College graduation season is upon us. How about a gift that will really mean something to a student in your life?
The way I see it, the best graduation gift isn’t just a check in an envelope – it’s coming up with a few great, memorable ideas to help a new grad get a great financial start in life. At a time when money skills for young adults have never been more important, consider the following:
Buy them a session (or more) with a money coach. If you already work with a qualified financial planner or professional tax preparer, why not pay for a session or two for the new grad to help them work out their first budget as a working adult? Take the time to talk with the professional about specific financial issues the grad will need to address as well as their first, formal budget setup if they’ve never budgeted before.
Help them get a start on their retirement savings. Again, most of these gift ideas can come from one person or a group throwing in cash contributions. Consider taking your new grad out to open a Roth IRA (https://www.irs.gov/
If they’re continuing school, create a 529 plan or contribute to an existing one. Many new college graduates return to school to start a master’s degree or other advanced training. If such an idea makes sense for your finances, consider opening or contributing to a 529 college savings plan (https://www.irs.gov/uac/529-
If your new grad loves a company, consider buying them a few shares. Again, evaluate this decision against your own finances and parental opinion, but if there is a particular company the new grad has bought merchandise from or otherwise has taken a great interest in, consider going with them to a brokerage to buy a few shares in the company. Make it a lesson not only in the purchase process, but in the valuation, tax and ownership issues anyone has to deal with as a long-term shareholder. Even though he or she will probably own more investments in mutual funds over a lifetime, understanding the ownership of individual stocks will inform all the investing they do.
Bottom line: Money issues can be daunting for today’s new graduate. Why not disarm their concerns with some solid advice from experts you trust? By offering up basics in budgeting, saving and investing, you just might become one of their favorites.
By Nathaniel Sillin
Nathaniel Sillin directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney