Dear family: Children's college fund needs cash

The Fangman children of Durham -- Jack, 2, and Katie, 1, -- won't be getting much for Christmas. Not mountains of new clothes. Not toys from China.

Soon after Jack arrived, his parents asked his grandparents to chill on the gifts. It went like this: Children don't need a lot of things. Contribute to the college fund instead.

"When it comes down to it, kids can play with only so many toys. What a waste," said their mother Shanda Fangman, a 34-year-old dentist.

Shanda Fangman said her parents and her husband Bill's parents are practical folks when it comes to money. Likewise, the grandparents have followed their children's request, giving the grandchildren a few small presents for holidays and birthdays but directing most of their gift-giving to their 529 college savings plans.

The majority of grandparents prefer to spoil their grandchildren with gifts rather than give money, according to a recent survey by AARP Financial. Of the 600 grandparents interviewed, 54 percent said they give presents at the holidays and 31 percent give money. The rest give both.

It's almost too late to do anything about overindulging the kiddies this year. But what about next year? How can you tactfully ask Grandma and Grandpa to go easy on the gifts and give cash for college instead?

Just talk to them, said Cindy Post Senning, great-granddaughter of manners maven Emily Post and co-director of The Emily Post Institute in Burlington, Vt. If your children are little, tell your parents that you want to rein in the presents before they develop crazy expectations.

"You can just start out the conversation about the holidays coming up and just say, 'We're just concerned we already have so many toys. We have been worrying about how it feels that Christmas is snowballing away from us and other things are snowballing, too, like college costs,' " Senning said. "And [ask] 'Is there anything we can do about that?' "

But don't prevent Grandma and Grandpa from getting the little ones gifts, Senning said. After all, grandparents enjoy seeing their grandchildren open gifts. You might suggest a modest present or two, with the rest of their generosity aimed at the college funds.

You should make sure that Grandma and Grandpa understand that you don't expect their contributions to pay all the college bills -- not by a long shot. Tell them you are contributing, too. That's a no-brainer.

"They like to see that their own kids are taking parenting seriously," said John Gugle, 37, a certified financial planner at Alpha Financial Advisors in Ballantyne. "The fact that you have set up a 529 without prodding from Mom and Dad gains you some pats on the back."

Let them know that whatever their contribution, it will be a welcome investment in your child's education. And it doesn't have to be much.

You can buy savings bonds, large and small. Some 529 plans will let you invest as little as $5 a month. (For more on 529 plans, visit www.savingforcollege.com.)

You can only suggest

But if Grandma and Grandpa still favor gifts that come packaged with bows, rather than cold hard cash for college, don't force the issue.

"You can't really dictate what they give," Senning said.

Gugle agreed, saying that his wife Ann's parents are better about giving money toward their four young children's future college bills than "real" gifts.

"[But] my mom still hasn't jumped on board. I am always saying, 'Mom, this is too much, too many toys, too many material things,'" said the father of Sarah, 6; Ashley, 2, and 4-year-old twins Ryan and Andrew.

Another option is to lead by example. Curtail the number and caliber of gifts you give your children and hope that Grandma and Grandpa will follow suit. This year, the Gugles are giving three modest gifts to each of their children. They explained to them that that's how many gifts baby Jesus got from the three wise men.

By limiting gift-giving now, you are managing your children's expectations. In too many families that Gugle knows, he said, "two gifts became four, and four became eight."