Great comment! To my knowledge, the majority of state's 529 plans are managed by mutual fund companies with a mix of plan options, including various mixes of stocks and bonds. As with a 401k plan, the level of aggressiveness would depend on how soon your child will be attending college. I would anticipate a minimum rate of return of 3% - with most being in the 6%-9% range. Yes, this would provide that much needed awareness about financial planning and savings as you mentioned. Thanks for the comment!

I too believe the concept is strong. As the parent of two boys, and an active 529/Roth IRA user in my home state, I believe this concept could dovetail nicely with a savings plan. I believe a key to the concept would be partnering with a reputable money manager or bank, where the $ can earn interest above a typical savings account. In turn, this would also build a financial planning/savings awareness tfor our youths hat many are not exposed to. Good luck! Great idea. Got my vote.

I wanted to comment about an earlier post...referring to the emotions of the end user. Absolutely true, and what is unique about this concept is that in a sense - everyone wins. Everyone should get an emotional reaction from particpating in this site - the child, the parents, the immediate family, friends, and community...

That's one way to get our conversation documented! Thanks for doing so. Bottom line is that there are many facets of this idea that have been thought through, some that have not - I really appreciate the insight! As we discussed, to eliminate the gap between parenting and means - we can increase the participation amongst underprivileged youth by implementing a sponsorship program. Keep the comments coming! Thanks everyone!

1) Yes, but the funds will be split according to a predetermined ratio. This would help with saving and budgeting, because the child would learn about earning money for the things they do, and then waiting for the money to accumulate to a point where the child could afford the bike (or whatever) they wanted. I like the saving lesson, but the child should not be able to drain their savings for an item that depreciates- such as a bike- unless they are done growing and plan to use it as a form of transportation to school. 2) No, any voluntary contributions are like any contributions – they are split according to the ratio. Agree. 3) Unfortunately, the target demographic would be middle-white and above, but would trickle down in certain instances. Potentially…more due to technology differences, some would be excluded, but could be remedied by others making it available to them at alternate (other than home) locations. That is was my initial thought. However, you mentioned below your idea is an attempt to do good for the world…middle white and above, are doing financially well- so why target them for this, when the real children in need are the economic poor? Remember The Wire? Those are the kids who need incentives. Instead of selling drugs to make money- have them improve their hoods to earn funds for a much needed college education. 4) Maybe partially – since no reward means that you volunteer for a good cause instead of your own. But contrary to that, I think it would actually have a positive effect on the amount of children who volunteer – again, with the incentive aspect. I feel that young children do not need fiscal incentives to do good. With proper parenting and help from teachers, they should want to do good, because it is the right thing to do. If anything should be an incentive it should be the greater lesson of helping another human being or the environment, not because you are trying to save up for a new bike. 5) Hadn’t thought of that, but that sounds like a fabulous idea! Corporate sponsorship is a splendid idea because the company will be able to get a tax break and the child might have a matching program with them, to reach their goals sooner. Also, it benefits the company because it creates a life-long brand loyalty that will include the child’s family and future family. 6) Not sure exactly what you’re getting at, but this would be a semi-voluntary way to save for college – similar to the “painless” nature of a pre-tax contribution to a 401k plan. People are finding it harder and harder to contribute to their IRA or 401K. How do you pitch the idea to those who are scrounging to save? It costs the average American family $250,000 to raise a child from infancy to adulthood (assuming a healthy child, attending public school…) How do you get them to “pay in” when they are paying out of their savings? Hadn’t thought about the exact amounts needed, just that X is more than 0. I would imagine the rates of returns would be higher than 3%, potentially in the 4-6% range due to the longevity that the money would be in there. I guess the RofR could be estimated by looking at 529 sites – College in Colorado being one of them. To get a higher percentage you would have to invest in some high risk stocks. Many banks do not give customers 3% return- usually more of 1-2% range. Assuming that your plan would begin today. Keep in mind that a 6% return equals about $200 (probably a bit less) a month the child would have to earn in order to pay for assuming 5 year college (because classes are overcrowded, and one has to assume that if the student cannot get into required courses, they will have to take an extra semester).

On an up note, just looked at your idea, and I really like it. However I do have a few constructive criticisms and questions. Will parents give to their child’s college fund instead of giving them an allowance? If so, how do parents teach their children the values of saving, budgeting and other financial tools? Will grandparent’s birthday money automatically be given to the child? What demographic are you trying to target? Middle Class White? Middle Class Brown? Upper class? Do you think this will undermine the value of community service, if a child is automatically paid for their services? Isn’t this work and not volunteerism? Are you planning on having corporate sponsors match these incentives? The average American family is drowning in debt, how do you compensate…more the saving for a college fund, and retirement? I suggest, that you really narrow your demographic. Create ways for children to learn volunteerism without expecting some kind of financial reward. What would a successful plan look like? How much would a child have to do per year in order to be able to afford college over a 13 year plan? What percentage of appreciation do you estimate? 3% return or something more aggressive?

I would like to comment further as well. I am interested in assisting with business plans, capital injection, etc. This is something that could be marketed with relative ease across many facets! There are endless opportunities in the way of cross networking and support from many business sectors. Marketing and successful sales are driven off of emotions from the end user. An idea like this is something that is a very close and intimate emotion with child and parent. It is a sensational concept and I am eager to see it move forward!

Absolutely...and that leads into a checks and balance system planned for the idea. There would be ways to keep abuse of the system at a minimum to ensure that what is being claimed was actually done. In Area 1, parents verify that the work was done. In Area 2, more proof is needed via a scanned report card or a box score from the newspaper indicating the scored goal, etc. All events can be monitored and once proven to be valid, a check box indicates such. Area 3 would require before & after pictures or something to document the success of the park cleanup. Great question!

I think this is a great idea! You will need to think about how to operationalize number 1, as this is ripe for contention between parents and kids. Like who enters info (kids or parents?). Maybe a worksheet for all the times dishes are washed and then a total for the end of the week, which feeds into a master spreadsheet or something. Otherwise, you might want to check out this model for technological ideas: they link loan donors with microenterprises in the developing world and keep track of it all online. http://www.kiva.org/app.php?page=home good luck! I hope you win!! Donna