The festive season is here, and by now many of you are probably looking for best gift you could give your kid (s). There are many gifts to give your kids, but a financial gift is among the best. It is not only valuable, but it can help your little one to appreciate the value of money, investing, and saving wisely. As time goes by, if you gifted your child wisely, and taught them how to grow use their financial gift wisely, you will realize that you didn’t just give your kid a financial gift. You also taught them a lifelong skill. Skills that will help them live a better and more comfortable life. In this article, we are going to look at some of the top financial gifts you can give your kids.
Custodian Investment Account
You could open a custodian account with a brokerage firm, which will give your child a first-hand account of investing in the stock market. Of course, everything they do will be under your supervision as their guardian or parent. You can gift them with as little as $100 and they will be able to buy and sell several stocks. To make it a life lesson, you have to let them make a decision on what to buy or sell. You are allowed to gift as much as $14,000 without paying for any gift taxes as of 2017. The gift tax exclusion will go up to $17,000 in 2018, making it an attractive way to save for your kid’s future, while helping them, to learn stock market financial skills as well.
This is a 1935 classic board game that will not just entertain your kid. It will also help them gain actual financial skills when playing with “Monopoly Money.” Some of the money skills they will learn include diversification, negotiation, and money management. Furthermore, they will be able to practice arithmetic skills and build their social skills as well.
Custodial Roth IRA
Is your kid working on a summer job or earning from their startup? Well, you should consider setting up a Custodial Roth IRA account for them. Furthermore, you can contribute up to $5,500 as of 2017 and 2018 to their account. There are some major benefits to your child having a Custodial Roth IRA account. They include the following:
- Same contribution limits as adults, which allows them to learn the importance of making saving over a long period.
- They will get over 10 years of compounded interest from that account.
- Their savings will take a tax-hit now, but grow tax-free forever.
- It’s a perfect “safe experiment,” which your child can use to learn about real-world financial investments.
529 Savings Plan
What are your plans for your child’s college education? How much debt are they likely to graduate with and how can you help them lower it? Most students graduate with as much as $40,000 worth of debt. You can help them to cut down on that debt by starting a 529-college savings plan for them. Under that plan, they will be able to use the money to pay tuition fees, academic fees, boarding, and transportation fees. Furthermore, they won’t be charged any taxes while withdrawing the money to fund their education expenses.
A Bank Account
You can present your child with a kid’s bank account that is complete with a debt card and checkbook. Such an account will allow them to learn how to manage money they earn. They will also learn that you have to earn money to own it. That will help them be creative in starting business ideas instead of relying on gifts alone.
Money gifts are definitely a valuable gift. That’s because unlike an adult, a child has more time to invest and enjoy the benefits. We hope that you found this article on The Top Financial Gifts to Give Your Kids This Holiday Season to be informative and a eye-opener.