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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Write It Out: Wise investment pays off

Kath’ren Bay-Higdon, right, poses with her spouse, Alexis Bay-Higdon, and two of the five grandchildren they have set up scholarship funds for: Maddie Gendreau, 12, Jake Gendreau, 9.
Kath’Ren Bay-Higdon 66

My spouse and I love showering our grandchildren with gifts, but we realized we were spending money mostly on things that were outgrown, and, eventually, shelved or discarded.

Was there a more effective way to maximize our gift giving? Our aha moment came when we were discussing the struggles our grown children had paying for their higher education. We decided to start a 529 college savings plan in our name, with each grandchild a beneficiary of their own account.

We approached the parents with our desire to start these college funds; our suggestion was enthusiastically accepted. The grandchildren receive the education money tax-free, and we receive tax credits for our donations – a win-win for everyone!

We add money to the accounts every birthday, Christmas and other celebrations. We still select a gift around $20 and include a card that says how much money (usually $50 or $100) was added into their college fund for that event.

Skipping vacation the first year we started, we invested $1,000 in each child’s account to get the accounts started, and now, when we get a bit of a windfall, we put a chunk of it into each account, in addition to the gifting.

As the kids become older, we talk about compounding and the importance of saving regularly.

In the 2008 recession, the earnings went down, but by hanging in there for long-term, the grandchildren watched their net worth grow back and begin increasing. They love watching their accounts grow in value, and they are learning firsthand about investing.

We now have five grandchildren, ranging in age from 8 to 18. Our oldest grandchild has enough in his account to pay for his first year tuition to all colleges he is interested in.

Our youngest will have even more options, because she has 10 more years of investment ahead. We still splurge occasionally with special gifts, but the majority of money spent on our grandchildren goes into their college funds.

Our family is middle-class; there are no rich uncles in the wings.

If the grandchildren want higher education – college or trade schools or special training – they will have some help from their parents, but most of it will have to be paid with scholarships, grants, working – and their college savings plan.

Even though there is the possibility they may receive it after we are gone, it has surely been our smartest investment.