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Giving a financial gift for a baby shower, birthday, graduation, Hanukkah, Christmas, or just because you feel like it, can kickstart a child’s financial future.
But what exactly is a financial gift, and how do you give one to a child?
A financial gift is the transfer of money or financial instrument from one party to another, without receiving or expecting to receive anything in return.
The best monetary gifts for kids, babies, and teenagers combine a number of benefits for the lucky child.
They offer actual financial value, build up financial knowledge and confidence, create and reinforce great savings and investment habits, and let’s not forget, they actually feel like a gift.
Financial gifts help kids reach their future goals and teach them (and their parents) a thing or two about money
Financial gifts can help kids and their parents reach financial goals like saving for college, a future house down payment, or a Disney trip fund.
We put together the best ways for you to set a young one on the right financial path in 2022.
Built for kids, parents, families and friends in mind, Greatest Gift offers you the ultimate financial gift option for kids and babies.
It turns investing in a child’s future into a personal gift that you can send to your nephew, niece or any other child in your world.
On top of a creating a fun, personal gift experience, Greatest Gift offers financial literacy content for both parents and their kids.
Greatest Gift lets you easily send cash as a gift with purpose in a personalized way and set up the child for future success. Gift receivers get to choose how to use the gift funds and are encouraged to save for the long term.
Greatest Gift offers you the ultimate financial gift option for kids. It turns investing in a child’s future into a personal gift that you can give to a loved one
Currently, you can send gifts through Greatest Gift to anyone in the US, whether they have an account or not, all you need is the receiver’s phone number or email.
Simply add a greeting (pictures, videos or notes are all possible!), choose a delivery date and time, and choose the gift amount.
When it comes to money and personal finance, automation is your friend. With Greatest Gift, gift receivers can skip that trip to the bank to deposit checks and transfer their gift funds directly to their favorite long-term savings options like 529 plans, investment accounts, or savings accounts for kids.
Gift funds that are transferred to long term savings and investing options have tremendous growth potential.
Gift receivers get to discover great ways to save and invest for children of all ages. They can find answers to their financial questions and support on their financial parenting journey.
Examples include the best investment accounts for kids, how to start saving for a new child, how to teach kids about money, and many more.
Greatest Gift aims to empower parents and children through financial education and to drive gift receivers to action - save, invest, and teach.
With Greatest Gift you have the power to transform a kid’s financial future.
A 529 plan lets parents invest for a child’s future education costs with tax benefits. Not exactly sure what that means? It means they get to keep more of the money and pay less taxes, covering more of that awful college tuition bill.
Sounds pretty good to us.
Some 529 plans offer a built-in way for family and friends to contribute to a child’s saving, and that’s where you come in. Simply ask the parents if they have a 529 plan set up for their baby or child and how you can contribute.
The more modern plans will have a Ugift code or their own gift giving page, while the older plans may ask you to mail in checks with the exact account numbers.
Keep in mind, in order to contribute to a 529 plan, there needs to be a plan open for the kid.
If the parents haven’t set up a plan yet, your alternatives are to open and manage a 529 plan yourself for the child or to send a gift with Greatest Gift.
ask the parents if they have a 529 plan set up for their baby or child and how you can contribute.
While contributing to a 529 plan may feel like the right way to go, the gift experience may feel lacking in presentation and personalization. The contribution process is often very transactional and outdated. Mailing checks to someone’s account is hardly an exciting Christmas gift.
Investment options include age-based managed portfolios that can help any parent start saving & investing for their child easily and enjoy a high return on their savings.
If you’re looking to give this as a gift for an unborn baby for a baby shower, we have a loophole for you. You can’t open an account until a child is born and has a valid social security number, but you can invest the money in your own (or the parent’s) 529 plan.
Then, transfer the funds to the baby’s 529 plan once it is open.
A 529 plan can be opened by anyone in the US with a valid social security number, and funds are easily transferable to family members.
You may know Savings Bonds gifts by their new name: the gift of Christmas past. Hiding in your garage or attic you may still find a United States paper savings bond certificate that you received as a child, but the days of paper bonds have gone from this world (and from the United States Treasury Department!).
You may know Savings Bonds gifts by their new name: the gift of Christmas past.
In 2012, the TreasuryDepartment ceased the sales of all paper bonds, thus effectively making giving savings bonds as gifts a dreadful process (though still possible!).
In order to give a savings bond as a gift, you’ll need some details from the gift receiver, like their social security number and TreasuryDirect account numbers (that’s the old website the treasury department uses to sell and manage electronic savings bonds). Oh and don’t forget you need to open an account yourself.
By the way, in order to give the bond, you’ll need to hold it in your account for five business days, so make sure to plan ahead.
So, electronic savings bonds… difficult sure, but possible. You may ask yourself “Is it worth it?”
Savings bonds that are available to be sent as gifts are the Series EE and Series I saving bonds. Series I bonds have a variable interest rate, and lately haven’t had the best interests.
The series EE are interesting, and promote long term savings. They come with a guarantee from the US government that if you hold them for 20 years, they will double in value.
To understand a little bit of what that means, it is comparable to investing in something that has 3.5% interest per year for 20 years.
Not bad for a safe bet on the US government, especially when you’re giving this to a baby that can wait 20 years for that money.
You may ask yourself “are Savings Bonds worth it?”
However, if you hold it for any less, you only gain the interest that the bond holds, which can be considerably lower. In addition, if you try to redeem it within the first 5 years, you will incur a penalty fee.
Visit TreasuryDirect’s website to create an account and buy a savings bond as a gift for that special kid in your life.
So, are savings bonds still a good gift?
Yes and no. They provide a safe investment with little risk, but don't really offer a gift experience or high return.
As a savings bond gift alternative, Greatest Gift provide a better gift experience and more investment options.
Giving gift stock to a child can introduce kids to a whole world of investing and personal finance and gives them the option to explore this world on their own.
Stock as a gift may have great educational value, but could prove to be too difficult to give as a gift successfully in a fun way.
Since the internet removed the need for paper stock certificates (damn you, internet!), giving stocks as gifts has become another (almost) impossible task.
Stock as a gift may have great educational value, but could prove to be too difficult to give as a gift successfully in a fun way.
How to gift stock to a child:
First, you’ll need to buy the stock you want to give and hold it in a brokerage account of your own.
Next, you’ll need to initiate a transfer of stocks as a gift process. This may require sending a letter to your broker (yes, that paper version of emails) with many personal details like the receiver’s social security number, a detailed description of the securities you're gifting, the name, address, and Depository Trust Company (DTC) number of the receiving broker (if the receiver has a broker other than yours), and the receiver’s account number at the broker.
Sounds like a lot, we know. So maybe not the best fit for your coworker’s baby shower, but it could still be a good option for your teenage nephew or niece.
Teenagers can make the most of a gift of stock. The stock itself can provide motivation and open them up to new terms and experiences in the personal finance world.
The gift will build up their confidence in investing and allow them to enjoy the benefits of compound interest with enough time to bounce back from any bumps in their investment portfolio.
There are a few ways to give the gift of savings to a child, and they all have the power to build smart habits of saving money that can be invaluable for kids as they grow up.
On the younger side, young kids can benefit from their first piggy bank (mine was actually a tin can with Dalmatians on it) or wallet. In fact, any place that they can store money of their own can work here.
Parents can use these to introduce young children to the concepts of money and teach them about the different coins and bills. A fun exercise they can perform is to save spare change for a few weeks, and then take the kids and use their savings to buy ice-cream. This would essentially be the child’s first purchase with the hard earned and waited for savings.
For slightly older kids, you can introduce them to digital banking and savings with bank accounts and apps like Greenlight. Take that little ceramic piggy to a local bank and deposit the funds into your bank account, then open an account for the child.
Creating a savings account for a child and contributing to it can introduce children to concepts like saving for large purchases, spend vs save decisions, and encourage them to save money for the future. If you open a high-yield savings account for kids that offer higher interest on saving balances, you can also teach the kids about interest and compound interest.
Once the kid has an account open, encourage savings, and contribute to the savings account. The new savings account can easily transition to be the child’s initial money for adulthood, and even $500 in savings puts the child ahead of most Americans, increasing his or her chances of graduating from college by up to 5 times!
Give a man a fish, and he’ll eat for a day. Teach his kids financial literacy, and they’ll grow to be financially independent, instead of living in his basement.
The world of personal finance is ever changing and evolving. Checking and savings accounts, credit cards, interest and compound interest, budgeting, retirement planning, mortgages, tax planning, stocks, bonds, health savings accounts, insurances, estate planning, and many other financial instruments offer benefits for people that know how to use them, but may take a financial toll if not used properly.
Give a man a fish, and he’ll eat for a day. Teach his kids financial literacy, and they’ll grow to be financially independent
Learning financial literacy from a young age can prepare children to handle these financial products responsibly and simply teach them to manage their money. They’ll be grateful when they’re older, and their parents will enjoy living their best retirement without having to financially support their adult children (maybe they’ll even be able to spoil the grandkids!).
Some of the other gift ideas we covered have elements of financial literacy and provide opportunities to teach valuable lessons, but you can also give a gift that directly focuses on financial literacy for the kids themselves.
A book is a gift you can open again and again. For younger kids, go with books that start introducing concepts like money. For the older kids and teenagers, you can go with more serious books that talk about budgeting, saving and introduction to investing.
Games are another fun way to teach kids about finances. The Game of Life is a classic board game that can introduce kids to concepts like money, salaries, career choices, choosing between spending, saving and investing, and more. Another classic financial board game is Cashflow, created by author of the book “Rich Dad Poor Dad”, and introduces more advanced concepts like passive income, investments, real estate, and overall wealth building.
Giving cash as gifts is perhaps the most straightforward way, just make sure to add a card to make it feel like a gift. Other than cash, Greatest Gift's platform provides a seamless solution to gift money with purpose in a personal way for children. Every gift powers up a young one's financial future and empowers parents on their financial parenting journey.
There are different types of investment accounts for kids’ benefit, and some that are actually designed for kids to invest themselves. Popular investments accounts for kids include 529 plans, a tax-advantaged form of investment for higher education, and custodial brokerage accounts that can be used for general investing purposes. These custodial brokerage accounts also include UGTM and UTMA accounts.
There is no limit to the amount of money you are allowed to give as a gift to anyone, including children. However, the IRS has an annual exclusion rate that defines the threshold of when a gift (or total amount of gifts in that year) qualify for tax purposes.
In 2022 that annual exclusion rate is $15,000. That means that if you give more than $15,000 in gifts in a given year to the same child (or person), you will potentially need to pay taxes on the gifts you give and may need to include the amount as part of the total lifetime gift limit.
A cash gift needs to be pragmatic, useful, and provide the maximum value it can, but all gifts need to have a great presentation and a little bit of personalization.
Financial gifts to children can set kids up for success.
There are a few ways to give financial gifts and they each have their own way of adding value and teaching a valuable lesson to the kids themselves. Make sure to add a personal touch and a bit of presentation to your monetary gift. Greatest Gift makes giving money as a gift a fun and easy process. A great gift at the right time can kickstart a child's financial future.
I love how easy it is to give a meaningful gift to the kids and tots in my life!
It means a lot to me that I can contribute to their future, and Greatest Gift makes the experience seamless and fun.
Our son just turned two. We created his gifting page with Greatest Gift and shared it on the birthday evite. The results were amazing! We received 12 gifts that will be going to his college fund and savings.
Love this platform.
We have a 2-year-old and another baby on the way, and we love Greatest Gift’s discover section. I look forward to learning about the right financial tools to help build their future and set them up for success financially.