Six Ways Grandparents Can Set Up Savings for Their Grandkids
Millions of Americans fall into the “people with grandchildren” category, and many are concerned about helping their grandkids financially. In a recent national AARP survey, most grandparents have, on average, four to five grandchildren.Those grandparents spend an average of $2,562 annually on their grandchildren, about $179 billion per year.
While not all grandparents can help financially, those who are able to may want to help establish financial accounts for their grandchildren, particularly for college.
Here are six ways grandparents can contribute to their grandchildren’s future from MyBankTracker.com, a leading financial comparison site.
- Savings Account: This is one of the easiest ways to save money. Putting money in a savings account means the money that is set aside won’t decrease in a total dollar sense.
- Certificates of Deposit: CDs earn higher interest rates because the money can’t be withdrawn for a certain period. Longer-term CDs tend to offer higher interest rates.
- Brokerage Account: Opening a brokerage account allows for investment in stocks, bonds, mutual funds, ETFs and other types of investments.
- UGMAs/UTMAs: Uniform Gifts to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) are both frameworks that allow parents or grandparents to give money to minors without having to set up a trust.
- 529 Education Savings Plans: A 529 education savings plan allows savings or investment for future education costs in a tax-advantaged manner.
- 529 Prepaid Tuition Plans: 529 prepaid tuition plans are another tax-advantaged savings option.They have similar tax advantages as 529 college savings plans.