Connie writes in:
I am 37, female, and single, and have no interest in getting married or having kids of my own. My younger sister (33) and her husband are having their first child in November. I want to help that child succeed. What’s the best way to do that? I have read about a 529. Is that the best route?
This is a subject that’s near and dear to my heart. As the parent of three children, having extended family that’s supportive and actually cares about your child is a truly wonderful thing.
There are a ton of things you can do to help that child succeed, not just financially, and all of these things are important. The key for you is to choose a few things you can easily do and do them well, rather than pledging to do most of them and not really doing them well at all. Some of these have financial commitments and some of them do not.
Here are 12 things that can really have a profound impact on a child that you can provide in your situation. I’ve witnessed how powerful these things can be from all of the involved roles – child, parent, and extended family member. Believe me, Connie, you really can make a huge positive difference.
#1: Open a 529 Plan
The first and perhaps most straightforward option to help a child that you’re not the parent or guardian of is to open a 529 plan for that child’s future educational expenses and contribute to it steadily, or else contribute to a 529 plan for that child opened by someone else (that child’s parents or grandparents, typically).
Money in a 529 plan is typically used to cover the costs of college – tuition, room and board, textbooks, and so on – or trade school. Money used for that purpose can be taken out of the account tax free by the student; money can be used for non-educational purposes, but in that case taxes must be paid on the gains along with an additional penalty.
This is a great way to help a child prepare for the expense of college. The best way to do it is to set up automatic contributions each month. Let’s say you decide to commit $20 a month from birth. Over the course of 18 years, at an average annual growth rate of 7%, you’ll have accumulated about $8,500 for the child. Make that a $40/month commitment and you’ll have $17,000 put away for the child when that child’s ready for college. If another family member or two makes a similar commitment, you’ll be close to paying for their full tuition at a state school.
The key with a gift like this is consistency. You’ll want to set up an automatic contribution and then just forget about it. Don’t touch it, don’t even think about it, just let that $20 or $40 or whatever disappear from your checking each month into that child’s college savings fund.
#2: Open a Taxable Investment Account for a Graduation Gift
What if you’re not sure that you want to give a gift that’s set up to be exclusively used for education? You can always set up an ordinary taxable investment account, contribute to that in a similarly automated fashion as is described in the section above about the 529 plan, and then gift the proceeds to the child when they graduate from college or get married or reach some other stage in their life.
The advantage here, of course, is that the money can be used for anything, not just college. The disadvantage is, of course, the taxes. As you go along and the investment earns returns in the form of interest or dividends, you’ll have to pay taxes on those – small at first, but it might grow to something noticeable later on.
You’ll also have to decide whether to control the account yourself and gift the money as a lump sum at graduation (you’ll want to be aware of gift tax laws if you do this, but you have way more control over when it’s gifted), or else gift the money as you go along into an account in their name (you probably won’t be responsible for the taxes at that point).
As with the 529 contributions, the best way to do this is to just open up a taxable investment account (either in your name or the child’s name) and then set up automatic contributions and never turn them off. Let it drip in at a rate of $20 or $40 a month and you’ll be able to give a five figure gift at their college graduation, something that can pay off a student loan or buy a car or make a house down payment or pay for a wedding. That’s the kind of thing that can change a life.
#3: Offer Reliable Emergency Child Care
This might seem a bit out of place here, but bear with me. Being able to step in and provide emergency child care when something goes wrong in the lives of that child’s parents can make an enormous difference in several different ways.
For one, it takes a lot of stress out of an already stressful moment for the parents. It shields the child from having to share in that stressful moment, which is probably helpful for their emotional development. It also shields the parents from what might be a super-expensive child care decision.
There are all kinds of life crises that can come up, from health problems to a natural disaster, from a personal crisis to a professional one. There may simply be times where your sibling is just overwhelmed, and you can help both your sibling and their child by just stepping up and saying “I’ve got this” at a key moment. It will save them money and stress and possible long term emotional damage.
Just be ready and willing to step in when something really goes wrong in the life of your sibling and/or your sibling’s spouse. Take their child, no questions asked, and let them handle the crisis.
#4: Cover a Meaningful Extracurricular Activity
Another financial hand you can lend is by saving money in an ordinary savings account and coming through with the funds to cover an expensive extracurricular activity that might be extremely important to your niece/nephew but prohibitively expensive for the parents. You might be able to pay for the fees for a summer camp or buy a band instrument or something like that.
Just start at birth by putting aside $5 a week or something like that into your savings account. Set it up so that it’s automatic (notice a theme here) and don’t touch it. Instead, just let it keep building and then pay attention to what’s going on in the child’s life.
There will come a time when that child is really passionate about something that’s just beyond the reach of their parents, who are probably already strapped by the continual costs of food and shelter and clothing and all of the other financial and personal challenges of parenting. When that happens, you can step up to give that child a truly enriching experience – you can buy that instrument or pay for that camp or buy that robotics kit or whatever it is that really matters to them.
This is a confluence of two things – money when it’s needed and attention to know when it’s needed, plus an extra dollop of good communication with the parents so that it’s not a shock out of the blue that can cause problems. Just let your sibling know that you’re saving for this kind of opportunity at some point in their life and remind them every so often. Then, when you see a possibility, check in with them and if they’re okay with it, make it happen.
#5: Offer Guardianship
Another financially challenging helping hand you can offer is offering to be the guardian of that child should something happen to the child’s parents. Let’s say that your sibling and the child’s other parent (whatever that situation may be) are no longer able to be a parent to that child – could you be the one that steps up to the plate and takes over the job?
It’s a pretty challenging commitment. Sarah and I have made such a commitment a couple of times, but only after some difficult discussions.
The truth is that concerns about guardianship are something that most involved and caring parents worry about. How will our children be cared for if we were to die unexpectedly? Who would stand up to the job? Will they be able to afford to care for our children? There are financial concerns buried in there, too, related to life insurance and other such difficult questions.
The best thing you can do as a supportive relative is to simply make that offer to the parents, if you feel able to. Simply tell them that you are willing to be the designated guardian of their children if they were to choose you. That at least gives them an option of someone willing to take on that burden if needed.
That doesn’t mean that they’ll choose you – they may have multiple options available. However, it is a relief to a parent just to know that there are people in a child’s life who care enough to be willing to take on that burden if need be.
The rest of these suggestions are less directly related to finances, but more directly related to how you can have a profound positive impact on that child’s life by investing other resources you have, namely time, energy, and focus.
#6: Step Up to Relieve Pressure
Being a parent is stressful in a way that’s often hard for non-parents to understand. You have to be in “parent mode” around the clock, making sure that the children are safe and cared for at all times. That’s a tremendous burden, and when life becomes difficult (as it does at inopportune moments), it can all feel like a pressure cooker. Even when parents behave well around their children, the children can still feel the stress and the pressure, and that’s not a good thing either.
It’s during those difficult moments when you can have a tremendously positive impact on both the life of the child and on their parents by simply stepping up to help relieve the pressure. Just volunteer to take the child for a day or two, or visit to serve as a short term “nanny,” or just make a home-cooked supper for them and eat with them and then do all of the cleanup (trust me, that last part is huge).
There are times where alleviating just a little bit of the pressure in a household with children can make an enormous difference in maintaining the sanity of the parents and the well-being of the children.
#7: Take the Child for Extended Periods of Time (i.e., A Week at Aunt Connie’s in the Summer)
This is an extension of the previous idea (as it gives the parents an extended period of time without having to worry about their children), but it goes even further than that: It gives you the opportunity to spend extended time with those children and provides a place in which you can take on some of the subsequent tips.
More than anything, it’s an opportunity for children to truly understand that they are loved by more people than just their own parents. It’s a window of opportunity to really connect with that child beyond just family events where their parents are present, to be able to reach a level of comfort together where meaningful connection can occur.
Yes, it’s stressful to take on that kind of care for a child – and it can be a bit expensive because you’re now covering food for another person for a while and you’re probably doing some activities with a price tag. However, in terms of really connecting with a child, showing them that they’re loved by more people than they might think, and also giving the parents an opportunity to not carry that child care burden for a while, there’s almost nothing better that you can do.
Turn off your cell phone. Turn off your desire to talk and add to the conversation. Just listen and pay attention.
Listen to what that child is saying. Ask questions – not cute childish facetious ones, but real questions that you would ask of someone if you’re taking them seriously and listening to them. Don’t let yourself be distracted – keep your focus on the child. Let them ask you questions and answer them, but don’t dominate the conversations with your own offerings. Let them steer the conversation, even if you consider the direction to be “childish” – that child is showing you what he or she truly cares about, and that’s important.
This will facilitate an incredibly deep connection with that child if you do it with consistency. They’ll eventually come around to asking you questions that they’re struggling with, things they might not feel okay asking their own parents about. That takes time and it takes a lot of conversation and it takes a lot of building, but when it starts to happen, it’s incredibly valuable for that child.
#9: Give the Child Experiences Outside of Their Normal Lives
Even the best parent sometimes steers their children’s lives down familiar paths, exposing the children to things that are on the radar of the parents rather than the full variety of experiences that the child could have. As a person involved in that child’s life, you can supplement those experiences with things that aren’t even on the radar of the parents.
Consider taking the child to art museums or musicals or a tractor pull or something that’s not normally part of their experience. Let them eat fried catfish or spicy Thai food that they’re not likely to get at home. Let them decide for themselves whether they like this new experience or not.
I had a few relatives and family friends who did this for me when I was a child and it had a profound impact on me. They gave me gifts that were outside my normal realm of experience and sometimes helped me have experiences that were outside my normal boundaries as well. Sometimes those things fell flat; at other times, they changed my life.
Give those experiences. Yes, some might fall flat. Don’t give up. Try other things. It only takes one new experience to change a child’s life.
#10: Know The Child’s Interests, Don’t Criticize, and Help Them Explore
One of the most powerful things that a child can have is an “ally” in their family who understands what they’re passionate about, particularly if their parents do not. This doesn’t necessarily mean that you’re also passionate about that thing, but that you care enough to learn more about it and are able to engage in conversation about that passion and are willing to help them explore it in new ways.
You hear that the child is really into collecting “bugs.” You don’t know the first thing about it, but hearing about that passion is enough for you to learn about insect collection and then a few days later you show up with a bug net and a small terrarium to whisk that child away for an afternoon of bug collecting.
You hear that the child is really into solving the Rubik’s cube. You don’t know the first thing about it, but you spend a few evenings and figure out how to do it (it’s not that hard if you give it some devoted time). Then you can solve it together, talk about better techniques, and maybe even go to a speed cubing competition together.
This does a number of things at once. For one, it helps to validate that child’s interests. It also helps build a bond between the two of you. It can also encourage them to add more depth to an interest that might actually lead to something that sticks with them for life and shapes their path.
#11: Attend Their Important Events
This is a really simple thing that mostly just requires time and proximity. If the child you care about has an important life event coming up, take the time to be present for that event. Make it to their dance recital or their musical recital or a couple of their games.
You don’t have to attend everything, but making it to at least a few of their events is a powerful way to directly show that you are interested in and care about the things that they’ve invested time and energy on and feel proud of in their life.
This can be difficult to do, especially if you’re remote, so consider taking the time to simply visit your sibling at a time where you can actually partake in something that their child is involved with. Schedule a trip to visit your sibling during soccer season so that you can catch a couple of the child’s games, for example.
When you do this, be attentive about their performance so you can talk to them specifically about how they did, showing that you’re there in mind and spirit and not just in body. It makes a difference.
#12: Let Your Guard Down
When you spend time with a child, just let your guard down and let yourself be your inner self. Let that inner child come out and don’t worry about who might see it. Roll down a hill. Run through a sprinkler. Play a game with serious intent to win. Talk openly about yourself. Make a mess.
Almost all of us, in our adult lives, have adopted personal “guards” of “adult behavior” that we use quite often, mostly to protect ourselves. Those guards really aren’t needed around children or even teenagers – in fact, it’s those guards and those efforts to seem like an adult that can prevent us from really connecting with children.
Let that guard down. Do what feels fun and right inside (as long as it doesn’t endanger the child in any way, obviously). Be open about things that you might never speak about. Be playful and experimental. Don’t worry about the mess – you can clean up the kitchen later. Don’t worry about seeming a little foolish in public – no one is going to hate you for dancing in the park with your niece.
Letting your guard down like that is going to make all the difference in the world when it comes to making a meaningful connection with that child.
Final Thoughts: Consistency, Above All Else
The key element in all of the strategies listed above is consistency. However you choose to help, make that method a lasting commitment, one that will continue through toddler years, childhood years, preteen years, teen years, and even beyond. Don’t just do it when it’s convenient. Don’t be spotty with it. Be consistent, so that the child knows that it’s reliable. That kind of reliability is incredibly powerful and meaningful.
It’s also worth noting that many of the most powerful ways to help a child don’t involve money. They involve time, energy, and focus. Yes, there are situations where money can help, and saving for a child’s college education can be powerful and meaningful, but it’s not the be-all-end-all of how you can help a child you care deeply about. I’d far rather have involved aunts and uncles than aunts and uncles who are uninvolved but contributing quietly to a 529.
Good luck in whatever tactics you choose.
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