The simple savings strategy that helps me pass on my wealth

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Here’s what: A new strategy for gifts

When my niece was born three and a half years ago, I was obsessed with the idea of ​​giving her the bettermore memorablemore hard-hitting gifts (I always campaign for aunt of the year). But I learned pretty quickly that babies are, to say the least, finicky creatures, and my best bet was to stop shopping and find a way to invest in her future.

My initial idea was to contribute to her education savings fund, but since she is in Canada, I was unable to access that account. Ditto for his usual savings account. So, for the past two years, I have sent books to develop her love of reading. It’s a good investment, sure, but it doesn’t exactly meet my needs as a Personal Finance Person®.

But then, last month, I posted an essay that gave me an idea. Freelance writer Danielle Cappolla wrote movingly for Insider about her uncle, who, after Cappolla graduated from college in his early twenties, gave him the bankbook for an account containing $6,000 – money he had hidden for her since she was born.

Instead of giving physical birthday and Christmas gifts, Cappolla’s uncle had put small amounts — $25 to $100 — into a savings account. When she reached adulthood, he handed access with the advice to keep up the habit of saving and working for a down payment on a house.

Now, I know that $6,000 doesn’t buy a house in the United States today – and Cappolla knows this too – but the point is, it’s a start. It’s money she wouldn’t have had otherwise, and it puts her on the path to home ownership, or owning a business, or a new car if she needs it.

This money is a substantial gift at a time in one’s life when expenses are increasing rapidly and the material pressures of adulthood are increasing. And as a lump sum, it can go further than the $25-100 his uncle had set aside for each occasion.

It was an enlightening moment for me: in addition to the books I like to send my niece, I will put small amounts in a high-yield savings account for every occasion (I had considered investing in her name, but the tax implications were a bit too complicated with an international border in the mix) with a plan to give him access to the money in about two decades.

I’ll tell her to do what she wants with it, but encourage her to choose something meaningful and impactful: a once-in-a-lifetime trip, the money to support a creative dream project, or even the start a down payment on a house. And I hope I finally win aunt of the year.

— Stephanie Hallett, editor of Personal Finance Insider

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