8 Gift Ideas That Set Graduates Up for Financial Success
Graduation season is upon us. If you don’t have a gift for your grad yet, may we suggest something better than a gift card or cash?
It doesn’t matter if they are graduating high school or college – young adults need financial help.
A recent report from the Pew Research Center claims, “Fewer than half of young adults ages 18 to 34 (45%) say they’re completely financially independent from their parents. […] 44% of young adults say they received financial help from their parents in the past year. The top two areas in which they got help were household expenses and their cell phone bill or subscriptions to streaming services.”¹
Only 16% of those aged 18-24 say they are financially independent from their parents.²
Even if they have earned their diplomas, most don’t have their finances in order.
Instead of giving them a trinket with the graduation year on it or a gift card, give the gift of financial support.
Here are 8 financial gift ideas that will empower your grad’s financial independence.
#1 Stocks
Gift stocks can be risky, but they are a great educational opportunity for young grads.
Giving the gift of stocks teaches young adults the value of investing and how to manage their investments.
Don’t just give them the stock certificates – take time to discuss which stocks you bought and why. Show them how online brokerage accounts work. Teach them about how the market works.
If they aren’t thrilled with this gift now, they will be years down the road.
#2 Individual Retirement Accounts
For the graduate who is already earning money (even if it’s just a part-time job), a Roth IRA makes a great gift idea.
While it may not seem beneficial today, they will appreciate it more than they know 40-plus years down the road.
Keep in mind that there are specific rules to opening and contributing to a Roth IRA:
- The individual must be working and bringing home earned income.
- You can contribute the amount of their earned income, up to the $7,000 contribution limit.
- No money can be withdrawn until the individual is 59½ years old – without penalty.
Before opening a Roth IRA for a graduate, make sure they don’t already have one set up.
If they don’t, we recommend seeking third-party advice beforehand.
#3 Fund an Emergency Savings Account
The Lend EDU College Students and Personal Finance Study found that “81 percent of students do not have an emergency fund.”³
It will only take one unexpected emergency for young adults to understand the importance of having savings.
Help them avoid this jolt of reality and help them start an emergency fund. If they already have a savings account set up, contribute to it.
If you want to really drive home how important it is to have cash on the sidelines for emergencies, show them receipts or bank statements that show exactly what past emergencies have cost you.
Showing, not telling will be more impactful – and, hopefully, set them up for financial success in life.
#4 Pay Down Student Debt
The average cost of tuition and fees for the 2023 – 2024 school year is $42,162 at private colleges, $23,630 for out-of-state students at public universities, and $10,662 for in-state students at public colleges according to U.S. News & World Report.⁴
With tuition costs soaring, many college graduates enter the workforce with debt up to their eyeballs.
Two-thirds of college students take on debt to earn their degrees.⁵
But it isn’t just student loans they are taking out.
In addition to student loans, 33.1% of students carry personal loan debt, and 64.8% of college students have credit card debt.⁶
For the college graduate in your life, consider helping them with some of their debt.
Just make sure the money you give actually goes toward paying down the debt.
[Related Read: Reality Check – Why You Need to Talk to Your Child about Paying for College]
#5 Cover the Cost of College Essentials
If you are celebrating a high school graduation, one of the best financial gift ideas is covering the cost of essentials – items college students cannot do without, such as textbooks and laptops.
Ask them for a list of their courses and order their books for them online.
#6 Give the Gift of Knowledge
Unfortunately, American schools don’t always do a great job when it comes to teaching financial literacy.
A Nitro survey of 1000 millennials’ perceptions of the public school system found that 84% of respondents feel high school did not prepare them to handle their personal finances.⁷
Lend EDU College Students and Personal Finance Study revealed the following:
- 43% of students surveyed could not name one major difference between a credit card and a debit card.
- 23% of students surveyed could not name one major difference between a checking account and a savings account.
- 68% of students surveyed did not know what a 401(k) or IRA is used for.⁸
Instead of giving a card with cash, consider signing the graduate up for a financial literacy course or giving them a book about finances that has made a difference in your life.
[Related Read: 10 Financial Lessons for Young Adults Before They Leave the Nest]
#7 Subscription to a Budgeting App
When young adults get their first “real” jobs, it can feel like a windfall (even if it isn’t).
That’s why it is important for them to learn how to budget.
As much as we can tell young adults to budget, it’ll be much more likely that they will budget if we give them budgeting tools.
One of our favorite financial gift ideas is buying the graduate a subscription to a budgeting app, such as You Need A Budget (YNAB), which costs up to $14.99 a month.
#8 Set Them Up with a Financial Advisor
If the graduate is entering the “real world” and earning “adult money,” it is a good idea to set them up with a financial advisor.
Especially if they won’t listen to your sound advice.
This is a wonderful way to get them started on the right financial path at an early age.
Better Prepare for a Life of Abundance in Retirement.
SOURCES
- https://www.pewresearch.org/social-trends/2024/01/25/financial-help-and-independence-in-young-adulthood/
- https://www.pewresearch.org/social-trends/2024/01/25/financial-help-and-independence-in-young-adulthood/
- https://lendedu.com/blog/college-students-and-personal-finance-study
- https://www.nasdaq.com/articles/how-much-does-it-cost-to-attend-one-of-2024s-best-colleges
- https://blog.suny.edu/41271/more-than-student-loans-understanding-other-forms-of-debt-as-a-college-student/
- https://blog.suny.edu/41271/more-than-student-loans-understanding-other-forms-of-debt-as-a-college-student/
- https://www.nitrocollege.com/research/remake-the-school-system
- https://lendedu.com/blog/college-students-and-personal-finance-study
