Once again I’m reposting the holiday gift ideas with personal finance twist with new additions. It’s that time of the year again where gifts are front and center in our consciousness. If you are still looking for the perfect gifts, here are some suggestions that may help you not just give more “stuff” this year, but something that will help the gift recipient build a better financial future.
No Budget: Your time & Random acts of kindness
If you have checked the sidebar of this blog, you will notice that I think it’s more important to manage your overall resources than just your money. A huge part of your resources is time. Many of us when strapped for time would be inclined to write a check or “find a quick fix” than spending real time to be present. (Present = gift! Get it?)
Being present shows that the person is more important to you than your money or time. We all know that our loved ones probably desire our company more than any gift we can give, but so often we are so busy that we can only give the second best thing – an object they don’t necessary need but shows we care. Maybe you are very far away from your loved ones this holiday season and can’t physically be there. I hope that you still have friends close by that you can spend time with to show that they are so special and worth your time.
Christmas is also holiday about giving and receiving random acts of kindness – not because the recipients are worth it, but because the giver is willing. In our society, most of the gifts are really more like “credits”, especially among people we know. There is an unspeakable obligation that dictates us to repay the gift of equal social value in the future. Eventually, most of the gift giving becomes closer to “repaying debt”, and we are trapped in this never ending circle.
A true gift is one that you do not expect to receive anything return, and one that the recipient does not do anything worthy to earn. If you have tight finances this year to give gifts, just do something you normally avoid doing for those around you – offer to pet sit, take out their trash, or just be nice! It brings out the joy in you and graciousness in others. Collective positive attitude is what propels this world forward to a better future, which will translate into higher productivity, growth, and more money in your wallet.
Low Budget: Personal Finance Games
Wonder how you can teach your children about money without actually giving them money to play with? Educational games are a good start. Whether it’s setting goals, budgeting, or even investing, these board games familiarize all generations with personal finance principles and help them strategize through certain real life situations. If you are spending this Christmas with families, consider bringing one of these games to make the gathering time merry and educational.
If you have little budget for presents, write a card and introduce your teenage family members to this free online game developed by the Council for Economic Education. You can even register for them and turn it into a contest among the nieces and nephews.
Best for : All ages, Large family
Medium Budget: Contribution to Long-term Investment Account
Want to help your younger family members go to college? Consider opening a 529 plan and make contributions for special occasions. If you deposit $50 every birthday and Christmas staring when the child is 8 years old, you will accumulate roughly $1,300 for the child’s college education by the time the child turns 18, assuming a nominal return of 5% annually. That doesn’t sound like very much compared to future tuition, but it can be more meaningful than unnecessary gifts over the year, and more appreciated if it helps the child just be $1,300 less in debt.
Furthermore, it’s a perfect opportunity to teach children about compound interest, risk, and the cost of investing. Every Christmas or birthday you spend with the child, you can bring a statement of the account and explain why what you saved in the account is more or less than the current value of the investments. This can be even more educational than the board games.
If there are teenagers in the family that are already working part-time or over the summer, consider offering a matching fund to encourage them to open a Roth IRA to save part of their income for the future. Since the account will be in the child’s name, it will be an even better opportunity for him/her to learn about investing and explore their risk tolerance at an early age. However, know that in some private colleges’ applications, students’ retirement savings such as Roth IRA may count against their eligibility for need-based financial aid, even though it’s not the case for the application for federal student aid (FAFSA) so long as the IRA is not distributed to pay for college.
Now you also have Stockpile to help you give toward a long-term investment easily. For the young children in the extended family, time is on their side to grow a small gift to a substantial amount before they become adults. Giving cash is still kind of a taboo in the American culture; even if that’s not true in your family, a check or a $20 dollar bill can easily be spent instead of accumulated to make a longer term impact. Even the money is saved, most likely it will only grow in a bank account with very low growth potential. Giving stocks directly to your niece to nephew bypass these problems. They may not thank you now, but they sure will appreciate the investment and lesson they learn from this in the future.
Best for: Children in the family; Teenagers who have earned income
High Budget: Pay for a session with a Financial Planner
For your grown children or parents, one of the best presents you can give may be an initial session with a financial planner, either to solve some existing financial issues, or to create a financial plan. Personal finance is one of the topics that causes the most strife in families. It’s not an area where we want to intervene but most of the time when financial trouble hits, family members are expected to pick up the slack and to help out. So before anything extreme happens, it’s in everyone’s interest to engage help from professionals.
If you already have a financial planner you work with or a referral, ask the person if he or she charges by the hour and is willing to offer an hour of consultation. Present it as a gift card for your loved ones and say it’s up to them to take you up on the offer. You can also check out the Garrett Network, which is composed of hourly-based financial professionals. Some planners even offer monthly membership, such as the planners on XY Planning Network, (of which my company is a member.) You can offer to pay for the initial fee or the first month’s fee, and the receivers of the gift can decide if they want to continue working with the planner.
Best for: Adult children, parents, newly engaged / newlyweds, new college grads, couples with newborn
Failing all of the above, you can always share this blog as a Christmas present to a friend or colleague! I promise you will continue to get relevant and useful personal finance knowledge tailored to globally mobile professionals in the new year.
Happy Holidays and see you in 2017!