Parents, aunts and uncles, grandparents, and friends are giving gifts to high schools graduates as they prepare to head off to college in the fall. An average graduation gift is $78, and from parents cash gifts average around $120. In all, about 5.6 billion dollars are given each year to high school graduates!
Maybe you shouldn’t be giving cash. Those dollars can be put to better use. Here are some more interesting ways to gift soon-to-be college students.
Help Pay their Bills – Offer to cover health insurance, car insurance, cell phone bills, or meal cards. These are out of pocket expenses that can break a bank and yet are mostly necessary.
Help with College Loan Payments – These payments may not come due until after college graduation, but at that time your high school graduation gift may be even more appreciated. Put money into an account that can earn interest over the four years of college to help your grad pay off his or her student loans. Or, purchase gifts cards (See GifttoCollege.com) that can be directly redeemed to your student’s loan account.
Start an IRA for Your Grad – Through a financial planner you can set up an IRA account for your high school grad. An initial contribution can grow tax-free until future retirement, allowing for decades of compounding. You could also agree to match your grad’s contribution to the IRA for a few years until your grad is twice-graduated and has a good job.
Give the Grad an Investment – There are different ways to gift investments to graduates. You could purchase a stock for the grad, and he can hold it or sell it as he wishes. You can also gift an already appreciated stock you own to your grad and save on your own capital gains taxes. A third way to gift your graduate is to give a gift card to her that can be redeemed on sites like Stockpile for shares.
Gifts can be practical and forward-thinking. Also the gifts suggested above offer long-term benefits.