Children may appreciate having money saved for college when they graduate from high school more than they will enjoy a toy now.
By Deborah Ziff
The day after Christmas in 2013, Brad Myers hauled away two loads of wrapping paper, boxes and leftover toy packaging in his pickup truck. His twin boys weren’t even a year old yet.
“That next day, I just decided, I’ve got to figure out something better,” he says.
The Virginia dad says he was frustrated with the way toys had taken over his home, adding that his boys would play with some gifts for “10 minutes, then chuck them aside, never to be touched again.” For future birthdays and holidays, he and his wife decided to encourage friends and family to donate to their sons’ college savings accounts with Virginia529, rather than give toys.
“Our intent was to decrease the clutter and give people in our immediate family a pathway to give gifts that are more productive than the typical thing you see,” he says.
According to a study by Fidelity Investments, parents, friends and family will spend an average of $691 per child on gifts during the holidays; 87 percent of parents said they would welcome contributions to their child’s college savings account instead of traditional gifts.
The idea that college savings is a lasting and valuable gift is just one reason to consider it as a holiday gift this year. Here are some others.
She uses the example of giving a gift of $1,000 today. If it grows at 6 percent for 18 years in a 529 account, a tax-advantaged college savings plan, it will be worth almost $3,000 when the child goes to college.
“Instead of buying them something that could get lost, broken or they’ll outgrow, give them the gift of education,” she says.
The parent of the child “may appreciate this a lot more than a noisy set of drums,” she says.
Even a little bit of financial support helps children get to college and graduate, says Mary Morris, chairwoman of the College Savings Foundation and CEO of Virginia529 College Savings Plan.
“We know that helps kids – when they know they have that kind of family support – to be successful in K-12, as well as making it to college and getting through,” she says.
“By making a gift, you will give them significantly higher earning power in the future, and yes, they will thank you for that,” she says.
Morris says Virginia’s gift certificate program only requires that gift-givers know the beneficiary’s name and date of birth, not account or Social Security numbers.
Some 529 plan managers are getting savvier about using technology, allowing account owners to create personalized gifting websites or digital dashboards with pictures and quotes, and encouraging them to share the link on social networking sites like Facebook and Twitter.
Lastly, there are also third-party websites, such as Gift of College, GiftedPath, GradSave or FutureGift, that allow savers to create gift registries for college savings. Gift of College, for instance, also allows friends and family to give gift cards.
The nice thing about many of these sites, Morris says, is “they’re not tied to any particular state” and the gift-giver doesn’t need to know where a friend or family member has an account. However, the third-party companies may charge a fee to the gift-giver, much like with a gift card.