As you begin to think about ideas for smart gifts for the graduate, consider one that is an investment in his or her future or one that can help manage the graduate’s current or anticipated expenses.
With announcements and party invitations jam-packed in your mailbox, there’s no denying that graduation season has arrived. Gaggles of high school seniors will move onto adulthood and a new generation of 20-something college graduates will enter the workforce. It’s an exciting new chapter, full of opportunity. What better way to congratulate them than with financial gifts for graduates?
According to the National Retail Federation’s Graduation Spending Survey conducted by Prosper Insights & Analytics, overall graduation gift spending will reach nearly $4.8 billion, an all-time high in the survey’s 10-year history. As you begin to think about ideas for smart gifts, consider one that is an investment in their future or one that can help your graduate manage his or her current or anticipated expenses. Here are some prudent and thoughtful financial gifts for graduates:
- Gift a share of stock. A share of stock, partial ownership in a public corporation, is a gift that can appreciate over time. It may sound a little impersonal, so put some thought into the company you choose. Maybe you have some great memories about visiting Disney World together, so buy a share of Walt Disney Company. Mac lover? How about a share of Apple, Inc.? Car enthusiast? General Motors Company would be a fabulous choice.
- Arrange for a financial planning consult. Off to college or out into the world, everyone needs a financial plan. While confetti won’t fly when your graduate opens this gift, it will be one of the best ones he or she ever receives. Managing expenses and creating a budget can be difficult, and to have an expert in your corner, one who has your best interest in mind, is often the difference between financial success and failure. Looking back, your graduate will appreciate this guidance more than you will ever know.
- Start a Roth IRA*. A financial gift for graduation doesn’t always need to fit into a box. If your graduate will earn income during the year, making a contribution to a Roth IRA in their name is a smart choice. While many at this age still don’t plan for anything past Friday night, you’ll be laying the foundation for a comfy retirement. Did you know that if you invest $1 per week at age 20, it could grow to over $12k by the time they reach 65?1 Now that’s a generous gift! (Be sure to consult with a tax advisor for specific rules and annual contribution limits.)
- Purchase an annual subscription. Have an avid reader you want to congratulate? Why not gift an annual subscription to a money or personal finance magazine? Not only will they think of you each month when it arrives in the mail, they’ll gain some helpful advice and guidance on current and relevant money issues all year long. Is there a book on the best-seller’s list or one that your financial planner recommends? You just hit the jackpot!
- Celebrate with cash. A financial gift for graduation can be as simple and easy as cash. While it can easily dwindle…$10 here, $15 there, it will also help your graduate manage his or her current expenses. Not having to use a credit card allows your graduate to mange debt more effectively and reduces the chance of accumulating astronomical interest charges. Not overjoyed giving cash? How about a gift card? The value won’t disappear as nonchalantly and it will guarantee your intended purpose for the gift.
Regardless of your choice, put some thought into your financial gifts for graduates. Your graduate has worked hard and should be celebrated for their efforts. Entering into a new adventure can be both exciting and daunting. Help them get started on the right foot and they’ll be one step closer to financial success.
1Source: Calculation based on the investment of $1 a week for 45 years at a rate of 6%.
First Financial Security, Inc. does not offer tax advice. Please consult your personal tax attorney or CPA to determine what’s best for your financial situation.