3 Great Gifts for the Money-Minded Graduate in Your Life

A smiling woman in a college graduation cap and gown.

Image Source: Getty Images

Looking for a graduation gift that goes beyond a check?

Key points

  • An IRA contribution can build the foundation of a solid retirement plan.
  • Take learning outside of the classroom with one of our favorite personal finance books.
  • Make it your own by arranging a meeting with an expert who can provide sound, objective advice.

Graduation gifts can be many things: a sign of support, an investment in the future, and even a learning experience. This year, don’t settle for cash in hand. Give your graduate a gift that will keep on giving for years to come. Here are three great gifts to consider.

1. Give your IRA a boost

Just because your graduate has earned income doesn’t mean you can afford to save it for the future. The gift of an individual retirement account contribution can go a long way toward a brighter retirement. In fact, with an assumed 10% annual growth rate, a $500 investment today could grow to more than $30,000 by the time a new graduate is ready to retire.

Do you want this money to go even further? Consider keeping it in a Roth IRA. With a Roth IRA, retirement savings can grow tax-free, potentially leading to thousands of dollars in tax savings down the road. Most graduates are below the contribution phase-out threshold and may be in the lowest tax bracket of their working lives.

See also  Smart personal finance management tips to apply today

2. Give the gift of knowledge

While your graduate is in learning mode, why not give them one last reading assignment? A personal finance book can help develop solid financial habits when a graduate is in the prime of their earning years.

Is your graduate interested in investing? look these 6 great books for investors

Most personal finance books cover the basics of financial wellness, from earning to spending and saving to investing. However, certain books are more suitable for certain readers. your money or your life by Vicki Robin and Joseph R. Dominguez is one of my favorite books on finance, but a recent med school graduate might relate to it better. The white coat investor by Dr James Dahle. Alternatively, if your graduate is more interested in the behavioral side of finance, dollars and meaning by Jeff Kreisler and Dan Ariely is a great read.

3. Bring in the experts

For something as personal as personal finance, it often makes sense to meet with a professional who can customize a plan for your graduate’s situation. A financial advisor can provide a wealth of insight, from budgeting and investing to making the most of new employee benefits. For a graduate entering the world of work for the first time, a roadmap to financial success can be an invaluable tool during a time of change.

Learn more: Best Financial Education Apps for 2022

If you already have a financial advisor, have them meet with your graduate one-on-one to create a financial plan. Otherwise, there are many advisers who cater specifically to recent graduates by offering products like a financial advice graduation package. Expect to pay upwards of $200 an hour for these services, which can come in pre-packaged or hourly billing arrangements. Entering the world of work is an incredible opportunity to develop and hone financial skills, and the advice of a financial planner can guide the way.