Where to put $5,000 now

If Junior made $4,000 last summer at the Gap, and you're feeling generous and wish to "match" his earnings, put the money in a Roth in his name, and it will grow tax free.

The money may not be available immediately, but it can come in handy down the road.

For college or graduate school expenses, your child may withdraw any contributions made tax-free and without early withdrawal penalties. Withdrawals of any earnings on the contributions, however, will be subject to income tax.

With the purchase of a first home, your child may withdraw any contributions made to the Roth free of tax and early withdrawal penalties.

Earnings in the account up to a maximum of $10,000 may also be withdrawn tax-free, presuming the Roth account has been open for five years and presuming all contributions have been withdrawn already.