Soon I will be able to increase the amounts that I have been depositing to three childrens savings accounts. They will receive their funds when they turn 18 years old. But I need to know if you think the following is fair to all three children. Child #1 will turn 18 in four years, child #2 will turn 18 in 8 years and child #3 will be 18 in 11 years.
If I give the same amount to each, it is apparant that childs #2 and #3 will receive more money then child #1.
So I decided to use a base number to make it fair (I think) to all three.
$7200.00 is the base number
Child #1 gets $150.00 per month for 4 years = $7200.00
Child #2 gets $ 75.00 per month for 8 years = $7200.00
Child #3 gets $ 54.55 per month for 11 years = $7200.00
Now here is where I get stuck. Inflation will give #2 and #3 less purchasing power when they turn 18. So how do I adjust for inflation? Do I Increase the monthly deposit by the past years inflation rate or use some other number?