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From college savings plans to retirement planning and insurance protection, gifts related to personal finance have been valuable long before the holidays.

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As the holiday shopping season approaches Cyber ​​Monday, you may be looking for alternatives to expensive toys or physical gifts. Consider another type of gift: financial. There are many ways to give generously besides cash or a check in a holiday card.

Start with a conversation, says Angela Furubotten-LaRosie, lead financial planner at Avea Financial Planning in Richland, Washington. Topics may include: credit card management and savings, early career workplace benefits and managing the financial picture of aging parents or retirement. He also suggests what you’ve learned from your mistakes.

“Families just don’t talk enough about the good, the bad and the truth about their financial situation,” Furubotten-LaRosie said.

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Once you talk to your family, you can get a better idea of ​​what makes a good gift. Here are some suggestions from experts.

Financial planning

You can help a loved one straighten out their finances, plan for the future, and even get their estate in order by hiring an online financial advisor or planner.

“For anyone not yet working with a CFP, making the time commitment is ideal, especially this time of year, and can help start the New Year on a stronger financial footing,” says Melissa Sotude, CFP and director of advisory services. at Halpern Financial in the Washington area.

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Estate planning

Estate planning, including a will, preparing a health care directive, and life insurance can be a particularly helpful gift.

“It’s something that most people put off and won’t buy for themselves,” says Mark Struthers, a certified financial planner at Sona Wealth Advisors in Minneapolis.

Life insurance

Life insurance payouts can also be a good gift as part of financial planning at any age, including estate planning, experts say. Helping someone pay to maintain this protection can be appreciated.

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Contributing to a Roth IRA

In 2022, the annual contribution limit is $6,000 a year, or $7,000 a year for people 50 and older, so be aware of how much you contribute against the person’s limit and previous contributions.

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Pet insurance

Pet insurance may be most welcome for the correct recipient.

“I’ve given people a certificate to show they bought it, and the people who got it love it,” says Struthers.

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Gold is traditionally considered a hedging against inflation as its value may increase in an uneven economy. For young people who want to diversify their portfolio, it can be useful the meaning of chasing gold as an asset.

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Financial gifts for children

There are several types of accounts that you can open for children to help them live a financially secure life into adulthood.

Custodial Roth IRA (or a child’s Roth IRA)

a custodial Roth IRA follows Roth IRA rules with a few important caveats. A custodian manages the after-tax payments—usually a parent, guardian, or grandparent—until the child reaches legal adulthood (ages 18 to 21, depending on the state).

“For a child (or anyone) to contribute to a traditional IRA and/or Roth IRA, the child must have their own earned income for the year of the contribution,” says Alicia Reiss, a certified financial planner. (CFP) and owner of The Business of Your Life virtual company.

Children don’t need to use their own money to make the contribution, but contributions can’t exceed the child’s earnings that year, Reiss adds.

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529 plan for college

A 529 account works as an investment account for educational purposes only. Specifics vary by state, and investing in 529 plans can be beneficial when it comes to taxes. Funds can only you will take it back for special educational purposes or you will face a fine.

A 529 plan “can be better than [children’s] Roth as an owner, parent or adult does not relinquish control,” Struthers said. “And because it’s education-specific, it tells the kid that you believe they CAN make the grades and CAN get into college.”

Uniform Transfer/Gift of Minors Act (UTMA/UGMA)

These are investment accounts designed for children that roll over at their age of majority, 18 in 18 states and 21 in others.

Remember to check tax limits and rules

It’s important to be aware of gift and estate tax limits, notes Brett Spencer, CFP and founder of Boston-based Impact Financial. For 2022, gifts of more than $16,000 (the US annual exclusion amount) may be taxable.

It also helps to be aware of financial aid eligibility restrictions, especially if a young adult is applying Federal Student Financial Aid Application or FAFSA, experts say.

“If the gift is for a grandchild’s education, the grandparents may want to have the child’s account named as the beneficiary,” notes Spencer. This is because both the parent’s and the child’s assets can be counted when calculating college financial aid eligibility. Grandparents are usually not factored into the equation, she notes.


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