What Should My Son Do with His Bar Mitzvah Money?

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March 13, 2026, 6 AM ET

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My son will be celebrating his bar mitzvah soon. Like many families marking this milestone, we anticipate that he will receive some gifts in cash and possibly even stocks. Naturally, the question arises: What is the best way to handle these gifts, and what should he do with the money once it is received? Mazal tov on your upcoming simcha! This is a great question and one that I have not covered before. Every family’s circumstances are different, so there is no one-size-fits-all answer. For example, do you plan to cover your son’s expenses until he enters the workforce? Or are these funds intended to support his discretionary spending in the near term? Are grandparents hoping this money will one day help with college, a wedding, or even a first home? Clarifying the purpose of the funds will help determine how they should be managed. That said, zooming out, receiving a meaningful sum of money at age thirteen is more than a financial event. It is an educational opportunity. A bar mitzvah marks the transition to responsibility in Jewish life. It is therefore an ideal moment to introduce your son to the responsibilities that accompany money. Done thoughtfully, these gifts can become the foundation of lifelong financial literacy. Teach Values First: Before discussing spending or investing, I would encourage families to begin with a conversation about the importance of prioritizing tzedakah. A bar mitzvah is fundamentally about responsibility and identity. Allocating a portion of his gifts to charity reinforces the idea that financial blessings come with obligations. It teaches gratitude, perspective, and the importance of contributing to something larger than oneself. This does not need to be a perfunctory gesture. Sit down together and discuss which causes matter to him. Perhaps it is a local synagogue, a Jewish educational institution, an organization in Israel, or a broader humanitarian cause. Allowing him to research and select the recipient makes the lesson more meaningful. If the first action he takes with his first significant inflow of money is giving, that impression can last a lifetime. Start With Structure: One of the first practical steps is opening a custodial brokerage account. A custodial account allows a minor to own financial assets, such as stocks, bonds, or mutual funds, while an adult manages the account until the child reaches the age of majority. The two most common types of custodial accounts are UGMA (Uniform Gifts to Minors Act) and UTMA (Uniform Transfers to Minors Act). While there are technical differences between them, both function similarly for most families. Importantly, contributions to these accounts are irrevocable gifts. Once money is transferred into the account, it legally belongs to the child. A parent or guardian serves as custodian and manages the investments, but ownership rests with the minor. At either age 18 or 21, depending on state law, the child assumes full control of the account. This reality alone should prompt thoughtful planning. These funds are not a flexible family asset; they are your child’s property. Custodial accounts are taxable. Investment income is generally taxed at the child’s lower rate, though once earnings exceed certain thresholds the “kiddie tax” rules may apply, potentially taxing some income at the parent’s higher rate. From an educational perspective, however, the value is enormous. A custodial account transforms abstract lessons about investing into tangible experience. Your son can log in, see his balance, track growth, and begin to understand that money can work for him over time. Introduce the “Rule of Three”: A helpful framework for managing a windfall, particularly for a young teenager, is the “Rule of Three.” This concept divides money into three categories: Spend, Save, and Invest.

Spend (Immediate Wants): This portion is for enjoyment in the present. Whether it is pizza outings with friends, sports equipment, or a modest purchase he has been eyeing, allocating a percentage for spending prevents resentment and builds budgeting skills. When a child uses his own money, he begins to understand trade-offs. Spending on one activity may mean foregoing another. That awareness is the beginning of financial maturity.
Save (Short-Term Goals): Savings differ from spending in that they are earmarked for near-term goals. Perhaps he wants a new device before summer or plans to attend a special program. Setting aside funds and watching them accumulate fosters patience and discipline. It also reinforces that not every desire needs to be satisfied immediately.
Invest (Long-Term Growth): The investment bucket is where the real opportunity lies. Funds that are not needed for at least ten years can potentially be invested for growth. With proper management, this portion could form the early foundation of his financial future, whether for a down payment on a home, seed capital for a business, or simply a financial cushion as he enters adulthood.

By dividing the money intentionally, you strike a balance between present enjoyment and future security. Reviewing Investment Options: Once funds are earmarked for investment, the next step is determining how to invest them. Certificates of Deposit (CDs): CDs offer a guaranteed interest rate for a specified term. They are simple and safe, making them easy to understand. They can serve as a helpful introduction to the concept of earning interest. However, because their growth potential is limited, they may not be optimal for long-term wealth building. Israel Bonds: Israel bonds function similarly to CDs. You lend money to the State of Israel and receive interest in return. While they may not offer robust long-term growth, they provide a meaningful opportunity to align money with values and reinforce communal responsibility. Teaching a child that investing can reflect identity and principles is an important lesson. Stocks and Stock Funds: For long-term growth, diversified stock mutual funds or exchange-traded funds are generally the most effective tools. Historically, equities have outpaced inflation over extended periods, making them suitable for money that will not be needed for many years. While I typically discourage concentrated bets on individual stocks, owning a small number of recognizable “blue-chip” companies for educational purposes can be beneficial. If your son uses a company’s products, owning a small stake can make the concept of corporate ownership real. If your son was gifted stock from his grandparents (I think every child in my day received Disney stock), he can use that stock as the one to track and follow for educational purposes. That said, the bulk of long-term funds should typically be invested in diversified funds rather than single-company positions. Use this opportunity to explain core concepts: risk and reward, volatility, compound growth, and the importance of time in the market rather than timing the market. Teaching Responsibility: This may sound bold, but after educating your son on his options, consider giving him meaningful input, or even final say, on how his funds are allocated within reasonable guardrails. Most thirteen-year-olds are not fully forward-thinking. That is precisely why this is a teaching moment. If he chooses to spend a large portion immediately, he may later regret having fewer funds available for something more substantial. That lesson, learned early with limited consequences, can be invaluable. If he chooses to invest diligently, he will observe growth over time. Watching an account balance increase because of disciplined choices reinforces the rewards of patience. True responsibility requires ownership. Shielding children from every mistake delays maturity. Allowing them to make thoughtful, guided decisions fosters accountability not only in finances but across life. The Heart of the Matter Is Financial Education: Ultimately, the most important takeaway is not how the money is allocated, but how the process unfolds. Financial literacy begins at home. Children absorb what they consistently see and hear. If money discussions are secretive or stressful, they internalize that tone. If conversations are calm, values-driven, and intentional, they learn that money is simply a tool. Involve your son in reviewing account statements. Show him how investments fluctuate. Explain why markets rise and fall. Discuss inflation and the importance of long-term thinking. These moments turn routine administrative tasks into meaningful lessons. A bar mitzvah marks the assumption of mitzvot and personal responsibility. Introducing financial stewardship at the same milestone feels particularly fitting. A thirteen-year-old may understandably be more focused on Yeshiva League floor hockey, preparing for exams, or spending time with friends. Yet the seeds planted now can compound for decades, both financially and intellectually. Receiving money at a young age is not merely a gift… it is an opportunity. Mazal tov on your upcoming simcha. May it be celebrated with joy, meaning, and the beginning of many wise decisions ahead.