What I Do With My Kids' PFDs

THE ALASKA PERMANENT Fund Dividend (PFD) is something that is truly unique to our state. There is no other state that offers its residents money on a yearly basis and our state taxes are minimal. With my partnership, and our two kids, there is now the promise of two additional PFDs within our family. With this money also comes the question of how do we responsibly handle it for our children?

2012 Dividend Amount is $878.00

Like many large, parental decisions, this is one that I'm not totally sure we're handling correctly, but my partner and I do agree on a three-part plan of what to do with our children’s PFDs. We may refine that plan later, but for now we:

1. Donate. For every single PFD in our family we donate $100 through Pick. Click. Give. For my partner and I this gives us the opportunity to donate to causes outside of our monthly charitable contributions. For our children’s PFDs we donate to causes that directly benefit children.

2. Travel. Next, we take half of our children’s PFD amount to pay for some type of travel. We recognize that travel is a learning experience with immeasurable value so this is a justifiable position. This year these monies will go toward an upcoming trip to Florida and a cruise, an opportunity to hang-out with the grandparents and collect some Vitamin D.  ast year we had no trip planned around PFD time so we used our son’s half to pay for his first ski lessons.

3. Save. We save the other half of the PFD. Right now, a portion of our son’s monies are currently in a CD, but with interest rates so low this method has little return. So we changed our approach to how we saved this half and invested in a Roth IRA. Yes, this is riskier than a CD, but an average rate of return is higher than a simple CD. (Please use my advice here as only a motivator to put some thought and research into how you save this money. A simple call to a financial professional can give you some advice for the best options for your family.)

As all residents of Alaska know, the cost of living in this state is high. In fact it is the highest in the state for urban areas right here in Juneau. For this reason I think of the PFD check as a subsidy for life in the Last Frontier and I am grateful for it. I know that many families must use this money to pay for life’s basics and do not have the luxury to spend it on travel or save it for a later date. Regardless if our child’s PFD is necessary to meet fiscal needs or a surplus that can be used in other way, as parents we need to honor this money as theirs and be responsible stewards of it.

Steve SueWing writes from Juneau and regularly blogs at AkDad.com.