October 17, 2016

How to encourage donations to 529 college savings plans

Behavioral psychologist Dan Ariely responded to a parent who would like to encourage monetary gifts to a child's 529 college savings plan in lieu of the usual gifts. As reported in The Wall Street Journal, Dan replied:

"Giving money is often more economically efficient than giving stuff, but the feeling of social connection that we get from gift-giving is higher when we give something tangible. You could try to provide the gift-givers with a chance to do a bit of both. You can ask them to buy something small for your child and also to put some money in the college fund."
"If you want an even higher proportion of the money to go to the college fund, buy a nice book with blank pages and on its cover write your child’s name and the word “future” (“Dan’s Future,” for example). You can then ask each gift-giver to contribute to the college fund and, at the same time, to share some life advice by writing on a page of the book. This way, there is a physical reminder of their gift (the book and the advice), but more of the money will go to the college fund."

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