Help the grandchildren prepare for college | Milton, MA Business Listings, Business Directory | Milton’s time
If you’re a grandparent, you don’t need Grandpa’s Day to remind you of the joys of having grandchildren. Still, you might want to take this day to think about ways to help secure your grandchildren’s future.
The type of donation or support you provide will be different at various stages in your grandchildren’s lives. Here are some suggestions:
When they are born …
Open a 529 plan. It’s never too early to start saving for college or other types of graduate school. To help your grandchildren meet these costs, you could invest in a 529 Education Savings Plan, which offers potential tax benefits if the money is used for qualifying education expenses. If the grandchild for whom you created the account ends up not using it, you can change the beneficiary to a qualified family member of the original beneficiary. (Be aware, however, that a 529 plan could affect your grandchild’s financial aid outlook.) If your grandchild is not attending college or university, a 529 plan may also cover expenses related to education programs. apprenticeships offered by trade and vocational schools. and registered with the US Department of Labor.
When they are children …
Open a backup account. It’s important that your grandchildren develop good financial habits – and one way to help them is to open a savings account for them and encourage them to contribute. You could even offer an incentive, such as consideration for their contributions, in whole or in part. Consider shopping for a high yield savings account that is free to open and with no monthly maintenance fees.
Establish a custody account. You may want to introduce your grandchildren to the world of investing by setting up a custody account (called UGMA or UTMA) in their name. You can put most types of investments, such as stocks and mutual funds, in this account and follow their progress with your grandchildren. Children often enjoy learning how to invest – and they may enjoy owning shares of companies that make familiar products and services. Income generated from these investments may have tax implications, so you will want to consult your tax advisor before opening the deposit account. And you can’t keep that account forever – once your grandchildren reach the age of majority, they take control of the account, so they can do whatever they want with the investments.
When they are young adults …
Help with the down payment on a house. Once your grandchildren are in the world, they may want to become homeowners. And, as you know, it can be difficult to find a down payment, so if you can afford it, you might want to help out in this area. You will be doing your grandchildren a great service, because home ownership is a key element in building up a wealth.
Provide financial advice. When your grandchildren join the workforce, they could benefit from advice and guidance on a variety of issues, such as setting short and long term goals, managing their 401 (k) plans, and choosing an appropriate mix of investments. So, consider making an appointment for them with a financial professional.
By helping your grandchildren at different times in their lives, you can make their trip more enjoyable, and in doing so, you will gain a lot of satisfaction.
This article was written by Edward Jones for use by Joe Parlavecchio, CFA, CFP®. Visit https://www.edwardjones.com/joseph-parlavecchio for more information.