Think about all the gifts you’ve given or received in the past month or even the past few years. What stands out?
If you’re like me, the answer is, surprisingly, very little. Sad, but true, considering the time, energy, and yes, money that goes into gift giving. When it comes to gifts for our children, it would be nice if we could create positive long-term results.
With that in mind, as we begin 2023, consider changing your approach. Here are five financial gifts that can make a real difference for your children.
1. Help them beat the trend of student loan debt.
Student loan debt is rightfully a hot topic. And while I don’t have a macro-level solution, you can help your kids graduate from college without the heavy burden of student loan debt.
The Department of Defense delayed implementation of its program that limited the transfer of Post-9/11 GI Bill benefits to service members with less than 16 years of service. If you are eligible and plan to transfer benefits, do so today.
In addition to those benefits, skipping the toys and contributing to a 529 college savings plan instead can help build an education fund to stave off loans. What you save represents debt that your children won’t incur.
2. Get their investment game up.
Wouldn’t it be great if, in the distant future, your children could tell their children a “look what my parents started” story related to how you started their interest in investing? For younger children, this can mean a piggy bank, starting a lifelong savings habit. Older children may like to own stock in one of their favorite companies.
3. Introduce your children to Mr. Roth.
If your children report income from their own hard work, part-time or odd jobs, they may be eligible to make a Roth IRA contribution up to that income. Think about it. At 8%, $1,000 in a 16-year-old Roth IRA can grow to more than $50,000 by age 66. Talk about spending time with your child. Unlike the many gifts I’ve forgotten over the years, this is one your kids will remember well into their golden years.
4. The promise of adequate investment.
Delayed gratification is a tough sell. If your financial situation allows, you can soften the blow by sweetening the deal. Offer free money to encourage your kids to save and invest, as opposed to buying something now, with a matching investment. My parents did it for me, we did it for our kids, and maybe it will work for your family.
5. Become a teacher.
We hold an influential place in our children’s world. And even though it may not seem like it at times, they appreciate our input. Don’t miss the opportunity to give the gift of time—in this case, time with your children—to foster and encourage good financial habits. If you’re not sure where to start, check out the FDIC Money Smart program. It offers classes for children of all ages.
Many of these gifts don’t come at a great price, but they all promise an outcome we all value: a better future for our children. Map out your gift planning plans for 2023 today!
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