Try Savings Bonds and College Funds as Last-Minute Gifts
If you're running out of time for Christmas shopping, think of giving kids money as a gift -- but not in cash or gift cards. You can give kids savings bonds, college funds and other financial instruments that will teach them to start saving -- and save you a trip to the mall.
Savings bonds make up a good present and your can buy them electronically, says Brent Hunsberger, a blogger and financial for The Oregonian. He remembers buying his first car with the savings bonds his grandfather used to give as gifts.
You can also open Roth IRAs and 529 college savings plans in kids' names, as long as you have their Social Security numbers -- which you also need to buy them savings bonds.
Roth IRAs let you save tax-free for retirement. You can open one online through most of the major investment companies, brokerage and bank websites with initial deposits of as little as $25 in some cases. Kids may look sideways at getting a retirement fund for Christmas, but remind them that the federal government lets you borrow from an IRA to pay for education expenses, so it can double as another college fund.
The 529 accounts are state-run college funds that are protected from federal taxes and sometimes state taxes, too. You're not limited to your state's plan, so go online and shop around; you can open a 529 online and some states don't have minimum investments to start.
Hunsberger also suggests giving financial planning books, business magazine subscriptions or a more unorthodox gift: A session with a financial planner. An hour should be enough to teach a kid how to set up a budget, he writes.
You may think that's a bit over kids' heads, but don't rule it out. Financial planners do suggest teaching financial concepts to kids early, so they pick up good habits. A survey from the bank HSBC found 57% of people who described themselves as "active savers" had been saving since they were children and 73% said they learned the value of saving money from their parents.
Justin Sinnott, vice president and financial consultant at Charles Schwab & Co. told ParentDish he's suggested to clients that they bring their kids along on appointments.
"Their heads are going to swim because they're not used to the vocabulary," he says. "But the earlier they learn about these things, the sooner they can start."
Related: Overspending to Blame for Missed Savings Goals
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