Smart Reasons to Save, Use and Invest Money

Birthday Dividend Funds For My Kids

For my son and daughter’s birthdays, they each get $10 for every year that they are old.  Actually, that’s not entirely true.  I’ve given them $50 for every birthday until their 6th.  On their 6th, I then give $10 for every year that they are old…  Once they hit 10 years old, I’m increasing the amount above age 10 by $20 instead of $10 per age.  So when they are 11, they will get $120 instead of $110 as before.

My Birthday Money Gift Schedule is below:

      
 AgeMoney   
 1$50   
 2$50   
 3$50   
 4$50   
 5$50   
 6$60   
 7$70   
 8$80   
 9$90   
 10$100   
 11$120   
 12$140   
 13$160   
 14$180   
 15$200   
 16$220   
 17$240   
 18$260   

this is simple enough, I’d like to make it more interesting.  So what I decided to do is start to invest my money into a stock that pays a dividend.  Then once the dividend provided by the stock is high enough, I’ll use that money to pay for my son and daughter’s birthday money gift.

I don’t expect to have enough money initially in the first few years, so that’s where the challenge will come from.  I need to find a source of money to put into the Stock Dividend Fund :)

Perhaps I will try to sell stuff on eBay again (I did this in the past).  That would be a fun challenge!  Or perhaps I’ll try to get a side job working at something.  What I don’t want to do is channel my earned income into the fund.  Between my kid’s 529s and brokerage accounts…  I’m pretty tapped!

Do you think this is a good idea?  And do you think that what I contribute for birthday money is enough?

-MR

12 Responses to Birthday Dividend Funds For My Kids

  1. Zachary says:

    It is probably best to reinvest the dividends straight away and to continue adding the yearly contributions on top of the dividends. That way the investments can grow to full their potential to help out your kids’ futures. This is a wise and fun way to educate your children about responsible money management and investing. Great job!

  2. @Zachary
    Thanks, it should be fun and a challenge if I do it correctly!

  3. You are so nice and planned out. My kids get whatever crosses my mind at their birthdays.

    I think any amount that you give is enough, you just do whatever you think is right.

  4. @everyday tips
    Thanks :)

    We also got him some lego kits. He’s was really into the star wars legos for a while, but now he’s into the city ones…

  5. Can you adopt me please? I’ll settle for the 18 year old level forever, lol. :-)

    It’s an interesting system. My family does gifts more than cash and my husband’s family does cash and gift cards more than gifts…it’s funny how it all works out. :-)

  6. Jenna says:

    Do they get the money when they turn 18 or does it go towards college or something?

  7. @Budgeting in the Fun Stuff
    LOL :)

    I always got cash from my parents and grandparents. I always saved the money though, so it wasn’t much fun…

    Nobody really give my kids cash for birthdays or Xmas, so I do it instead.

  8. @Jenna
    Well with this money, they get it on their birthday, and do with it as they please. Although, I have to admit that I do voice my opinion on the matter.

    Where my son was a lot younger I told him that half would have to do into the bank.

  9. I love this idea Don! It’s a win win and great for their future and education.

    Best,

    Sam

  10. @Financial Samurai
    Thanks Sam, I wish I had started implementing it sooner.

    Oh well, better late than never :)

    Take care!

  11. FinEngr says:

    I think that’s a great idea – especially since you’ve already gotten a 529 setup!

    As long as you try to involve them in some way, and get them interested, your efforts should pay “dividends” in the long run. I think the worst outcome would be they take your hard work for granted once their older because they never really understood the sacrifice or what went into it.

  12. @FinEngr
    I’m teaching them buy playing a game called “Cashflow for kids” and teaching them concepts such as what are stocks, dividends, bonds, passive income, expenses, etc…

    My son is just starting to understand, but my daughter is still too young. She’ll catch it too, because she’s going to be the smarty in the family…