With the holidays upon us, many people have already purchased and wrapped the gifts for their children. If you’re like one member of our team, though, then you might be frantically racking your brain for a good gift idea for your children, grandchildren, nieces, nephews, godchildren, etc.
Here are a few ideas of gifts of money you can give children to help them better learn about finance.
- A piggy bank
If you are looking for gifts for a young child, it’s probably a good idea to start with the basics. Teach them the power of saving by giving them a piggy bank so they can see how money can accumulate over time with a little patience and persistence. There a lot of different styles and price ranges for piggy banks, so you can really personalize this gift. Just remember that for good luck you’ll need to give them the piggy bank with a little something in it to get them started.
- Educational books and games
Before you start yawning, take a look through Amazon’s list of children’s books focused on education of money and saving (yep, they have a whole section). With over 4,000 books, clearly there are plenty of options whether you’re looking for a child who’s two or twelve. Darrah Brustein, a longtime Wela advocate, actually released a series of children’s books focused on financial education called Finance Wiz Kids.
If the child you’re shopping for isn’t a bookworm, you might consider purchasing a board game that will teach them about finance. We recently wrote about the educational power of Monopoly, and The Game Of Life is another popular board game that allows children to learn about managing money through a fun medium.
- Open a 529 college savings account
Give the gift of education by opening or adding to a child’s 529 account. You can open one of these tax-sheltered accounts with as little as $25 in many states. This gift can actually double as a tax deduction for you as well depending on where you live. These state-sponsored accounts allow you to invest in stocks, bonds or money-market securities which can lead to a sizeable appreciation depending on the age of the child.
By giving this money as a gift, it will hopefully help this child not only value their education later in life, but also understand the power of investing and saving.
- Put money into a Roth IRA for a teen
A Roth IRA is typically used for retirement savings, however, the money in a Roth IRA can also be used to pay for college tuition and related expenses without owing the 10 percent early-withdrawal penalty on any earnings taken out. Also, first-time home buyers who’ve owned a Roth IRA for up to five years can withdraw up to $10,000 in earnings for the purchase of the home without owing taxes or a penalty on the money. These benefits make it a powerful money gift for teens. There is a catch, though. The child must have earned income at least equal to the total amount you’ll put into the account, so it’s best to give this gift to teens who’ve held a summer job or part-time work.
- Purchase stock in a company they know
Peter Lynch said to buy what you know, so kick off this kid’s investment education by buying them stock in a product they know. Whether they’re Disney buffs or maybe they only wear Abercrombie & Fitch (do kids still do that these days???), you can buy them a few shares in whichever company they’re already “invested” in and explain to them the relationship between the product they enjoy and their new (small) ownership in the company.