529s - A Great Present. Seriously.
Memo to relatives and friends:
If you want to give our new baby something, make it a deposit to his 529 account.
Before he was born three weeks ago, we set up and started funding a 529 account for our son. (A 529 is a tax-advantaged way to save for college, but there are others.) I would absolutely love it if, instead of another stuffed animal or 0-3 month outfit, people would just deposit money there. A couple of people have sent money and we’re going to do just that.
With Christmas in a few months, I’d make the same recommendation. Please, oh please don’t buy a toy for my baby. Just put the money in his college fund. Believe me, the last thing we need is more toys.
So if you’re looking for a present to give to a little kid, ask the parents about this. If they have set up an account, they’ll be more than happy to give you a deposit slip. If they haven’t, hopefully it will spur them into doing so.
Just as an aside, I’m soooo looking forward to getting rid of toys and baby gear as he progresses past the various ages when they’re used. I can’t tell you how psyched I am for the day when I start unloading strollers, bouncy seats, and all the rest. It actually lifts my spirits thinking about getting rid of boxes of baby clothes. Ahhhhh.
Some 529-related links:
Free Money Finance has several posts on 529s. This is just one that deals with 529 FAQs.
Moolanomy has a great post-of-posts regarding 529s.
News flash - after posting this, I read Paid Twice’s post about her struggling with what to get her 1-year-old for her birthday in the face of grandparents with lots of gifts. Unfortunately, she says directing them to the college fund is not an option. Too bad.
Image courtesy Roanoke for kids.
October 11th, 2007 at 9:00 am
Thanks for noticing my post!
October 11th, 2007 at 10:13 am
Thank you for linking up to my post!
October 11th, 2007 at 11:53 am
Sorry about the quick thank you, I didn’t have time to read the post until now.
First, congratulation on your new baby.
Second, out of curiosity, did you go with prepaid or savigns plan? Also, which state did you choose and why?
October 11th, 2007 at 2:11 pm
@Pinyo - Thanks!
We’re doing a 529 savings plan through Maryland.
We chose a savings plan because we didn’t have a lump sum to put down. I think you can also do a payment plan with the prepaid, but the payments are still pretty sizable. The savings plan allowed us to send in a smaller amount each month.
We chose Maryland because it’s our current state of residence. As such, we get a tax deduction for contributing. It’s actually pretty sweet - $2,500 deduction per account per year and you can carry forward anything excess. So we’ll be reducing our state gross income by $4800 every year.
October 11th, 2007 at 4:38 pm
Nice thoughts. I’ve encouraged the same to my family, and it’s worked pretty well. I’ve tried to tell people “No toys at all”, but some have gotten offended.
October 11th, 2007 at 10:46 pm
[…] Personal Finance has a better idea about what to give to a new born baby, a deposit to the baby’s 529 account. […]
October 12th, 2007 at 9:08 am
[…] Advanced Personal Finance, 529s - A Great Present. Seriously. […]