With the holidays approaching, you may be receiving wish lists from children and grandchildren. And the larger your family grows, the longer your shopping list for gifts might be.
Before going to the mall, evaluate your gift options. “Retirees have much to offer family members by way of love and wisdom,” says Sharon Oberlander, managing director and wealth management advisor at Merrill Lynch. “When applied to gift giving, these attributes can have a tremendous impact on loved ones, especially during the holiday season.”
Now may be the ideal time to pass along financial life lessons you’ve learned. Read on for money-savvy gift ideas that could make a big difference for a loved one.
Attach a story to cash. If you put a check in a holiday card, add some background information or money advice. Your grandchildren may know you live a comfortable life, but they may be unaware you spent decades diligently saving for retirement. Include a letter that details your financial journey or tells how family members lent you money in the past. Offer tips your loved ones can use to build a financially strong future.
Help grandchildren save. If younger ones in the family don’t have a savings account yet, offer to open an account for them. Draw up a coupon valid for a trip to the bank together. Show your grandchild how deposits work, and then make an initial contribution. You might offer to deposit an amount to the savings account every month or year.
Give toward college. For grandchildren attending a university, you can write a check directly to the college. High schoolers, elementary students and even toddlers also benefit from a gift toward education. “Money for college isn’t as exciting to younger children as a new drum set or Barbie doll, but rest assured, it’s a gift they will appreciate when they head to college, and it has the potential to affect their lives for years to come,” says Michael Minter, a managing partner at Mintco Financial in Tampa, Florida. Write a check that can be placed into a 529 plan or ask parents about the best way to give an educational gift.
Purchase stock. If your loved ones rave about certain products, investigate the manufacturers that produce those items. “Retirees can educate their children or grandchildren about the stock market by gifting them shares in companies they know and love,” Oberlander says. Give relatives who have a passion for coffee a new French press and stock in their favorite coffee chain. Techies might appreciate a new gadget and stock in a software company.
Pay down student loan debt. Write a check with a note stating the money is for student debt, if you know your child is struggling to pay school bills. Another way to help with student loan debt is to give the gift of your time. Offer to sit down with your relative to look over school loans together. Set up a plan to pay off the debt, perhaps faster than expected. You might agree to give holiday gifts for the next five years toward the debt or match a percentage of the payments your loved one makes. If your child sends in $300 a month to pay down a student loan, you might offer to pay 10 percent, or $30 each month toward the debt.
Encourage charitable giving. If you give a cash gift, add a note suggesting part of the funds be put toward a nonprofit organization. You might also contribute directly to a charity you know is important to your child. “Retirees can make charitable giving even more hands-on by taking their grandchildren to volunteer their time together,” Oberlander says. Put in hours at a local animal shelter or sign up to help at your grandchild’s school.
Collect rebates. Services such as Upromise and Ebates let you sign up to receive small amounts of cash back for certain purchases. “Members can collect modest rebates on groceries and other items purchased at participating stores,” Minter says. Those amounts can be directed to a college savings account for your grandchild. If you sign up, consider making a long-term commitment. “Over a span of 10 or 15 years, these savings could pile up and make for a substantial wad of cash,” Minter says.
Teach about happiness. Rather than buying new electronic toys for grandchildren, look for ways to apply money in a purposeful way. “Buy them a plane ticket or something that is an experience,” says Nicole Middendorf, CEO of Prosperwell Financial in Plymouth, Minnesota. Check sites like Groupon for discounts on travel, or use points accumulated from a rewards credit card to fund a trip.
Give the perfect reading material. If a book helped you along your financial journey, consider giving the copy, with your notes in it, to a loved one. Or buy the book for the whole family this year. In addition to financial books, literature that talks about life goals or travel can help start money conversations. These books might inspire children or grandchildren to set new savings goals, pay off debt or take a vacation.
Consider personal presents. Rather than purchasing new gifts this year, look around your household. “Care enough to give a gift with some meaning to it,” says Pablo Solomon, a semi-retired artist and designer living near Austin, Texas. “I really enjoy giving things that I have collected and accumulated to just the person who will cherish it. And I get to see their delight while I am still alive.”
Contribute to an IRA for a loved one. Some of your loved ones might not have a retirement account of their own set up yet. “If you’re a parent, grandparent or someone with a vested interested in helping a young personal financially, you can fund an IRA for them,” says Dan Keady, chief financial planning strategist at TIAA. “There is no age limit. However, they need to have some taxable income.” The account owner is required to have taxable income that is the same or more than you contribute to the account each year. You can make annual contributions up to $5,500 a year.
Help fund extracurricular activities. If your grandchildren are involved in sports, theater or musical activities, there will likely be ongoing monthly costs. You might cover a monthly payment for piano lessons or give new sports equipment as a present. If you don’t have the cash to pay for these, offer your presence at activities. Your grandchild will remember you standing on the sidelines cheering for years to come.
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