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5 Financial Christmas Gift Ideas for Kids
I am sure that your children have written a long list of what they want for Christmas. Many if not most children receive toys, electronics, clothes, and much more for Christmas. There are very few parents or grandparents, that give their children gifts that set the children on the right financial path.
Most children will probably not appreciate a contribution to a 529 plan or an IRA that will help in the future, because they are not thinking about the future.
The financial gift you give them as children can help pay for tuition, a car, or be used as the down payment for a new home.
Here are some ways to give a financial gift to fund future goals.
5 Financial Christmas Gift Ideas for Kids
Uniform Transfer to Minors Act Account (UTMA)
A UTMA is opened in the name of the child. An adult (most likely the parent) is in control of the account until the child reaches between 18 and 21, depending on what state they live in. The money in a UTMA can be used on anything for the child.
This account is a good way to teach children about making deposits and withdrawals. When my children receive money, they complete the deposit slip, make the deposit themselves in front of the teller. This process teaches the child to save money.
There is no cap on the amount in the account but there are some tax liability over a certain amount.
Note: The amount could impact financial aid eligibility.
529 Savings Plan
The 529 plan is a state-sponsored college savings plan to encourage saving for college costs. This contribution is for college related expenses. The owner of the account is a parent or adult that deals directly with the asset management company. The beneficiary of the account is the person who will use the money for college.
The good thing about this plan is that anyone can contribute, grandparents, uncles, aunts, and friends. Contributing for birthday and Christmas gifts adds up over time.
Stockpile allows you to buy small amounts of stocks commonly referred to as fractional shares. There are many big-name companies to choose from including Amazon, Google, Apple, Microsoft, Berkshire Hathaway, and more.
One thing I like about Stockpile is that they offer physical gift cards that can be redeemed anytime. If your child needs to have something in their hand at Christmas, you can give them a physical card.
It is easy to setup a custodial account for a child. You can setup an account when the child is younger and then give the child more control as they get older. This will help your child learn about stocks and investing.
Individual Retirement Account (IRA)
If your child works, you can contribute to a Roth IRA on the child’s behalf. The maximum amount to contribute for 2018 is $5,500. Even if you are contributing for your child’s future, it is still very important to get the child involved. Teach your kids the importance of investing money to make it grow for the future by reading books on finances or listening to podcast. There are many resources and tools available online.
Teaching about personal finance
You can save a ton of money for a child’s future and give your child the opportunity to learn about saving and investing for the future. There are age appropriate books that teach about money management.
Age appropriate books to learn about money management:
The Bears learn the importance of being responsible with money. They learn about impulsive spending.
Age 5-8 A Chair for my Mother
This is a book about a family losing everything they own. Through their struggles, they learn about working hard, saving and giving.
Age 8-12 Secret Millionaire Club
The book is about kids that pool their money to help the community. Kids will learn principles about business, growing as successful people and grow and mature as people and citizens in a community.
It teaches young entrepreneurs how to turn hobbies, skills, and interests into profit-making ventures.
Age 15-17 The Money Savvy Student
This book teaches that the knowledge and ability to make, manage, save, and invest money is critical to success in life. A person’s financial future is entirely up to them.
Age 18 and older Get a Financial Life: Personal Finance in Your Twenties and Thirties
This book show those starting out how to decrease their debt, avoid common money mistakes, and navigate the world of personal finance.
You don’t have to give toys or electronics for Christmas. You can give a financial gift for a child that will set them up for a good financial future.
What do you plan to give the kid(s) in your life this Christmas or what are some of the best money gifts you have given or received?
Related posts: 7 Great gifts for your kids to teach them about finances
Hi, I’m Ngozi, I work full-time during the day, blog at night and in my free time. Join me as I write about saving money, side hustle, getting out of debt, and ways to enjoy the simple things in life.