I introduced Betterment to readers last year as an alternative method of maintaining a brokerage account. For an annual fee of 0.15% to 0.35% of your assets invested with Betterment, the company provides a goal-focused way of investing for retirement and saving for future financial goals. The service handles asset allocation automatically based on goals, making this process ideal for hands-off investors.
Jon Stein, the founder of Betterment, has been preparing for his wedding. His approach to saving is such that receiving typical wedding gifts is not that important to him. He’d rather receive cash that he and his fiancée can use towards their larger goals. While there are a number of options for creating wedding gift registries, there hasn’t been a successful method of creating and maintaining a public cash gift registry that tracks friends’ contributions.
SmartyPig is fairly close. SmartyPig is a goal-oriented savings account with more in common with certificates of deposit. You can define custom goals and invite friends to contribute. But only Betterment uses the registry metaphor like the gift registries hosted by wedding websites like TheKnot or by retailers like Macy’s.
With Betterment’s gift registry, you could break goals into chunks of $50 gifts, for example. One saving goal you may already have in Betterment may be to buy a new house. To encourage your friends and family to contribute to this goal rather than buying you household items is to identify what you may need and ask for contributions. You may know you’re going to need to finish the basement in your new house. With the gift registry, you can include the finished basement as an item on the list, with the funds collected going towards your Betterment goal of buying a new house.
For a great example, see the gift registry for Betterment founder Jon Stein and his wife Polina. You can see the couple’s specific savings goals — a patio furniture set, a barbecue grill, and a down payment for a new house for example — and contribute to each goal in chunks of $50, $100, or $200.
New and current members can start the gift registry by visiting gifts.betterment.com. Visitors will be prompted to enter the type of event related to the registry, a wedding for example. On the same page, you will be able to enter specific savings goals related to that event and split each goal into reasonable dollar amounts for gifts. After this is complete, you will be able to share your registry with the public.
Unlike some other gift registries this is a completely free service. You do not need to pay a fee to publish the gift registry, there is no fee to collect contributions, and friends and family who wish to contribute do not need to worry about being charged a fee on top of their contribution. That’s not to say Betterment doesn’t profit from this service; funds that are contributed count towards the management fee, 0.15% to 0.35% of managed assets per year, a fee that Betterment charges on a quarterly basis.
Asking wedding guests for cash to be used towards a savings goal is certainly more practical than assembling a gift registry full of items that may not be necessary. When a young couple is getting started with their lives together, perhaps early in their career, other financial goals may be more important than having the finest silverware and china. There may be a stigma, however, with asking for cash from guests. A gift registry like this seems to find a happy medium between the traditional gift registry and a more practical approach to personal finances. Yet, some couples may be uncomfortable with the idea of asking guests for monetary contributions.
The the guests’ perspective, a close family member or friend might prefer to be associated with a useful object, so that the couple thinks of the contributor whenever that object is used or displayed. Giving a gift of money doesn’t have the same lasting effect, but there is no longer the concern about whether the couple would just end up returning the physical gift to the store for the cash, anyway.
A wedding isn’t necessary for creating a gift registry with Betterment. Visitors are encouraged to tie the registry to an event, and the tradition of gift-giving is most often associated with some type of life event, but that’s not a necessary component. Early retirement or financial independence can be considered an event, and this is a legitimate savings goal. Potential contributors, on the other hand, may be more willing to help if there is some sort of celebration attached.
For a limited time, Consumerism Commentary readers can receive a free gift of $25 towards a savings goal when they open a new Betterment account. Open an account, then visit gifts.betterment.com to create a registry.
Would you ask your wedding guests — or friends or family with or without an occasion — for gifts of cash? If you’re wary about asking for cash, does a registry like this make the request more palatable? Would you prefer to stick to traditional wedding registries?