DEAR DAVE: Our daughter is 11 years old, and we save $50 a month for her. Right now, we've accumulated $4,200 for college, a car or just savings in general. Should we be investing this money, instead of putting it in a savings account?
DEAR JILL: If I'm in your shoes, I'd choose college as the focal point over the other things you've mentioned. My advice would be to move that money into a 529 Plan with mutual funds inside. That way, it will grow tax-free from this point forward. Then, if you continue to set $50 a month aside for her for seven more years — and the stock market averages 11 to 12 percent — you'd have about $16,000 sitting there when she turned 18. That wouldn't fully pay for college, but it'd be a great start. Plus, she can apply for scholarships and grants and work and save to help make it happen.
As far as a car is concerned, I'd set up a separate savings account and agree to match whatever she saves. That way, if she can put aside $3,000 to $4,000, with the match she'll have a pretty nice car. But in my mind, college is the most important thing here.
DEAR DAVE: Should families who are struggling to pay off debt still give their kids commissions for doing chores?
DEAR STEVE: Yes, but it doesn't have to be a lot of money. Kids seldom get paid an amount that is equal to what the chore is worth. To be perfectly honest, the chores most kids do — especially the little ones — aren't worth that much. I wouldn't pay a kid $5 a day, or even per week, to feed the dog. I mean, it takes less than 30 seconds to scoop the food into the bowl!