Q: My 9-year-old son does not know the value of a dollar. He doesn't get an allowance but he gets money from relatives. He knows he has to tithe on what he gets, 40 percent goes into the bank and the rest is his to play with. I've noticed that he has been dipping into his piggy bank, which when filled goes to the bank. I don't know how to instill (in him) that it's important to save when he debates (with me) that he's saving to buy what he wants, so why wait for the long term. I need some help!
A: Let the boy have some short-term fun with his "play" money.
He should be able to buy some things he wants now. With your son, come up with a list of the things he can afford to get right away and things that will take some time to save for, which will teach him delayed gratification.
If you make him save all of his money without any short-term pleasures, he may grow up to resent saving.
Q: What should a couple do when they have saved for years to help fund their only child's college expenses -- only to have said child go off to college and fail miserably her first year? She doesn't want to continue. First, how do I get the funds out of the 529 savings plan? Second, how do I get over the anger of scrimping and saving for years, only to have her throw everything away? Right now I want to take the money and go on a dream vacation since we have never done that.
A: It's understandable that you are upset. But the first year of college can be tough and it can discourage a lot of people.
Don't take that dream vacation just yet.
Hang on to the money in case your daughter changes her mind. You should also wait to avoid paying a penalty if she does return to school. Contributions to a 529 plan -- a state-operated investment plan -- grow tax-deferred. If the money is used for purposes other than qualified higher-education expenses, the earnings are subject to a 10 percent penalty as well as federal income tax.
Make your daughter get a job, pay rent and financially contribute to the household. She is likely to find the pickings slim and the salaries low for someone without a college degree or without some technical training.