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JLP’s Question of the Day – Kids and Money
By JLP | July 28, 2006
Here’s the question:
The reason I ask this is that my family loves to give gifts like toys and clothes but none of them like to make contributions to the college fund. I was just curious how you guys have approached this topic with grandparents (if you have).
Topics: Question of the Day | 11 Comments »
July 28th, 2006 at 10:32 am
I think about this often, after my kids come home with more new clothes or crap from grandmas! They would be so offended if I would ask them to contribute money- because I think the bottom line is that it isn’t really about what’s best for the kids- but what makes them feel good? (Does that sound harsh? lol) I think it depends on your family, but for mine- the best thing is to graciously accept the gifts and then have them magically disappear and money appear in kids accounts….
July 28th, 2006 at 10:34 am
We use the Maryland 529 plan, and have given the contribution forms to grandparents so they can contribute. I think it makes them more comfortable, as they’re directly contributing to the college fund (as opposed to going through us).
We did have to do a little “marketing” up front, though, to convince them that savings bonds, while appreciated, would not be as beneficial as a 529 contribution.
July 28th, 2006 at 11:05 am
I think about this often, after my kids come home with more new clothes or crap from grandmas! They would be so offended if I would ask them to contribute money- because I think the bottom line is that it isn’t really about what’s best for the kids- but what makes them feel good? (Does that sound harsh? lol)
I don’t think it sounds overly harsh, but I don’t think it should necessarily be about what’s best for your children. A lot of work has been done on the sociology of gift-giving and one important discovery is that it’s an important social bond for us to have fun selecting a gift for the recipient, even when someone else’s fun involves searching for cheap, pink, scratchy baby clothing at WalMart that we’d rather not have cluttering up our homes.
Now, some people will derive joy from putting money towards a child’s college account, in which case I think it’s fine to casually inform them such an account exists in case they want to contribute. But to ask them to contribute would be cause for offense, in my opinion.
July 28th, 2006 at 11:35 am
I would agree with prlinkbiz that the proliferation of material gifts to kids has much more to do with the needs of the giver than the needs of the recipient.
I have really become fairly disgusted with the whole gift-giving culture that has evolved. It seems like an arms race to see who can ingratiate themselves more to their kids and/or grandkids. The cycle seems to be spiraling out of control, and the bar keeps moving up, at least in my family.
It’s not a new issue. Even as a child, I remember how much stress the holidays and b-days would cause my parents as they tried to scrape together what little money they had for gifts, so that us kids would not be disappointed. As an adult, I feel guilty that us kids should have been more understanding and less selfish – but then we were only kids. And I feel that my parents should have tried to instill less materialism in our lives, and given us a much better lesson in saving, delayed gratification, and practicality – but that’s all water under the bridge now.
Bottom-line, kids would benefit greatly from learning a bit of self-discipline, and gaining some perspective on the rampant materialism that is behind the gift-giving mania. And certainly, money in a college fund would be much appreciated later down the road.
July 28th, 2006 at 11:45 am
A great question. My kids are both older, 1 attending college. He has had to take out student loans over and above what we could afford to give him. I would have preferred his Grandma to loosen her purse, but that won’t happen. We have approached the subject with her but to no avail. She is too worried that when she gets older she might need the money for health reasons. I support having relatives contribute to schooling funds at birthday parties, the kids received way too much toys, often forgotten in a few days.
July 28th, 2006 at 12:34 pm
I think that for young children (under 3) who don’t totally understand gifts yet, when asked for “ideas”, mentioning 529’s, or whatever the case may be, is perfectly acceptable. Older than that though, I agree that at that point the gift giving is between the person giving and the child. There won’t be a huge smile from a number that child never sees getting slightly larger and little satisfaction for the giver.
I am lucky in that my parents do both with little to no suggestions from me.
July 28th, 2006 at 2:30 pm
No exactly fair… it should be, JLP’s question(s) of the day.
I was going to say no, but that is not absolute. They have given me small amounts of cash to invest on her behalf, but in comparison with the overall gifts she recieves – the total is well under 10% of the total gift value.
They would rather she have what she wants, not what she necessarily needs – but she is the ONLY grandchild on my side of the family, so that’s the way it has worked out. Also, I have to echo what has already been posted. They do what they want with their money, and they want to spoil her now, not finance something ‘responsible’ – that is now my job.
On the other hand, they do know we are diligent about saving for her, and don’t seem as worried about it as I am – with the inflation rate for hgher education easily keeping up with the rate increase of say, a gallon of gas.
Perhaps that will change as I take on a more advisory role in their lives. It may likely happen. Stay tuned.
July 29th, 2006 at 11:45 am
Before you ask your relatives, you should consider how your kids will respond.
I regularly contribute, in lieu of material gifts, to college funds for my nieces & nephews (no kids of my own). Because kids these days are accustomed to receiving money (cash) for birthdays, my savings gifts are “tolerated” as long as the kids get a material gift every now and then.
However, I was running behind on Christmas purchases one year, and decided to contribute to their college funds. Well, you should have heard the flak! I even got an “I hate you” from one. I could get on my soapbox and go on for days, but will stop myself and slowly count to 10.
Not exactly a direct response to your QOD …
July 29th, 2006 at 11:56 am
Cindy,
“I hate you.” Sounds a little ungrateful. If I caught my kids saying something like that, I don’t know what I would do but I know there would be consequences!
Thanks for the comment.
July 29th, 2006 at 10:41 pm
I think that that the main reason a person gives a gift is to please the recipient, not necessarily fulfill a “need”. When it comes to gifts for young children (or even teenagers), money for their college fund is definitely not something that they will enjoy at the time it is given, so the pleasure of giving the gift is lost. Even if the child is polite and thanks the giver, no one will be fooled, he or she would most likely have preferd something they could enjoy immediately.
What I would suggest, JLP, is that you ask for money for your child’s college fund for yourself on gift-giving occasions, rather than for your child, as you want this more than your child does and will be much more likely to appreciate the gift. The gift-giver will also have the joy of having given a gift that is truly appreciated by the recipient. I think that when a child is young, a contribution to a college fund is more a gift to the parent than the child, as it takes some of the burden off the parent, while the child does not yet feel the burden at all.
July 30th, 2006 at 12:22 pm
First, I like Marina’s suggestion that you request college contributions on your own behalf…
My youngest son’s godparents give a physical birthday gift and $50 toward his 529. My parents have always given savings bonds (soon to be cashed and rolled into their 529s)for the first 3 years or so of each son’s life (baptism, Christmas, birthday) with some physical gifts mixed in (they can’t help themselves–they’re grandparents!) I’ll never get my in-laws to contribute–my MIL takes care of all the gift-giving (for 8 kids, their spouses, and 12 grandchildren + 2 step grandchildren.) Contributing toward savings would be an easy way to save time and money, but the depth of her financial education is limited (husband has always done all the investing, etc.) so the traditional gifts are a comfortable way for her to please the children.
Also, now when my boys receive birthday cash, they most likely tell me to “put it in their college account.”
Sorry to take up so much space, but I emailed about my “garage sale blues” a few months ago to select friends and family after reading an article at Fidelity’s site re: contributing to college savings rather than buying another toy (couldn’t find it on the site anymore.) Here it is:
First of all, a disclaimer: Nothing personal, family and friends…I appreciate your generous nature when it come to our boys. But every May, I get the Garage Sale Blues!
Every May, I rue the enormous waste toys as presents create: waste of money, waste of landfill space (packaging!) and a waste of my time having to have the dang annual garage sale! And yes, as a mother (and aunt) I’m guilty of buying toys I wish I never had…like those so-annoying laser guns Mark insisted the boys would love for Christmas…and now they sit unused in a Rubbermaid container in the basement. Not one of my better moves. Does anyone else feel pressure to have a respectable “pile” under the tree on Christmas morning? I’ve shifted gears towards books and DVDs, sometimes well-received, sometimes not. However, buying them feels better to me. One of my sis-in-laws gives her children 3 gifts–a la the Wise Men. Boy, if I would have only started that practice 10 years ago…ka-ching$$$! We suggested that to our boys this past Christmas. Wily foxes that they are (and still Santa-believers), they said fine–Santa would bring them the other presents they wanted! Oh, the agony of wanting to end the charade…but secretly taking pleasure that they still believe!
Family members ask for gift ideas, now you can give them one by suggesting college savings. I also think kids can embrace the intangibles of it, if they’re older than 7. Our boys know we have 529s started for them. Recently I showed Adam his balance and he was irritated that little Ryan had more. Recognizing the learning opportunity, I wrote out their balances as a subtraction problem and told him to figure out how much more he would need to be “even” with his brother. Well the difference was around $53… So Adam promptly ran to his room, came back with $60 of allowance/birthday money, and told me to put it in his college account. That smug look on his face showed me the positives of sibling rivalry. Hey at this point in my life…I take what I can get!