“85% of parents expect their child to graduate with debt, estimating an average of $45,000 in student loans“ according to a Fidelity survey.
In one year you are likely to encounter a handful of opportunities to receive gifts: religious holidays, birthdays, graduations, recognizing accomplishments, etc. If you have more than one child simply multiply. You love throwing a party, but at some point enough is enough with the STUFF! So what can you do? This is how I typically see it handled:
- “Your presence is presents enough.”
- Bring X as a donation to charity.
- A significant reduction of festivities after a child’s first birthday.
These are all commendable options, but the reality is we’re not all rich, we’re just lacking space. Celebrations are a perfect opportunity to support a child or family, so its time to get deliberate on how to receive gifts. Think about it, if auntie is buying your son $50 worth of stuff three times a year that’s $2,700 spent by the time he turns 18. If that money was instead invested at a 5.0% return it would be worth $4,430 as he headed into college. Now consider all the relatives and friends celebrating your child throughout the year. You’re missing out on big money in exchange for a toy box that ends up in the attic.
How to start a gifting program:
- Make it easy, which isn’t hard compared to shopping.
- Describe the purpose of contributions so it still feels tangible.
- Broadcast the option, don’t keep it a secret.
- Get your child involved so they learn and understand the toy reduction.
If you’re tech savvy, you can create your own gifting program by building a site and linking a savings account with PayPal (or your preferred way of transferring funds). If that’s sounds overwhelming opt for an institution that already has a program in place. For instance, take a look at Fidelity’s college gifting program. If you already have a 529 at another institution or want to utilize a more flexible style account, you may opt for a program like Future College Fund. If you need more information on types of college savings accounts before proceeding, check out my article on savings vehicles for cash gifts.
Lastly, if you’re reading this feeling extremely taboo – get over it. We’re talking about seed money for your child’s future. If you’ve happily responded to an e-vite or paid for a swim with the dolphins excursion on a honeymoon registry you can definitely side step into a college gifting program. Just make sure to hand write the thank you card.