’t want random strangers deciding who gets your collection of concert stubs or the bicycle on which you logged so many miles. And you definitely don’t want your friends and family squabbling over the last $200 in your checking account or the $5,000 vacation fund you worked so hard to accumulate.

There’s so much information out there about what actually goes into a will. New York City estate attorney Michael C. Levy helps us separate myth from fact.

Myth #1: I can leave everything to my cat (or dog or parakeet)

Believe it or not, you can. But it’s a bit more complicated than a simple yes or no.

“You can’t technically leave property directly to a pet because a pet has no means to accept the property,” Levy says. “They are not human, and they are incapable of understanding the concept of money or property.”

What you can do, is set up a pet trust and leave all the money, real estate and property you want to that trust to be administered by an executor of your choice.

Don’t think it happens? That’s what heiress Leona Helmsley did when she died in 2007, leaving her beloved Maltese named Trouble a whopping $12 million.

A judge eventually slashed Trouble’s extravagant inheritance down to $2 million — the remaining $10 million went back into her charitable trust — but the pooch lived a lavish life until she died in 2011 at the age of 12.

Myth #2: I can just write my wishes on a piece of paper and give it to my mom

“That’s not a good idea because most states require certain formalities to have a will entered into probate and actually considered valid,” Levy says.

Generally speaking, you must state your final wishes and intentions in writing, and have the document signed by two witnesses who must affirm that they saw you sign the will, Levy says.

“If you cannot prove that the will was validly signed, it will ultimately not be admitted to probate,” Levy says. “The piece of paper to mom is not going to work.”

Myth #3: I can put in whatever I want, right? It’s my will!

Actually, no. The probate court will not uphold anything that’s illegal or against public policy.

Levy has also seen wills that place conditions on heirs that they be married or marry a person of a particular religious faith. None of this is likely to hold water in court, he says.

And explicitly disinheriting someone sets up the estate to be challenged in court by the disgruntled relative, so that’s usually frowned on as well, Levy says.

If you’re dreaming of strange and creative ways for your money after you die, best to consult a lawyer before penning those grand plans.

Myth #4: I have one copy of my will. I can just keep it in a sock drawer or a safety deposit box

Don’t do it, Levy says.

In New York, if the client has possession of the original will and loses it, the probate court will assume it’s been revoked and will consider your estate without a will.

That’s why Levy strongly recommends leaving the original with your estate attorney and keeping a copy for your own records.

“But if you have a safe place where you know it’s not going to get lost and you know it’s not going to be turned into a paper airplane by a child or used as a ‘wee-wee’ pad by a dog that’s fine,” he says.

Connecticut estate planning firm Cipparone & Zaccaro based in New London, Connecticut, also suggests leaving it with your attorney. Other sensible options, they say, are in a fireproof safe either at your house or with the executor.

Levy did issue one caveat about safety deposit boxes — don’t lose the key. If you lose the key and then die, the bank is going to require proof that your executor has permission to access your safety deposit box … permission still located inside the safety deposit box.

Just let your lawyer keep it, Levy says.

Myth #5: I don’t need a lawyer to write a will!

No, technically you don’t. A quick online search of “online will documents” turns up dozens of do-it-yourself offerings.

But be careful what forms you use. And since state estate laws vary wildly, a one-size fits all type of legal document may not hold up in court.

“If serious legal mistakes are made, you’ll never know because they will not become apparent until you die,” Combs writes. “And the people left to deal with the mistakes are the people you’re probably creating your will to protect.”

The post Will Myths! Can I Leave Everything to My Cat? appeared first on Stash Learn.