We brought home a Christmas tree last night. There were only three left in the shopping plaza near our house, and no more was to be expected.
We were so grateful to have a couple of young children vacationing with us. And there is nothing as magical as those bright lights and ornaments and the sweet smell of greenery in the house.
Gift-giving rituals, of course, are an integral part of everything, but when it comes to holiday gifts for kids and teens, I tend to use them as an opportunity to give gifts that will likely last for years.
Let me explain what I mean.
While parents understandably feel pressured to give their young children toys and games, my husband and I, who have no children, but nephews and nephews, have long realized that one of the best holiday gifts we can give is smart money.
Read: This simple investment can earn you more than 6% without any risk
Here are seven clever last-minute ideas to consider depending on the ages of the people on your list:
monetary. My great aunt Gladys, and my three brothers, gave me $25 each for Christmas when we were kids. After all these years, I still smile at her tenderness and remember her generosity.
My nephew Mike reminded me of the power of money when he was six, I remember. He urged me not to spend money guessing on something he might want.
Cold criticism is never a bad gift, believe me. Mike will support me on this
Although I now admit that our “kids” are in their twenties and thirties and have been fired, we give gift cards to restaurants in the towns where they live, so they can enjoy an experience.
Money basics book. A friend of mine at the dog park asked me this morning for a book he could give his teenage daughter to get him started on finances. I did not hesitate to respond. Two of my favorite books are Beth Kopliner’s Get A Financial Life: Personal Finance in Your Twenties and 30s and Make Your Child a Money Genius (Even If You Aren’t). Beth is a personal finance reference and former colleague at Money magazine.
Subscribe to a financial newsletter. This is the case for young people who are beginning to show some curiosity about financial matters. I recommend Kiplinger’s Personal Finance Magazine. An annual subscription will cost you $29.95 annually.
I savings bonds. There is a minimum online purchase of $25, and they’re now paying 7.12%. Additionally, the bonds are guaranteed to keep pace with inflation. They earn interest for 30 years or until they are cashed out, whichever comes first. If it was cashed before five years, the interest from the previous three months will be forfeited.
To learn how to buy savings bonds as a gift, go to TreasuryDirect.
Read: Hiding in plain sight, the US Treasury yields more than 7%
I realize it’s too late to do this as a Christmas present this week because your money will need to be liquidated, but you can print the certificate and roll it up. Your child will be notified via email from TreasuryDirect as soon as your funds are liquidated.
529 accounts. Don’t expect shouts and cheers of joy to give this person of your young talent, however, it is a good thing. You can open a tax-protected 529 account with a child as a beneficiary for as little as $25 in many states. The $529 tax-free cash can be used to cover college costs. Chances are, you can get a state tax deduction for putting money into the account, depending on where you live. You can learn more about these state-sponsored plans at Savingforcollege.com.
You can also buy a Gift of College gift card from about 3,000 retailers across the country, including Target TGT,
And online, provided that the child or young person already has an account with the crowdfunding platform. Amounts range from $25 to $200 and can be used to add to a 529 plan or pay off a college loan.
Roth Individual Retirement Account (IRA). The account is opened in the child’s name, and you must share the child’s Social Security number when opening the account. It’s a great way to give them a chance to save for their retirement contracts down the road. This time alone is a real gift of doubling in value over time for their future financial security.
Most banks, brokerages, and mutual funds will help you set up a Roth IRA trustee or trustee for a minor. As a trustee, you control the funds in the account until the child reaches the age of majority in their state; Then the assets are handed over to him.
One condition: This gift is best for teens who get earnings from seasonal or part-time work. The child must have earned income at least equal to the total amount you will put into the account.
investment account A great way to learn about investing is by doing so. The traditional way to do this has been to help the person gifted buy a mutual fund or shares in an exchange-traded fund (ETF). I love this track because you two buy a basket of money as a team. One of my picks is the Vanguard Total Stock Market ETF, which is a mix of small, medium and large cap stocks. Current price: Just over $234 per share, which may be more than you’ll want to spend, but it’s an idea to keep in mind. One detail: If he or she is under 18 and not your child: The parent, guardian, or trustee initially needs to create a guardianship account.
Stockpile.com is another fairly simple option. Children can own stock by having an adult in a trust account with them. According to the site, “a minor (referred to as the beneficiary) owns the shares, while the adult (guardian) has legal liability over the account until the minor is old enough to have his or her own individual account.” The minor has their own login information to their repository so they can review their stock performance and order stock trades, but the trustee (you) has to agree.
Basically, you open an account for a minor and buy partial shares of more than 1,000 stocks and exchange-traded funds (ETFs) by sending a gift card from $1 to $100. Or the child can choose your stock directions when sending the gift card. There are no trading fees. There is also a helpful primer for beginners on investing in the site that you can encourage them to take advantage of or cycle through together. And frankly, you might benefit from a refresher on your own.
This teamwork can be very attractive. Plus, helping him or her learn 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 craving a fun gift to enjoy on Christmas Day, for my money, you can’t go wrong with the classic board game Monopoly that costs around $38 on Amazon right now. My first memory of money was in the swinging 60’s, and my brothers and I had a lot of heart-pounding games.
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