PROFESSIONAL PERSPECTIVES: Your Money, Your Independence

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Glenn Brown, CFP
Glenn Brown, CFP

Empower New Graduates with Gifts of Independence

With graduation season approaching, many friends and family members seek meaningful ways to celebrate the achievement.

While traditional gifts are always appreciated, consider something with lasting value that can help launch graduates towards financial independence.

Aside from cash or gift cards, here are some thoughtful financial gift ideas and tips to empower high school and college graduates as they embark on their next chapter.

Investment Account. Open a brokerage ac­count in their name and purchase one or two foundational low-cost index exchange-traded funds (ETFs). Even better, establish small auto­matic monthly contributions from their and your checking accounts. Even at $25-$50 a month, it’s a consistent reminder that demonstrates the value of saving, compounding, and choosing to invest over time.

Furthermore, encourage graduates to explore different investment options and asset classes in these taxable investment accounts. And if they make investment mistakes, good. It is better to do it at a young age with less money and respon­sibilities than in their mid-40’s, with a family and inside their retirement accounts.

Parental IRA Contributions. Parents can contribute to their child’s Individual Retirement Account (IRA) up to the child’s earned income. Consider Roth IRA and its unique advantages in­cluding being funded with after-tax dollars, mean­ing withdrawals in retirement are tax-free. This can be incredibly beneficial for young graduates, as their income and tax rates are likely lower now than they will be in the future. By starting a Roth IRA early, graduates can maximize their tax-free growth potential over the long term.

Financial Literacy Books. Equip graduates with essential financial knowledge by gifting them books on personal finance and investing. Consider “The Total Money Makeover” by Dave Ramsey, “Poor Charlie’s Almanack” by Charles Munger and Peter Kaufman or “The Millionaire Next Door” by Thomas Stanley and William Danko.

I wish I’d read ‘Millionaire’ in my 20’s, instead of early 30’s, as it provides insights into the habits and behaviors of wealthy individuals, offering valuable lessons on living below one’s means, budgeting, and accumulating wealth.

Financial Planning and Investing Tools. Don’t let Tik Tok or free “you-are-the-product” apps be their source of financial knowledge. Con­sider gifting a subscription to a financial planning app that can help track spending, set savings goals, and create budgets. These tools provide valuable insights into their financial habits and empower them to make informed decisions about their money and avoid unnecessary debt.

And for those who want to invest beyond their low-cost index ETFs, consider Investor’s Busi­ness Daily or gift a year access to Seeking Alpha Premium.

Financial Advisory Services. Last year a client set up two Zoom meetings for their son, a college graduate moving to North Carolina. For the first meeting, the four of us met on an agenda mom and dad wanted covered. For the next meeting, the parents bowed out, leaving the agenda and conversation up to their son. This worked well, as he was much more engaged and has stayed connected by sending questions as they arise and sharing updates.

Entrepreneurial Resources. If the graduate has ambitions of starting their own business, even a side hustle, consider gifting business books, online courses, or membership to entrepreneur­ial communities. As a parent, consider the legal benefits ensuring a Limited Liability Corporation (LLC) is established by paying for the initial state registration.

Building an Emergency Fund. Encourage graduates to establish an emergency fund by con­tributing to it yourself. Life is unpredictable, and having savings set aside for unexpected expenses can provide peace of mind and prevent them from going into debt during emergencies.

Graduates who receive these gifts will not only appreciate the gesture but also benefit from the financial stability they provide as they navigate the challenges and opportunities that lie ahead.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Glenn Brown lives in MetroWest and is owner of PlanDynamic, LLC, www.PlanDynamic.com. He is a fee-only Certified Financial Planner™ helping motivated people take control of their planning and investing, so they can balance kids, aging parents and financial independence.

 

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