As spring winds down and begins to roll into summer, another season briefly takes hold for families across the country: graduation season. The culmination of thousands of hours spent working towards diplomas and degrees of every discipline takes the form of ceremonies, parties, and of course, gifts. The pressure parents and other family members put on themselves to get their grads a great gift often rivals the pressure the grads put on themselves to complete their coursework. But are high-dollar gifts like cars and trips, or more modest ideas like engraved keepsakes, the best choices? Sure, what kid wouldn’t want a lavish gift, but trips are fleeting and cars start losing value as soon as they’re purchased. And graduation keepsakes might make mom and dad (and even grad) shed a few tears, but eventually it’s going to wind up collecting dust on a shelf at best, and collecting dust in storage at worst.
Whether students are moving on to college from high school, or to the—gulp—real world from college, we’ve compiled some gift ideas from which they’ll really benefit.
Gift Cards (With a Catch)
Even though they might seem like a cop-out, gift cards to a big box retailer are pretty standard gift ideas, so let’s be realistic about them. College-bound high school graduates always need things for their dorm rooms, and college grads can always use them too. Gift cards are practical, easy, and let the recipient get something they might actually want. Those who decide to go this route should go with their grad to the store and give them some shopping lessons. Since most of these retailers are one-stop-shops for groceries, clothes, and other items, it’s a perfect place to see what kind of purchasing decisions they make on their own. Let them go through the store and see how they do. Are they comparing things like unit prices? Do they head straight to the clearance rack? Do they know their cell phone can be used to look at competitors’ prices, and not just for Snapchatting selfies to their friends? If not, give them a crash course that will serve as a head start once they no longer have mom and dad shepherding them through the store.
A Credit Card. Yes, a Credit Card
This might qualify as personal finance heresy, and alarm bells are likely going off in the minds of cautious parents on the dangers of kids and credit, but hear this one out. One of the biggest hurdles for young people who are just getting their financial lives started is establishing a credit history. Credit is necessary for pretty much anything these days, and having good credit can save tens or even hundreds of thousands of dollars over a lifetime of consumerism. That’s not to say you should give them free reign over the card, though. Open a card (hopefully with no annual fees or other hidden costs) and add your graduate as an authorized user. Do be aware that this ties you to your grad just as much as it ties your grad to you. If you make big credit mistakes, it can negatively impact the authorized users as much as it impacts you. One way to combat this is the shared responsibility and accountability provided by things like instant text alerts and monthly statements. Another way to establish trust is to have both you and your grad sign a contract with one other, and pledge to pay off the balance of the card every month no matter what. If you do this right, it can be a big boost to their financial health, and your peace of mind.
This gift idea makes sense if the student in question will be working while in school or has a job lined up right out of college. That’s because one of the only restrictions for being able to contribute to an IRA is having some kind of earned income. That doesn’t mean they have to be the ones making the contributions, though. If the grad makes at least $5,500 (the current maximum contribution allowed by the IRS), then you can give them up to that amount. If their income is less than $5,500, you can contribute up to their taxable income. Make sure you shop around for the best deal, as some companies charge maintenance or other fees for their IRA participants. The after-tax nature of a Roth IRA is particularly attractive for young people, because the principal can be withdrawn without penalty at any time (although it makes sense to explain to them why that’s not a great idea if they can help it), the investment earnings grow tax-free, and when they reach age eligibility they won’t pay taxes on distributions.
Professional Clothing and Accessories
This gift idea is great for college grads on the job hunt, or high school grads who might be interested in participating in an internship during their college careers. Even if they’re not jumping right in to a work or school environment where business clothes are the norm, one or two professional outfits can go a long way towards boosting confidence if and when the occasion warrants. If the student is already set for clothes, why not get them a professional accessory like a briefcase or portfolio case—preferably a high quality piece that will last. Even if clothes go in and out of style, a smart work or school bag will always be in fashion. If you choose to go with them, don’t be too keen on picking out their style for them (an obvious point to any parent who's ever tried to weigh in on the style choices of a young adult). But, just like with the gift cards at big box retailers, helping them find a good value will go a long way.
Culinary skills are one area where young adults typically find themselves severely lacking, especially right out of high school or college. And as anyone who’s been through the college and post-college lifestyle will tell them, pizza, ramen noodles, and PB&Js only get you so far. We all know cooking can save a ton of money, and can be a good way to impress friends and maybe even a boyfriend or girlfriend. There are even cook books for people who don’t have access to a kitchen—i.e. dorm room inhabitants. If they live in a house or apartment, think about some kitchen appliances like a pressure cooker, crock pot, or a nice set of pots and pans. If you’re hardly a kitchen wiz yourself, look to websites like Groupon for deals, or even check out your local recreation or community center, where cooking classes are frequently held. Cooking their own food will save money, and it's usually conducive to a healthier diet.