Bloomington, IL, 25 April 2015 | 03:00 PM America/Chicago Growing Your Legacy A little help can go a long way When she was just 14, Carol Nordman’s parents started a retirement fund for her. Rob Whitehead paid for two years of in-state college tuition with a gift from his grandfather. What do these stories have in common? Carol and Rob each received small monetary gifts from relatives that made big impacts on their futures. Many of us worry we can’t make notable impacts because we don’t have tons of money. Experts—as well as the families of Carol and Rob—disagree. Small monetary gifts can spark initiative, drive and creativity. An early Start Earning a Navy ROTC scholarship at Rice University, Carol didn’t need the money her parents saved for her tuition. Although her parents are good with their money, they also are fairly certain they won’t have a huge legacy to leave Carol. Still, they wanted to come up with a creative, low-cost way to make a difference. In 2014, when Carol started her active-duty assignment with the Navy, her parents started a Roth IRA with the maximum $5,500 in her name. “She took it upon herself to get a scholarship, so we think it’s only right that she participate in the profit sharing of her college savings,” Carol’s father, Doug, says. The Nordmans also want to help Carol max out her contribution to the saving plan for federal employees, Thrift Savings Plan. The contribution limit is $17,500 a year. “When you’re just starting out it’s hard to have all the money to max out these retirement plans, but by starting early you get the tremendous benefit of compounding,” says Doug, who runs the blog Military Retirement & Financial Independence and has written a book, The Military Guide to Financial Independence and Retirement. Doug and Marge believe teaching Carol the importance of saving early is the biggest inheritance of all. “We’ll see how she does in the first year, if she can manage this amount of money well,” Doug says. “If she does, then maybe we’ll do it another year.” A Little Creativity “No matter what level of legacy you leave, it really makes a big difference,” says Jeff Birnbaum, a Certified Financial Planner with On Point Financial in New York City. “As adults, we take certain things for granted, and we forget how difficult it can be when you’re just starting out and trying to make ends meet.” This was the case for Rob Whitehead, 43, a professor and architect from Des Moines, Iowa. When Rob was 17 his grandfather gave him, his sister and his two half-siblings $4,000 each for college. “He sent me a handwritten letter and told me how important he felt a college education was to the future success of people,” says Rob. His grandfather then asked the siblings to put into writing their commitment to use the money only for school. Preventing the temptation of using the money elsewhere, Rob invested the $4,000 in certificates of deposit, with one maturing before tuition was due each year. “Every year, when I cashed the CD I invested with his money and used it to pay for college, I felt a renewed sense of dedication,” Rob recalls. Without his grandfather’s gift, Rob isn’t sure whether he could have attended Iowa State. In college, Rob made the Dean’s list several times, he then earned his master’s degree in architecture, and now he is a professor at his alma mater and a firm owner. Strings Attached? Sometimes parents and grandparents worry gifts, small or large, enable poor decisions. Adam Leone, a principle at Modera Wealth Management in Westwood, New Jersey, believes relatives play a key role in helping shape financial decisions. “If you want to be involved then be involved. Don’t just give them money and hope for the best,” he says. According to experts, if the goal of the gift is to teach a financial lesson, then long before you give your children or grandchildren money, talk to them about what you hope to accomplish. Unfortunately, not all recipients are responsible. Poor money management is typical for young people, Leone notes. In some cases, it is better to wait until the recipient’s maturity level is higher. Laying out expectations can help make financial assistance a rewarding experience for all parties.