Where should I put small cash gifts for my child?
Locking all gift money into a 529 leaves no money for non-education expenses, while UTMAs lower potential college financial aid. Parents end up torn over whether to prioritize tax-free college savings or keep money flexible for early adulthood, making them hesitate to fund any account at all.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
- 1Opening a 529 planDid this help you?
- 2Opening an UTMA accountDid this help you?
- 3Opening a High-Yield Savings Account (HYSA)Did this help you?
- 4Investing in broad market index funds like VTIDid this help you?
- 5Focusing exclusively on a 529 plan up to estimated college costs.Did this help you?
- 6Prioritizing personal retirement savings (401k/Roth IRA) before funding child accounts.Did this help you?
- 7Paying down personal low-interest or student debt first.Did this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, each linked to the thread it came from.
“It’s not a lot of money. Mostly small gifts from grandparents. What’s the best account to open? I would love to open up a Roth IRA for him but he’s too young to work.”source ↗
“First priority is probably saving for her education, but at what point would I want to cap contributions to the 529 (if at all) and divert them to the other accounts?”source ↗
“at what point would I want to cap contributions to the 529 and maybe just put some in her UTMA for flexibility’s sake?”source ↗
“Secondarily, is there a rule of thumb for what percent of YOUR savings would go to you/your retirement vs to her?”source ↗
“Yes to all three. I think first priority would be school because that’s the first thing she’ll face. So I should contribute the most to the 529. But should I put ALL of my money into that now, or maybe split between the accounts?”source ↗
“I have an 8 month old. I have a 529, Robinhood UTMA, and a trump account open for her. Unfortunately I can’t throw endless money at all of them, so which one should I prioritize funding first, and why?”source ↗
Where this came up
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