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Articles > No More Toys – Send Money for College
Anh Vazquez
www.littlegrad.com
If the parents had the choice between another toy, or an extra contribution going into their children’s college funds, the money going into the college fund is the clear winner. This is according to a recent nationwide survey that measured the opinions of parents and grandparents on various issues such as sharing household tasks, college savings habits, and aspirations for their children and grandchildren.According to the survey, conducted by Little Grad, five times as many parents (61% to 13%) would prefer that relatives and friends give their children money for college rather than toys for special occasions. Interestingly, the survey also found that grandparents want to be involved in helping save for their grandchildren. Nearly 60% of families reported that grandparents either started a college savings account for their child or are at least occasionally contributing to it.
The parents want it and the grandparents want it. What keeps extended families from contributing more to college savings? There are many reasons why this occurs. Here are three common barriers:
- Being embarrassed. Many families might feel that it is inappropriate to tell family members they would appreciate money instead of a gift.
- Remembering another account. Many grandparents (and even parents) are put off by the seeming complexity of college savings accounts…a 529 vs. a UGMA…who to make the check out to? In the end, it may seem simpler to send a toy or a check that frequently ends up in the family checking account rather than in a long-term college savings account.
- The joy of the toys. Toy makers do a wonderful job of finding ways to delight children and market to them via advertising and other promotions. While grandparents may know in their heads that giving money to college is right, in their hearts it is hard to forgo the look on the grandchild’s face when they open a present.
It can be difficult to approach financial issues with family and friends. Here are some ways to tactfully suggest an alternative to the usual gifts:
- Gracefully include the information into the holiday cards. Even the busiest of parents try to send out holiday greetings. For many, getting a family photo done to send out helps get everyone into the holiday mood. As part of the message to the family, a family can proudly announce that they have a dedicated college savings account. This makes it easy for the motivated grandparents, aunts, uncles and godparents to follow up with contributions.
- Online bookmarks. Almost everyone with a computer makes use of bookmarks to help remember frequently used resources. Parents can send an email that tells where they have opened the account, along with the website where contributions can be automatically scheduled. The motivated relatives can get the needed information from the parent, bookmark the site, or add the account information into their own bank account auto pay. Some savings programs like Little Grad (see below) include the ability to easily make blogs that can be bookmarked.
- Getting the characters involved. For the child who loves Dora, or the Teletubbies, there is genuine delight in getting a toy that lets them commune with these characters. But a card from one of these characters, or perhaps even better, an electronic card from a site like nickjr.com or pbskids.org, that tell the parents about the college contribution gift is a gift to the parents and the child will enjoy (and will never need batteries!)
Getting a college savings plan kicked off while children are young, and getting broader family involvement are the most important things a family can do to secure the financial aspects of their child’s education. And once those things get started, here are a few ideas that easily help the family to save more.
- Automatic contributions. Most families can afford to make at least a small monthly contribution from their bank account. Both parents and grandparents might want to look at their situations and set up automated monthly contributions.
- Reward programs. Online programs like Little Grad, Babymint and Upromise help parents get rebates from their online shopping. These programs can easily net a family hundreds of extra dollars for college each year. In addition, many reward credit cards can be tied to college savings accounts–Fidelity, Citibank and many other banks offer these with a percentage of all your purchases being put into college savings.
- Tax Free Accounts. All 50 states have made it easier to set up a 529 account, where money being saved for education will grow tax-free. (Note: these accounts do carry the risk of losing value, as they are investment accounts, not straight interest bearing accounts). A family can get direction from their financial advisor, or from doing research at sites like savingforcollege.com.
Taking steps towards securing the money part of the child’s educational future can remove a lot of worry from a parent’s mind. Letting the rest of the family be part of this process can be a great thing to undertake together and bring some sanity to the often overwhelming Christmas season.
Anh Vazquez, CEO of LittleGrad.com, earned a Master’s degree from Stanford University and a Bachelor’s degree from Carnegie Mellon University. After spending over ten years working for leading companies such as Intel, Netscape, and Wal-Mart, Anh’s career interests shifted when she became the mother of two children. Anh drew on her experience as a senior executive at Wal-Mart’s fastest growing division (Walmart.com) when she decided to start LittleGrad.com, a free service that helps parents save for their children’s college education. LittleGrad.com has been featured in The Wall Street Journal, Forbes, San Francisco Chronicle, and Money magazine. For more information please visit www.littlegrad.com
