Although it can be tempting for grandparents to shower their grandchildren in gifts and love, one of the most long lasting gifts a grandparent can provide for their grandchildren is sound financial advice. In an article by Fox Business, Casey Dowd writes about the value of financial habits passed down from generation to generation. According to the article, the value of a dollar and an education are the most important lessons boomer can share with their grandchildren.
However, according to a new TIAA-CREF study, the generation of baby boomers may have a somewhat skewed perception of the costs of receiving a higher education today. The study found that 20% of grandparents think a four-year college education costs $30,000 to $50,000 and 25% percent think it costs $50,000 to $75,000. The reality of higher education is a costly one, with a four- year public college costing approximately $100,000 and a private four-year school averaging at $164,000, according to the study.
Joseph Stabnick, the senior director for AARP College Savings Solutions from TIAA-CREF, offers several tips for grandparents to help fiscally guide their grandchildren in order to achieve financial stability. Stabnick states, “Boomers can make a positive impact on their grandchildren by sharing how their financial decisions have affected their lives.” Only 8% of grandparents discuss money and the significance of saving for college with their grandchildren whereas 85% of young adults are open to having this discussion. Grandparents can leave a financial legacy to their family by consistently connecting with loved ones and relaying basic principles of managing one’s money. Another paramount role a grandparent can play is supporting their grandchildren’s college education. College is more expensive than it has ever been and continues to experience rises in price. Many grandparents are unaware of simple and affordable ways to assist their grandchildren in saving for college. One of these methods is a 529 college savings plan. These are investment accounts that allow earnings on contributions to grow tax-deferred, much like retirement savings. People can start with as little as $25, the amount spent, perhaps, on a gift for one’s grandchild. To reflect on the timeless metaphor of giving an individual a fish versus giving them a fishing pole to achieve self-sustainability, bequeathing sound financial advice to your grandchildren can significantly affect their financial state in the future.
Tags: 529 college savings plan, aarp, aarp college saving solutions, boomers, casey dowd, fox business, joseph stabnick, tiaa-cref
