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We brought home a Christmas tree last night. There were only three remaining at the shopping mall lot near our house, and no more were expected.
We were grateful because we have a couple of toddlers spending the holiday with us. And there is nothing as magical as those sparkly lights, ornaments and the sweet smell of evergreen in the house.
The gift-giving ritual, of course, is part and parcel of it all, but when it comes to holiday gifts for kids and teenagers, I tend to use it as an opportunity to give gifts that have the potential to last for years.
Let me explain what I mean.
While parents understandably feel a pressure to give their young children toys and games, my husband and I, who don’t have kids, but a passel of nephews and nieces, realized long ago that one of the best holiday gifts we can dole out is a money-smart one.
Read: This simple investment can earn you more than 6% with no risk
Here are seven last minute money-smart ideas to consider depending on the ages of those on your list:
Cash. My Great Aunt Gladys gave me and my three siblings each $25 dollars every Christmas when we were kids. All these years later, I still smile at her gesture and remember her generosity.
My nephew, Mike, reminded me of the power of cash when he was around six, I recall. He urged me not to spend money guessing on something he might want.
Cold cash is never a bad gift, trust me. Mike will back me up on this.
Although I admit now that our “kids” are in their 20s and 30s and are launched, we’re giving gift cards to restaurants in the towns where they live, so they can treat themselves for an experience.
A money basics book. A friend at the dog park asked me this morning for a book he could give to his teenage daughter to get her started learning about finances. I didn’t hesitate to answer. Two of my go-tos are Beth Kobliner’s books “Get a Financial Life: Personal Finance in Your Twenties and Thirties” and “Make Your Kid a Money Genius (Even If You’re Not).” Beth is an authority on personal finance and a former colleague of mine at Money magazine.
A subscription to a financial publication. This is spot on for a young person who is starting to show some curiosity about money matters. I recommend Kiplinger’s Personal Finance Magazine. The annual subscription will run you $29.95 a year.
I savings bonds. There’s a minimum electronic purchase of $25, and they are now paying 7.12%. Plus, I bonds are guaranteed to keep pace with inflation. They earn interest for 30 years or until they are cashed in, whichever comes first. If they’re cashed in before five years, however, the interest from the previous three months is lost.
To learn about how to purchase savings bonds as a gift, go to TreasuryDirect.
Read: Hidden in plain sight is a U.S. Treasury yielding more than 7%
I realize that it’s too late do this as a Christmas gift this week because your funds will need to clear, but you can print out the certificate and wrap it up. Your kiddo will be notified via email from TreasuryDirect once your funds clear.
529 account. Don’t expect whoops and cheers of joy for giving this one from your young giftee, however, it’s a good one. You can open a tax-sheltered 529 account with a child as beneficiary for as little as $25 in many states. The 529 cash can be used tax-free for college costs. Potentially, you can get a state tax deduction for putting money in the account, depending on where you live. You can learn more about these state-sponsored plans at Savingforcollege.com.
You can also purchase a Gift of College gift card at about 3,000 retailers around the country, including Target
TGT,
and online, provided the child or young adult already has an account at the crowdfunding platform. The amounts range from $25 to $200 and can be used to add to a 529 plan or pay off a college loan.
A Roth individual retirement account (IRA). The account is opened in a child’s name, and you must share the child’s Social Security number when you open the account. It’s a great way to give them a leg up on saving for their own retirement decades down the road. That time alone is a real gift of compounding the value over time for their future financial security.
Most banks, brokerages and mutual funds will help you set up a custodial or guardian Roth IRA for a minor. As the custodian, you control the money in the account until the child reaches the age of majority in his or her state; then the assets are turned over to him or her.
One proviso: This gift is best for teenagers who have earnings from seasonal or part-time work. The child must have earned income at least equal to the total amount you’ll put into the account.
An investment account A great way to learn about investing is by doing it. The traditional way to do this was to help your giftee buy a mutual fund or shares in an exchange-traded fund (ETF). I like this route because the two of you purchase a basket of funds as a team. One of my choices is the Vanguard Total Stock Market ETF, a blend of small, midsize and large-company stocks. Current price: just over $234 a share, which may be more than you want to spend, but an idea to consider. One detail: If he or she is under 18 and not your own child: his or her parent or guardian initially need to set up a custodial account.
The website Stockpile.com is another option that’s fairly simple. Kids can own stock by having an adult on a custodial account with them. “The minor (referred to as the beneficiary) owns the stock, while the adult (the custodian) has legal responsibility over the account until the minor becomes old enough to have their own individual account,” according to the site. The minor has his or her own Stockpile login so they can review how their stocks are doing and request stock trades, but the custodian (you) will need to approve.
In essence, you open an account for a minor and purchase fractional shares of more than 1,000 stocks and Exchange-Traded Funds (ETFs) by sending a gift card of $1 to $100. Or the child can choose with your guidance the stock when you send the gift card. There are no trading fees. There’s also a handy beginner’s primer on investing on the site that you can encourage them to tap into or roll through it together. And honestly, you might benefit from the refresher yourself.
This teamwork can be super engaging. Plus, helping him or her get acquainted with the ins and outs of investing will be a gift that will serve them well for the rest of their lives.
If you’re still are hankering to give a fun present to enjoy Christmas Day, for my money, you can’t go wrong with the classic board game Monopoly which costs around $38 on Amazon right now. It was my first memory of money way back in the swinging ’60s, and my siblings and I had many a high-spirited game.
