The iPhone 11 might be on your college student’s wish list this year, but this may be the year to give your not-so-little-anymore kids something that can help them even years down the road—a jumpstart on the road to financial independence! While this gift may not have the same wow-factor as typical stocking stuffers, with a little encouragement, you can help your young adult develop the money habits that will serve them well for the rest of their lives.
5 Financially Focused Holiday Gift Ideas for Your College Student
These great gifts ideas can help college kids build a better budget, make wise investments, and mold them into financially savvy adults.
Give the Gift of a Savings Bonds or Stock Investments
The gift of a savings bond or purchase of a stock can help a young relative start their financial future on the right foot. You can help your college student learn about how these types of investments can fluctuate over time, when it’s best to sell or hold an investment, and more.
Savings bonds are issued by the U.S. Treasury Department and are easy to purchase. Because the bonds are backed by the federal government the risk on your bond is low since it is unlikely that the U.S. government will fail to pay back the bond. With a savings bond, you can guarantee your college student doesn’t spend all their cash at the local pizza parlor and that money will be there when they need it in the future.
Giving the gift of stock is another way to set your college student up financially. Plus, owning a piece of their favorite company, like Snapchat or Apple, can be pretty exciting. College kids will be able to watch their stock grow or decrease in value, and it’s a great learning experience for a young investor that may inspire them to continue investing on their own. Buying a stock for someone may seem a little bit daunting, but here are some easy options for giving stocks as gifts:
ComputerShare will connect you to companies that sell individual stocks. It handles much of the work, so you just have to buy the stock. Some of the companies have a minimum purchase amount, but the requirement will vary by company.
Giving a stock through StockPile is easy! You can purchase a gift card with any amount that will equate to a fractional share of stock. The gift card can be given as a plastic card or via a virtual gift card. Once your recipient receives the card, they will be able to log into StockPile and redeem their share. They even have the option to swap out their gift for another type of stock.
Start Funding a Roth IRA
If your college student is working a part-time job, they may have the option to fund a Roth IRA. Roth IRA contributions are made after tax, meaning there is no tax deduction on the way in, but investments grow tax-free and are withdrawn tax-free in retirement. The benefit of a Roth IRA compared to a traditional IRA is that one can always access their Roth contributions (not the earnings, which are penalized if taken early) at any time. This shouldn’t be their first choice, but if an emergency pops up that tax-free access to funds could come in handy.
While you can’t directly contribute to your child’s Roth IRA, you can give them cash on the condition that it goes straight into the account. You can even encourage them to continue contributing to the account from their part-time earnings by matching their contributions.
Load Up on Useful Gift Cards
If your college kid is just starting to figure out their monthly budget and how to balance their needs and their wants, a gift card may the most useful gift this holiday season. Give them a gift card to their favorite store so they can treat themselves without breaking the bank. Or better yet, give them gift cards to help them with their monthly expenses. Here are just a few great gift card ideas that can alleviate some financial stress from your student:
1. Gas Card
Gas is expensive and if your college student is a commuter it probably takes up a huge chunk of their budget. Help them out and give them a gift card to the nearest gas station and let them save that month’s gas money for a rainy day.
2. Grocery Card
Who knew vegetables were more expensive than eating at McDonald’s or making ramen noodles in your dorm’s microwave? Treat your college student to more than just dollar store snacks and give them a gift card to a retail grocery store so they can enjoy an actual meal.
3. Car Maintenance Gift Card
Has your college student’s 'oil change’ light been on this entire semester, but they can’t afford to get it refilled? Jiffy Lube now offers gift cards for oil changes and any other service they offer. Help ensure your student is safe by keeping their car in tip-top shape.
Contribute to Their Down Payment Fund
Is your college student graduating soon and thinking about buying a car or owning a home in the near future? Consider contributing to a down payment fund. This can be done in a few different ways. You can always just write a check and give it to them. Another option is to get together with a couple of other family members and pool your contributions so they can start with a larger sum.
Pay for Their Enrollment in Financial Management Classes
Many young adults graduate from college and are thrown into the ‘real-world’ not knowing how to live within their budget and how to get or stay debt-free. Don’t let your college student drown in student loans, mortgages and credit card bills for years before they figure how to balance all their finances. Give your student the gift of a financial management class so they can start to learn the basics of financial independence.
Money smart gifts may not seem as fun as seeing that Apple logo underneath the wrapping paper, but your child will be grateful in the long run. A little financial educational seed planted in your college student’s mind (and investing account) this holiday season may grow into something that benefits them for years to come.