Bank/savings account for my son - need advice

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Blackhawk
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Bank/savings account for my son - need advice

Post by Blackhawk »

My son, 19, just got approved for temporary disability. Due to Social Security being Social Security, it is safer if he receives his checks via his own account, separate from ours (or each of us will have their assets counted against the other and they'll reduce both of our income, then see that we're both getting less, adjust it back up, count us against each other, GOTO 10.)

He'll be getting a back payment, plus a set amount per month. A portion of the monthly will go to us (his contribution to the family.) A portion will be going to him for spending money. The remainder will sit in the bank with the intention that in a few years when he's caught up developmentally, he'll be ready to go to college/other and start his own life, and he'll do so with a nest egg.

I know nothing about bank and savings account options. I don't have enough income to save, let alone keep a minimum balance. I have never been able to save, invest, or do anything similar, so I have nearly zero of the background knowledge required to even follow most of the advice I've seen, which tends to be lingo-heavy. So I'm coming here to make sure I make a smart choice. Here are the (I think) relevant facts:

~We will not need constant access to the money (checks aren't necessary, nor will bills be paid from that account.)
~We will, however, need to transfer a sum of several hundred out of the account and into our account at least once per month.
~We'll be starting with a deposit of at least $1000, possibly more.
~Several hundred more per month will be left in the account.
~Other than the direct deposit and
~We do our banking at Old National, using plain old checking accounts.
~It would obviously be convenient for him to also use Old National, but some quick checking suggests that they have terrible interest rates for savings accounts (I have no idea if this is true.) I would be perfectly happy doing his banking elsewhere, so long as it otherwise fits our needs and doesn't require that we drive a hundred miles for in-person visits (our own bank is already 30 miles away.)
~The account, as planned, will remain otherwise untouched for at least a couple of years.

What do I do with his money to make sure he gets the most out of it without risking it or needing to get a degree in finances?
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Re: Bank/savings account for my son - need advice

Post by Smoove_B »

Interest rates for savings accounts (really, most bank accounts) is terrible and has been for quite some time. To gain access to higher interest rates you need to typically have absurd deposits, but even that isn't a guarantee.

If Old National has the ability for you to do online banking, I would say to keep his account there for ease of use. Namely, I transfer money between my bank accounts by pressing a few buttons and clicking "verify'. To accomplish exactly the same thing, my dad (using the same bank) goes into the lobby, fills out the paperwork, has a cup of coffee, talks with everyone working there and leaves an hour later.

There are some online only banks that have slightly higher interest rates, but I've never really looked into them. Maybe someone can offer better advice there.

I wish I had better advice. Sorry.
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Re: Bank/savings account for my son - need advice

Post by coopasonic »

0.50% is about standard for low balance, no fees savings
0.10% for checking

Watch out for fees. Legally that info should be front and center.
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Re: Bank/savings account for my son - need advice

Post by gilraen »

Interest rates are practically non-existent, especially on such low balances. Don't bother with them. Just make sure that whatever account you get doesn't have monthly fees or at least is waived with a minimum balance (or possibly waived with another requirement met, like if at least one direct deposit is received - my checking account does that).

Looking at the Old National bank's website - their Basic Savings account will waive the $4 monthly fee as long as you keep at least $300 balance at all times. Looks plenty sufficient for your needs.
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Re: Bank/savings account for my son - need advice

Post by LawBeefaroni »

Don't worry about interest rates. They're too low to matter unless you have a much larger account.


If your current bank allows account transfers online, go with that. Get a no fee checking account. I would recommend a second savings account too, but that can wait.

Looking get Old National, I'd say the student checking or the "ONB Everyday" account. The student has no fee with no minimum balance. The Everyday has no fee if you have $500 in monthly direct deposits or $750 checking/$1500 combined accounts. Neither generate interest but like I said, don't worry about that.

Once he gets around $1500 in cushion, open a savings account and move the cushion in there.
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Re: Bank/savings account for my son - need advice

Post by hitbyambulance »

you may want to look into a credit union at some point:

https://wallethub.com/credit-unions/indiana
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Re: Bank/savings account for my son - need advice

Post by Alefroth »

hitbyambulance wrote: Fri Jul 30, 2021 2:00 pm you may want to look into a credit union at some point:

https://wallethub.com/credit-unions/indiana
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Re: Bank/savings account for my son - need advice

Post by Alefroth »

Be aware that Reg D limits the amount of monthly transactions from a savings account. Sounds like that won't be an issue for you, though.

There is no reason he shouldn't be able to do nearly anything without visiting a branch in person.
Last edited by Alefroth on Sat Jul 31, 2021 1:56 pm, edited 1 time in total.
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Re: Bank/savings account for my son - need advice

Post by stessier »

If it's true that no one is going to have to touch that money for some time, even in case of emergencies, you might look at getting a CD. At least you'd get some interest that way.
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Re: Bank/savings account for my son - need advice

Post by LawBeefaroni »

stessier wrote: Fri Jul 30, 2021 2:43 pm If it's true that no one is going to have to touch that money for some time, even in case of emergencies, you might look at getting a CD. At least you'd get some interest that way.
In this case I'd recommend thet only after checking account is fully funded and there is a decent sized savings account.

Let's say the CD is at a staggering 1%. For $3000, that would he $45 and change over a year and a half. It's nifty luxury but only after you're sure it won't be needed.
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Re: Bank/savings account for my son - need advice

Post by Blackhawk »

That's one problem - we have no idea how long this will be in there. I can't imagine it'll be less than two years, but it is 'until he is ready', which is something nobody knows. He could realize that he has a dream he wants to pursue in a few months, or it could take years. He'll have the $1500 after the first month or two. After a year it'll be in the $5,000 range (that's an estimate, there are still a few numbers we're guessing at.) We'll only need access it once a month most of the time, so that's not an issue.

It's funny - the thing I always heard when I was younger was that if you didn't need to spend it, you put it in a savings account rather than a checking account to make money from it. It sounds like it doesn't really matter anymore.
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Re: Bank/savings account for my son - need advice

Post by LawBeefaroni »

Blackhawk wrote: Fri Jul 30, 2021 8:02 pm That's one problem - we have no idea how long this will be in there. I can't imagine it'll be less than two years, but it is 'until he is ready', which is something nobody knows. He could realize that he has a dream he wants to pursue in a few months, or it could take years. He'll have the $1500 after the first month or two. After a year it'll be in the $5,000 range (that's an estimate, there are still a few numbers we're guessing at.) We'll only need access it once a month most of the time, so that's not an issue.

It's funny - the thing I always heard when I was younger was that if you didn't need to spend it, you put it in a savings account rather than a checking account to make money from it. It sounds like it doesn't really matter anymore.
When we were younger, savings earned 6 percent or more.

I'd still recommend a separate savings account. From a psychological standpoint it's a good idea to have clearly defined "pools" of money. You can transfer between savings and checking instantaneously with most banks so there's really no downside.

Just wait until he has enough in checking and then open savings.
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Re: Bank/savings account for my son - need advice

Post by Blackhawk »

LawBeefaroni wrote: Fri Jul 30, 2021 8:13 pm Just wait until he has enough in checking and then open savings.
Just so I understand - what's the purpose of him getting a checking account?
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Re: Bank/savings account for my son - need advice

Post by $iljanus »

Blackhawk wrote: Fri Jul 30, 2021 9:54 pm
LawBeefaroni wrote: Fri Jul 30, 2021 8:13 pm Just wait until he has enough in checking and then open savings.
Just so I understand - what's the purpose of him getting a checking account?
That’s the account that he’ll make financial transactions from, like pay bills. Savings accounts are meant for you to park your money and there are Federal rules limiting the amount of transactions you can make in a period, which after looking it up is 6 per month.

https://www.investopedia.com/this-gover ... nt-4589978
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Re: Bank/savings account for my son - need advice

Post by Blackhawk »

Right, but he doesn't pay bills. Any. I pay the combined family bills from my account. That's what the one monthly transaction would be - transferring his contribution to the family expenses into my account.
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Re: Bank/savings account for my son - need advice

Post by $iljanus »

Blackhawk wrote: Fri Jul 30, 2021 10:05 pm Right, but he doesn't pay bills. Any. I pay the combined family bills from my account. That's what the one monthly transaction would be - transferring his contribution to the family expenses into my account.
Ahh, I just got caught up in the thread so I suppose he doesn’t need a checking account until you feel he’s ready to be financially independent.
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Re: Bank/savings account for my son - need advice

Post by Kraken »

LawBeefaroni wrote: Fri Jul 30, 2021 8:13 pm When we were younger, savings earned 6 percent or more.
I learned percentages when my parents opened a savings account for me when I was about 6 years old. The rate then was 4%, and that's been my benchmark ever since.

Interest rates are indeed in the crapper everywhere now; my savings are in Capital One 360 online accounts that are paying 0.4%, which is actually more than short-term CDs are paying. I still have a few long-term CDs earning 3-4% and I foresee interest rates recovering to that level over the next couple of years as the economy reinflates.

ING Direct -- one of the first online-only banks -- used to have the best rates around, but since Capital One bought them they've been pretty average. Online banks generally have better rates and lower fees than physical banks due to having no overhead, and they're obviously more convenient. Once rates climb back to healthier levels, consider building a CD ladder -- several CDs with staggered maturity dates. CD ladders are the most "fun" one can have with traditional savings. They're a good way to learn low-stakes investing with zero risk. And you can do it all online.
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Re: Bank/savings account for my son - need advice

Post by LawBeefaroni »

Blackhawk wrote: Fri Jul 30, 2021 9:54 pm
LawBeefaroni wrote: Fri Jul 30, 2021 8:13 pm Just wait until he has enough in checking and then open savings.
Just so I understand - what's the purpose of him getting a checking account?
They have zero minimums and allow more transactions. Also has a debit card. And like I said,. psychologically it separates "spending" from "saving."


Savings would work as well but ultimately you want to end up with both. A lean checking account and savings account with the majority of funds.
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Re: Bank/savings account for my son - need advice

Post by Drazzil »

Be VERY careful about having any kind of bank balance in his account. I don't know the limits myself but if he gets more then a set amount in a bank account SSDI will make him live on it until he has nothing left. I knew of a guy who scrimped and saved up enough money on his Social Security Disability to buy a trailer and live in it. SSI made him sell the trailer and live on it until he had nothing left.

I think the thing you're looking for would be a special needs trust. You or he could start it, and it is exempt from the limits on assets from SSDI and he could use it to pay for housing or other needs. Not sure about the state you live in so YMMV.
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Re: Bank/savings account for my son - need advice

Post by Zenn7 »

Drazzil wrote: Mon Aug 02, 2021 6:27 pm Be VERY careful about having any kind of bank balance in his account. I don't know the limits myself but if he gets more then a set amount in a bank account SSDI will make him live on it until he has nothing left. I knew of a guy who scrimped and saved up enough money on his Social Security Disability to buy a trailer and live in it. SSI made him sell the trailer and live on it until he had nothing left.

I think the thing you're looking for would be a special needs trust. You or he could start it, and it is exempt from the limits on assets from SSDI and he could use it to pay for housing or other needs. Not sure about the state you live in so YMMV.
I second this. I know in Michigan, for Medicaid, you can't have more than $2,000 in assets total. Don't know how that compares to SSDI, but you definitely want to make sure he's not going over any limits if there are any or you lose the money.
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Re: Bank/savings account for my son - need advice

Post by Zarathud »

Basically, you need to know the personal assets limit and make sure the account spends down below the limit.
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Re: Bank/savings account for my son - need advice

Post by Drazzil »

Zenn7 wrote: Mon Aug 02, 2021 7:45 pm
Drazzil wrote: Mon Aug 02, 2021 6:27 pm Be VERY careful about having any kind of bank balance in his account. I don't know the limits myself but if he gets more then a set amount in a bank account SSDI will make him live on it until he has nothing left. I knew of a guy who scrimped and saved up enough money on his Social Security Disability to buy a trailer and live in it. SSI made him sell the trailer and live on it until he had nothing left.

I think the thing you're looking for would be a special needs trust. You or he could start it, and it is exempt from the limits on assets from SSDI and he could use it to pay for housing or other needs. Not sure about the state you live in so YMMV.
I second this. I know in Michigan, for Medicaid, you can't have more than $2,000 in assets total. Don't know how that compares to SSDI, but you definitely want to make sure he's not going over any limits if there are any or you lose the money.
What I would do if a special needs trust (your best option) or some other legal method isn't available would be to find other ways of preserving the moneys value while saving it for long periods of time. wmmv
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