A holiday gift for your children and grandchildren that you won’t have to worry about supply chain disruptions and delivery delays: the gift that teaches them about money.
To give you some ideas – whether your child or grandchild is six or 26 -“Friends talk about money“Podcast co-host and I just released an episode of our favorite money gifts, and I wanted to share some of them here. (You can listen to that episode anywhere you get your podcast.)
With gifts of money, we are not necessarily talking about giving cash. Instead, we’ve suggested different ways your kids and grandchildren can become smarter about saving, investing, budgeting, and debt.
“Financial education is huge,” says Pam Krueger, founder of the financial advisory testing service Wealthramp. “As a grandparent or aunt, it gives us a way to start conversations around the whole concept of planting a seed, watering a plant, and watching it grow.”
Also read: 5 financial moves to make by December 31
Terry Savage’s All Time Favorite Gift
In the podcast, we also offer recommendations for parents and grandparents who want to help pay for their kids’ college education. In fact, “Friends Talk Money” co-host Terry Savage, a popular author and personal finance columnist, says her “favorite gift of all time” is the gift of an upbringing. university education.
She notes that the best way to do this is through a state-administered, tax-free 529 college savings plan.
“The money deposited into these accounts is tax-free to be used for college in any state,” Savage explains. “And the great thing is that you can make an extra donation every birthday or holiday, helping the fund grow over the years.”
The IRS allows you to invest up to $15,000 in a 529 plan this year without any nasty gift or estate tax consequences. Some states also offer a state tax break for 529 contributions.
The best site to research 529 plans, says Savage, is an independent resource for parents, Savingforcollege.com. It ranks 529 plans for every state.
One caveat: If you open a 529 plan as the guardian of the plan for a grandchild, there could be a negative impact on the child’s financial aid as college bills come due. , Savage noted.
I opened 529 plans for my two sons when they were young, and I’m so glad I did. The accumulated savings helped my husband and I pay for two college tuition fees.
Incidentally, you can also buy something called “Gift of College “gift card” at approximately 3,000 retailers around the country, including Target
and online. It allows you to put money into the 529 through a gift card.
Teach your kids how to invest by buying stocks
Savage’s second favorite gift for kids and grandchildren: the gift of investing in stocks by buying shares in companies they know.
The Stockpile.com website is set up to do just that. For as little as $5, you can open a minor account and order any of the 1,000+ stocks and Exchange Traded Funds (ETFs) by depositing a $1 to $100 gift card dollars. “Or the kid can pick the stock when you send in the gift card,” says Savage. No transaction fees.
Savage added, Stockpile also has a “fun online guide” to introduce kids to the principles of investing and risk and reward.
Bonus: You can educate yourself by learning from your children or grandchildren about companies and parts of the economy they are more familiar with than you are.
Acorns and piggy bank
An alternative gift for teens or 20s, suggested by Savage, is the Acorns.com app and its “Round-Up” feature. When the child purchases something with a credit or debit card, the app rounds the price to the nearest dollar. Then, when that extra money goes up to $5, Acorns puts it in a diversified ETF for the kid.
For young children, Savage recommends “The piggy bank saves money“Created by a mother of two, Susan Beacham (it costs $21.99; $24.98 with a family activity and coloring book).
“This is a four compartment piggy bank and the compartments are clearly labeled Save, Spend, Donate and Invest,” says Savage. “It’s the stuff kids remember, because they touch it and feel it,” added Krueger.
I was especially pleased to see that “Donate” is one of Money Savvy Piggy Bank’s options, as the bank introduces children to the idea of helping those less fortunate.
Savage also enjoys savings advice and online financial education for young children at Fitzsimonscu.com website from the credit union Fitzsimons.
My 5 money gift ideas for kids and grandkids
Five financial gift ideas for kids and grandkids that I feature on the podcast:
Sign up for Kiplinger personal finance magazine ($29.95 a year) or its free email newsletters or Money.com free email newsletters
U.S. government savings bonds are called I bonds (because they are tied to inflation), currently paying 7.12%
A Roth IRA, so the kids can save some of their employment income and put it into their final retirement
Use the Venmo app to easily transfer money from your bank account to theirs – especially useful for college pizza runs
Additionally, financial advisor Lazetta Rainey Braxton recently wrote a helpful Next Avenue article for Generation X parents, with ideas for help them raise financially wise kids.
Only 9% of Americans over 55 use holiday get-togethers with family members as an opportunity to talk about money, according to a recent Wells Fargo.
survey. Maybe this is the year for you to do it.
Richard Eisenberg is the Senior Web Editor for Next Avenue’s Money & Security and Work & Purpose channels and Managing Editor for the website. He is the author of the book “How to Avoid a Financial Crisis in Daily Life” and has served as a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS Moneywatch.
This article is republished with permission of NextAvenue.org, © 2021 Twin Cities Public Television, Inc. All rights reserved.
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