Saving

Make the most of the money from your canceled summer plans: Experts suggest 4 ways

Many families have gotten refunds from summer plans canceled due to the pandemic. Here is how to use that money wisely to achieve your goals.

Twenty/20

Many families have had to rethink their summer plans due to Covid-19 safety concerns. If you have received an unexpected refund when your kid's sleepaway camp didn't open, for example, or your vacation was canceled, don't worry: There are some moves you can make with the money to bolster your finances and make a positive impact on your long-term goals.

You don't need to use all the money that way, of course, says Elle Kaplan, CEO of wealth management firm LexION Capital. Some of it you can still use to create memorable experiences for your family. She recommends setting aside a percentage of any refunds you receive into a "make special memories" slush fund: "That can include camping trips, special family hikes, anything that will create a special and lasting memory for your child and your family."

Once you've done that, here are four other smart ways you can make that money work for you.

Build up an emergency fund 

Debby Popkin, a nurse from Southington, Connecticut, and her husband had enrolled their 16-year-old son in a digital game design program on a college campus, while her 12-year-old daughter was enrolled at two separate sleepaway camps. If the season had proceeded as planned, these activities would have cost approximately $18,000.

While it's not going to be the summer they intended, Popkin says that her family has found some fun, and safe, activities at lower prices.

Parents who find themselves in a similar situation can set aside any unexpected savings into an emergency fund, says David McHugh, chief marketing officer of the personal finance company Crediful.

"If, after a few months, things with the economy and unemployment are beginning to stabilize, you can take the money and reinvest it into something else," says McHugh. "But right now, it's best to set aside any extra funds just in case you're laid off, get a reduced income, or your bills go up."

VIDEO4:0304:03
What is a health savings account (HSA)?

Video by David Fang

Fund a health savings account 

Initially, Emily Porro, the founder and CEO of Porro Communications and her husband, had planned a trip to Spain and had enrolled their sons in different summer camps. Had these plans gone forward, she estimated that the cost might have been between $4,000 and $6,000. 

Another way that parents like Porro can repurpose their camp refunds is by putting them into a health savings account, or HSA, if you have access to one, says Susan Olson, a certified financial planner and partner at Abacus Wealth Partners.

"HSA deposits are the tax trifecta: tax deductible, tax-free growth, and tax-free withdrawals if used for medical expenses," she says. "The accounts can be banked for use in retirement if cash flow is good now, and invested in a target date retirement fund in the meantime."

VIDEO4:0604:06
Why you should start a college savings plan for your kids

Video by David Fang

Open a 529 account for your kids

In a similar vein, Kaplan recommends putting any refunds into a 529 account, a special savings account for educational expenses. Funds in 529 accounts grow tax-free and can be withdrawn tax-free for qualified educational expenses. You might even be able to score a state tax break on your contributions. 

Start an IRA for your kids

Marcy J. Wang, managing director of advisory professional development at professional services firm BDO, planned to send her 11-year-old daughter to the same sleepaway camp she's gone to for the last four years and her 16-year-old son to Berlin for a four-week German language immersion program, followed by three weeks at a theater program. 

The camp and the theater program were canceled, and the language immersion program is postponed until 2021. Wang estimated that altogether these programs would have cost her family approximately $12,000.

Parents who find themselves in similar circumstances could put the refunded money into a Roth IRA, particularly if their children are old enough for a summer job, says Lou Haverty, CFA and creator of the career site Financial Analyst Insider.

"It's the perfect opportunity to start teaching kids about saving money and the power of compounding interest," he says. "It could be a boring topic for some kids at first, but if they can see their own money grow, it might help them develop an interest in the stock market and about the value of saving money.

Daniel Bukszpan is a freelance writer. A journalist for 20 years, he is the author of "The Encyclopedia of Heavy Metal," published in 2003 by Barnes & Noble and "The Encyclopedia of New Wave," published in 2012 by Sterling Publishing. He also contributed to "AC/DC: High-Voltage Rock 'N' Roll, The Ultimate Illustrated History," "Iron Maiden: The Ultimate Unauthorized History of the Beast," and "Rush: The Illustrated History," published by Voyageur Press. He lives in Brooklyn, New York, with his wife, Asia, and his son, Roman.

More from Grow:

acorns+cnbcacorns cnbc

Join Acorns

GET STARTED

About Us

Learn More

Follow Us

All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

Advisory services offered by Acorns Advisers, LLC (“Acorns Advisers”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Brokerage and custody services are provided to clients of Acorns Advisers by Acorns Securities, LLC (“Acorns Securities”), a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Acorns Pay, LLC (“Acorns Pay”) manages Acorns’s demand deposit and other banking products in partnership with Lincoln Savings Bank, a bank chartered under the laws of Iowa and member FDIC. Acorns Advisers, Acorns Securities, and Acorns Pay are subsidiaries of Acorns Grow Incorporated (collectively “Acorns”). “Acorns,” the Acorns logo and “Invest the Change” are registered trademarks of Acorns Grow Incorporated. Copyright © 2019 Acorns and/or its affiliates.

NBCUniversal and Comcast Ventures are investors in Acorns Grow Incorporated.