Best savings plan/account for grandkids?

[disykat]

What I meant by "expected" was how much did the person contributing to the account expect to contribute, that a college savings account would even be worth it.

Not assuming this is what you in particular mean, but I will never understand how people can think any amount of savings is not worth it. It is money they will get that will keep them from that amount of possible debt. Savings is always worth it, IMO. All or nothing mindsets mean a lot of people have nothing!

I have watched young people I've known not work, because the paychecks were "not worth it" and parents not save for or contribute to their kid's college because the amount that they could give "wasn't enough" to cover the whole thing etc. Then people end up with massive amounts of debt and wonder how it happened.??? IMO, college savings for most students generally isn't about avoiding all debt, it's about contributing via multiple avenues (jobs, parental help, strict budgeting, smart choices, scholarships, gifts from relatives, etc.) to keep the debt as manageable as possible.

Talking in today's dollars only, a grandparent could put in $100 a year and minimally it would add up to $1800. That's enough to pay for books, contribute to their share of the rent, bolster the food budget for months, it could pay for transportation costs, etc. etc. etc. Any amount of savings is "worth it," IMO. Sure, there might be SOME grandparents out there able to and wanting to cover the entire cost of college for grandchildren, but that doesn't mean giving in smaller amounts isn't generous and meaningful.

 

[Frwinkley]

Any savings is worth it, and the earlier one starts, the better. It’s the magic of compounding interest.

I know people who spend easily $6.00 a day on coffee.That’s $180 a month. Throw that in a high yield savings account, and watch it grow over the course of 18 years.

Our grandkids’ 529s are invested in index funds and we are quite aggressive in our allocation because the kids are so young. Once they hit high school, we’ll become more conservative.

And our savings is not intended to pay all of their college expenses, but every bit that we can contribute helps.

Of course, we’ve taken care of our retirement savings. That should always be the top priority.

 

[disneychrista]

Not assuming this is what you in particular mean, but I will never understand how people can think any amount of savings is not worth it. It is money they will get that will keep them from that amount of possible debt. Savings is always worth it, IMO. All or nothing mindsets mean a lot of people have nothing!

I have watched young people I've known not work, because the paychecks were "not worth it" and parents not save for or contribute to their kid's college because the amount that they could give "wasn't enough" to cover the whole thing etc. Then people end up with massive amounts of debt and wonder how it happened.??? IMO, college savings for most students generally isn't about avoiding all debt, it's about contributing via multiple avenues (jobs, parental help, strict budgeting, smart choices, scholarships, gifts from relatives, etc.) to keep the debt as manageable as possible.

Talking in today's dollars only, a grandparent could put in $100 a year and minimally it would add up to $1800. That's enough to pay for books, contribute to their share of the rent, bolster the food budget for months, it could pay for transportation costs, etc. etc. etc. Any amount of savings is "worth it," IMO. Sure, there might be SOME grandparents out there able to and wanting to cover the entire cost of college for grandchildren, but that doesn't mean giving in smaller amounts isn't generous and meaningful.

Not saying having $1,800 to help pay for things is not worth it. Maybe I just don't understand why one would open a 529 (or whatever number it is) account for such a low amount. A standard saving account, say through Capital One or Ally, without any restrictions would be fine.

 

[disykat]

Any savings is worth it, and the earlier one starts, the better. It’s the magic of compounding interest.

I know people who spend easily $6.00 a day on coffee. That’s $180 a month. Throw that in a high yield savings account, and watch it grow over the course of 18 years.

Our grandkids’ 529s are invested in index funds and we are quite aggressive in our allocation because the kids are so young. Once they hit high school, we’ll become more conservative.

And our savings is not intended to pay all of their college expenses, but every bit that we can contribute helps.

Of course, we’ve taken care of our retirement savings. That should always be the top priority.

YAY! I've seen people get so angry about "the latte factor" theory, but it's so true! The reality is if you spend money on something you no longer have it to spend on (or accumulate for) something else, so watch what you're spending on.

 

[disykat]

Not saying having $1,800 to help pay for things is not worth it. Maybe I just don't understand why one would open a 529 (or whatever number it is) account for such a low amount. A standard saving account, say through Capital One or Ally, without any restrictions would be fine.

I assume there are minimums associated with opening specific types of accounts and people would be choosing accordingly.

 

[tvguy]

Not assuming this is what you in particular mean, but I will never understand how people can think any amount of savings is not worth it. It is money they will get that will keep them from that amount of possible debt. Savings is always worth it, IMO. All or nothing mindsets mean a lot of people have nothing!

I have watched young people I've known not work, because the paychecks were "not worth it" and parents not save for or contribute to their kid's college because the amount that they could give "wasn't enough" to cover the whole thing etc. Then people end up with massive amounts of debt and wonder how it happened.??? IMO, college savings for most students generally isn't about avoiding all debt, it's about contributing via multiple avenues (jobs, parental help, strict budgeting, smart choices, scholarships, gifts from relatives, etc.) to keep the debt as manageable as possible.

Talking in today's dollars only, a grandparent could put in $100 a year and minimally it would add up to $1800. That's enough to pay for books, contribute to their share of the rent, bolster the food budget for months, it could pay for transportation costs, etc. etc. etc. Any amount of savings is "worth it," IMO. Sure, there might be SOME grandparents out there able to and wanting to cover the entire cost of college for grandchildren, but that doesn't mean giving in smaller amounts isn't generous and meaningful.

Your point is well taken. To me, it shows why our schools need to teach basic financial responsibility. However, the attitudes of a lot of parents who brush off the need for savings may undermine that effort.

 

[disykat]

My husband grew up in a poverty mindset, so it's a giant trigger of feelings for me. Even while I still fight him on some of his financial thinking because he gets stuck in old patterns at times, he now gets upset with his family members watching them struggle - often needlessly in our opinion.

I was lucky that my parents taught me about saving, etc. (and of course we taught our own kids as well.) I was shocked in high school when I had to take a personal finance class and realized there were kids that knew NOTHING about money and I was pretty sure the young, first year teacher that was teaching the class was one of them!

 

[tvguy]

My husband grew up in a poverty mindset, so it's a giant trigger of feelings for me. Even while I still fight him on some of his financial thinking because he gets stuck in old patterns at times, he now gets upset with his family members watching them struggle - often needlessly in our opinion.

I was lucky that my parents taught me about saving, etc. (and of course we taught our own kids as well.) I was shocked in high school when I had to take a personal finance class and realized there were kids that knew NOTHING about money and I was pretty sure the young, first year teacher that was teaching the class was one of them!

My wife and I have some decisions to make. 43+ years of saving and good financial advice have our financial planner asking us to consider taking some of the income from annuities we bought decades ago. Guaranteed income for both of our lifetimes to enjoy while we are healthy enough to do so. The only thing to consider is it will reduce what we leave our kids. It is a good problem to have.

 

[irlandaise]

Any savings is worth it, and the earlier one starts, the better. It’s the magic of compounding interest.

Amen!

There's a cute scene in the vampire TV series "Forever Knight" where Nick Knight's human friend who knows the truth about him asks how a police detective can have nearly half a billion dollars in savings. He points out that he's 800 years old, and says "compound interest."

Okay, granted, we on this forum are not (AFAIK ) working with that kind of timeline, but the principle (sorry for the pun) is the same. I was working for a small nonprofit a few years ago, and when we had an all-hands meeting about our 403(b) savings plan, I chimed in to urge my co-workers to take advantage of it. I specifically mentioned how gratified they would be to see how even modest contributions would build up and compound over time. As Nike says, Just Do It!

 

[TCRAIG]

Not saying having $1,800 to help pay for things is not worth it. Maybe I just don't understand why one would open a 529 (or whatever number it is) account for such a low amount. A standard saving account, say through Capital One or Ally, without any restrictions would be fine.

There are some definite tax benefits of a 529 over a regular savings or investment account. Something to consider though - 529s are only tax free if the money is used towards higher education costs, there is no federal tax benefit to the depositor (maybe state depending on where you live) and any $$ in a 529 account will count against any need based scholarship calculations…