Help a Reader: Gifts for College

Here's an email I recently received from a reader:

Our son is about to turn 1, and my husband and I have agreed that we don't want people to buy him gifts for his birthday, but would instead prefer people consider giving money for his college fund. We have seen other nieces/nephews have birthday parties where the amount of toys they ended up with was out of control (we have a fairly large family on both sides). Although my parents like this idea, and support it, I'm not sure how to make it more widely known without coming off rude.

We would love to celebrate his birthday with our close friends and family, but we don't want people to feel like gifts are necessary. I do understand that many people will want to give gifts though. I'm trying to find the right balance between not ending up with more toys than he needs or has room for, and looking like we are "asking for money" which I feel comes off as crass and rude. Maybe this is more of an etiquette question than a finance question, but how do you (or your readers) handle that fine line of what is and isn't socially acceptable?

What's your advice for her?

Comments

[JC]

At that age, I think it is up to the parents to start the college fund - not party guests. If some of the family would like to contribute to something like that, then that's great. While I wouldn't mind supporting a close friend's child's college fund, I would rather do that unsolicited. The awkwardness and future stigma of possibly giving a gift that the couple deems 'cheap' would outweigh the thought of giving a different gift.

I've had the almost exact opposite problem. Some of the family wanted to start a college fund for a few of the cousins, but it was decided that the parent and grandparents would not appreciate the gesture and it may even go unused. Imagine the disappointment of the family when a sizable college fund goes unused!! Although, it is still on the back burner for the future, so don't think we're giving up on it....

[Rae]

This sort of thing comes up a lot on an etiquette forum I frequent, and there's no real final answer. A lot of it comes down to how close you are to the people you're inviting. One thing to keep in mind is that it's never etiquette-ly correct to say something like "no gifts" or "cash only" or "donate to the college fund" or anything like that on an invitation.

The best advice I've seen is to try to work your preferences into other conversations. Like, "you know, we have so many toys for Tommy, but he almost always plays with three specific ones. In fact, we just had to take a huge box to Goodwill the other day that he'd barely touched. We've decided not to spend any more money on toys for a while and just invest in his college fund" Use conversations like that to steer them toward a certain type of toy (blocks or whatever), or money for the fund even outside of discussions about birthday parties and the like.

I'm not entirely sure of the tax repercussions of having stocks or bonds in a child's name, but you could also suggest that sort of thing rather than cash. But that type of conversation really depends on how comfortable you feel with who you're having it with. Your parents, since they are in support, can also gently guide friends and family with the same sorts of conversation above, and how they think it's wonderful that you're doing the college fund thing, etc.

[JC]

In addition to my previous comment - it wouldn't be out of line to state in the invitation that "gifts are appreciated, but not necessary" or "hugs, kisses and friendship are the best gifts for (name)"

[Doug Warshauer]

One solution would be to cut back on the gifts and clothes you would otherwise get for him and use that money for the college fund, allowing the gifts to come from the friends and family.

Especially if this is a first child - it sounds like it probably is - you might find that you get some gifts that are really great from people who have older children and have had positive experiences with the items they give you.

[Mr. ToughMoneyLove]

Tell your guests to bring beer as gifts and then drink them because other than maybe the kid sticking his face in the cake, nothing fun happens at birthday party for a one-year old. Good grief. Save your own money and have a party when the kid is old enough to remember it.

[Catherine]

Retirement first, college later. Before your son turns one, you have a unique opportunity to set expectations. Choose wisely.

In my family -- literally dozens of cousins, gift giving is greatly simplified. (think socks, a basketball, movie ticket) Few of the kids expect anything beyond one gift from Mom & Dad and a cake that everyone shares. The only downside is that we are getting at least 2-3 cakes per month at the weekly family dinners, but piles of gifts are never part of the scene. You can influence the pile of toys by doing the following:

1. Fully fund your own retirement plan and pay off all debts. That is the best gift you could ever give your children.

2. Don't throw any birthday parties. I don't mean don't celeberate at all, just don't buy into the whole scene with invitations, decorations, gift bags, entertainers and a guest list that includes the whole pre-school class. Limit the guest list to those you see regularly and actually have invited to come to your home. Having to rent a venue for a child's party means you have gone overboard.

3. Strictly limit the gifts that you do buy for whatever gift-giving occasions happen in your family. Stick to one. That's right, one gift at a time. Such as one for Christmas, one for Easter, one for the Birthday, one for graduation. Multiple people can contribute to the one gift, but let there be only one to receive & unwrap. Set expectations low enough that when a treat happens, it is really a treat.

4. Spread the word that you will immediately re-gift or donate purchased items to charity without even letting little Johnny open the thing. I once gave some Barbie clothes to a neice for her birthday and years later spied the unopened packages in my brother's garage. She never missed that their Mom had tucked the gift away for later. By the time later rolled around, Barbie was no longer appealing. I could have saved a few bucks and a trip to the store. Save your friends and family the trouble. And save your child and his or her friends the stress. It is stressful to receive a big pile of gifts. And very stressful for other children to watch someone else receive the largess.

[Veronica]

I'm not sure if my differing opinion is the product of being from a younger, less well-mannered generation, but I don't see any problem with writing something on the invitation, like "In lieu of a gift, please feel free to contribute $10 to Tommy's college fund." I've seen the same sort of thing on wedding announcements, and felt a sense of relief at not having take time out of my busy schedule to go shopping for the perfect gift. Everyone can use cash.

[CPA Abroad]

@ Rae - Having stocks and bonds in a child's name is not as beneficial as one might think. Thanks to the kiddie tax, any unearned income above $1900 (2009 amount) would be taxed at the parent's rate for children under 19, or under 24 if a fulltime student.

I like Doug's idea if you cannot figure out a way to bring up the subject. I guess it all depends on how close you are to these people and if you feel like they would be offended.

[Holly]

My husband is one of 8 children and we use the nieces' and nephews' birthdays as an excuse for all of us (and grandparents) to get together for dinner and dessert at our houses and for the cousins to see one another. We have no problem gifting anywhere from $15 (for the younger children) to $25 (for the older children). A check is given to the parents and we let the recipient and his/her parents decide whether to save it in a college fund or to put it toward a purchase (something they have been saving for).

It's nice that we all live within 25 miles of each other and we love that the cousins have grown close over the years.

Dinner is something simple (think meatballs or roast beef sandwiches and pasta salad, etc.), and it's also usually a BYOB...and many times we all donate a btl. of soda, iced tea, or an appetizer. It can be done rather inexpensively.

[Benjamin Bloom, CLTC]

A 529 Plan Option

Many new parents will choose to open 529 plans for their children because of one the many great features (tax deffered growth, tax-free withdrawl for higher education, diverse investment options, controlover assets, etc). But there is a great option that some 529 plan sponsors will provide; a site for people to send in contributions.

Just think, at the bottom of the invitation (e-mail or paper), give your friends and family a link to a website where they can make a contribution. That's a rather elegant solution to your problem. Don't ask them for money, give them the option to contribute.

[Joe]

Hmmm. Perhaps you tell your mother and close friends what you wish and give them permission to spread the word amongst all the other guests?

[MaryBeth]

Miss Manners would say that one never mentions gifts on invitations, because one should never appear to expect a gift. I do think that you could share your preference with your parents and siblings and allow them to quietly spread the word.

[Squirrelers]

I don't see anything wrong with mentioning "No Gifts, Please". I realize it may differ from formal etiquette, but saying you don't want gifts is different from asking for gifts. At least to my way of thinking.

As for mentioning the college fund specifically, not the best idea. But spreading the word through parents and others very close to you may very well be a nice way to get this accomplished.

From my experience as a parent, a 1-year old doesn't care about gifts anyway. Often times they are afraid to try the cake! Personally, for my daughter, I just cared about having the people over rather than recouping anything via gifts. I know the reader also didn't find gifts necessary, and I applaud that. Just have the party, enjoy the fun, digitally record the festivities, and make some memories! Don't worry about gifts.

[Budgeting in the Fun Stuff]

I wouldn't mention gifts. If you receive too many, I'd wait a month to see which toys are actually being used and sell the unused ones on Ebay or Craigslist and put that in his college fund.

[F]

My mom did the same thing for me when I was little. She told everyone not to get me gifts because I had too many toys (which I did). She used to brag about the fact that I had a $20,000 college fund by the time I was 4 year old.

I'm not 21 and just graduated from college. Want to know where my "college fund" went? She used it as a down payment on her house. Please don't do this unless you're 100% sure that you're responsible enough to use the money for its intended purpose.

[Holly]

@ F:

My story is similar, but my parents divorced and I never saw a dime of the 'college fund'.

I went all through college thinking it would be at least half paid for by my parents...of course that was a bit of an assumption (due to the fact that my parents would justify saying 'no' to everything with, "We will put that $ in your college fund."). While I was nearly finished college, their divorce was finalized. No surprise that there was no recollection from either parent of their offer to help me pay for college.