A GIFT FOR A LIFETIME: Grandparent Giving for Education

 We all know grandparents and grandchildren have a special bond. If you are a grandparent of college age children, or those attending private schools in some cases, you have to be alarmed about the amount of debt students are racking up. Economists are estimating students will be paying loans for as long as 20 years, affecting their ability to get homes and cars.*

Grandparents have a special tax saving measure that will be a wonderful gift to their favorite student.  They can make direct payments of tuition to a school free of gift tax.  So what does that mean to the grandparent?  It means that even if you have contributed to 529 plans or given to your student directly, you can exceed the $13,000 annual gift tax exclusion by writing the check directly to the educational institution for tuition payments.  The grandparent is giving now and also reducing their future taxable estate.

What does it mean to your grandchild?  It could mean less debt and the ability to start their professional career on a more solid financial basis.   With the giving season right around the corner, this may be a strategy you want to consider. To learn more, contact your financial planner at the Center.

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Source: Huffington Report, 7/20/2012

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  You should discuss any tax or legal matters with the appropriate professional.

April is Financial Literacy Month

 It is a sad statement about our society that we need to have an entire month dedicated to financial literacy.  Today, a large percentage of individuals and families are experiencing some kind of financial difficulty that is negatively impacting their everyday lives.  Money Management International recently reported that Americans carry more than $2 trillion in consumer debt and 30 percent report having no extra cash.  This is just Americans – you can only imagine what the figures might be worldwide! 

Much of our problem, in my opinion, is lack of education.  We need to start teaching basic financial education to children, so that good financial habits are built over a lifetime.  The problem is, there are very few schools teaching financial education, and many parents don’t have the resources (or sometimes the knowledge) to teach their children these important lessons. 

The good news is that we have a great resource locally.  Detroit is home to Junior Achievement Finance Park, a hands-on financial learning center.  I recently spent the day volunteering with the FPA of Michigan at JA Park with a classroom of 8^th graders from Detroit. I saw first-hand how this high-tech facility can help students learn the basics of money management by spending the day in the life of an adult.  Students were assigned a life scenario and were responsible for:

• Calculating their Net Income (salary after taxes)
• Managing monthly expenses by making lifestyle choices
• Setting aside a portion of the budget for savings and charitable giving
• AND, ultimately, creating a balanced budget 

As we all know, this is not always an easy task.  The day provided students with some real-life perspective on how difficult it can be to manage money, and on why Mom and Dad sometimes have to say “No” to their daily wants. 

In honor of Financial Literacy month, you have the opportunity to visit JA Park with your children FREE of charge this Saturday, April 28^th, from 9 a.m. to a 1 p.m. for JA Family Day.  I encourage you to attend with the children in your life…let’s work together to help the next generation become financially literate!

Please feel free to e-mail me for additional financial literacy resources for children and adults.

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Raymond James is not affiliated with Junior Achievement.

The Gift of Education

Convincing a child to go to college might seem about as easy as giving a goldfish a good, close shave. But in reality, you have some leverage you might not know about. It's called an Education Policy Statement and it gives your student some guidelines to follow. In an Education Policy Statement you can:

• Make the most of your educational gift
• Let the student know what you, the donor, expects
• Lay out donor & student responsibilities 

Giving the gift of education can be a productive, beneficial, life-changing experience. A good education can help your student achieve their life dreams and goals. That's why, over the years, many parents and grandparents have asked for help in making sure they clearly spell out their vision of college.  An Education Policy Statement document might not be the silver bullet, but with the right incentives in place to motivate the student along --- well, it's a good start.

In a future blog … How much can you expect to pay for college? We'll give you the tools you need to add it up.

What Does MOM Stand For?

The other day, my teenage daughter related to me a quip she received by way of Twitter.  It goes something like this… a child was pestering his mother about his urgent need for a new cell phone.  The mother continued to answer “NO,” without an end to the requests.  She finally asked in frustration, “Do you think I’m made of money?”   The child replied, “Isn’t that what MOM stands for… Made Of Money?”

My first response to this story was to chuckle; it is a very clever play on words.  However, after my own children continued to use the Made Of Money reference over the next several days, I realized that this is a clear indication of a real problem.  Most school age children and younger adults are receiving little to no financial education at school or at home.  They see the kids on TV and their friends at school ask and receive anything they ask for, without understanding what it takes to earn the dollars that are being spent.

As a parent, what can you do to begin to teach your children about the value of money?

• Help them learn the difference between wants and needs. 
• Pay them an allowance, but make them earn it with specific weekly responsibilities.
• Put them in charge of something (financially) at home; put them in charge of something at home (like food for their pet).  They are in charge of buying it when it runs out…using part of their allowance.
• Encourage saving (i.e. if they can save ½ of something they want, you can match it to make up the difference).

For list of Financial Education Resources for Parents and Children, visit the Certified Financial Planner Board of Standards, Inc. website at http://www.cfp.net/learn/resources_children.asp