Don the cap and gown, toss the tassel, grab the diploma: It’s graduation season. Amid the celebration, lots of lucky graduates are receiving congratulatory cards, gifts and messages from friends and family.
Which brings up: What to give the newly minted graduate? Whether it’s high school or college, here are some money-smart ideas from financial experts.
Cash is king, but
It’s probably the most-wanted gift, but also the easiest to fritter away. If your son or daughter is sitting on a stash of checks, have a conversation about how that money should be spent. “You want to guide them. Sit down and have a conversation with your graduate,” said Rachel Cruze, co-author of a new book, “Smart Money Smart Kids.” “Encourage them to have a little fun with the money, but also to set aside some for the future: college expenses, life expenses.”
For a new college graduate, it might be helpful to set aside some grad money for tuition or paying down student-loan debt. “Even if it’s only $1,000, that’s a thousand you don’t have to pay back with interest,” said Cruze, a Nashville resident whose father is personal-finance guru Dave Ramsey.
With cash, she notes, it’s so easy to waste it. Be intentional. Have a plan.
Yes, the gift card
Gift cards are the easiest and most practical gift, especially when they’re to stores or places that young grads need: say, Target or Bed Bath & Beyond for dorm-room essentials. Or to the campus bookstore to help offset the cost of buying textbooks and supplies. For those entering the working world, it could be a gift card for a favorite grocery store, coffee shop or to a retailer like Macy’s or Men’s Wearhouse for a post-college wardrobe upgrade.
Get out of debt
If you’re planning to give cash, consider earmarking the money to pay down a student loan or credit-card debt.
“Helping your graduate reduce that burden will enable them to focus their resources in other areas, such as saving,” said Jean Towell, manager of TheMintGrad.org, an online site geared toward college students and graduates.
And while it isn’t exactly a heartwarming idea, she also suggests a subscription to a credit-monitoring service to emphasize the importance of a good credit score.
Gift of good advice
In a recent Northwestern Mutual survey, almost a third of millennials – those ages 18 to 29 – said they don’t know where to find help in managing their money. Giving them a session with a certified financial planner could be the gift of good advice.
“Introducing a grad to an experienced adviser who can assist with comprehensive planning – whether paying off loans or building a nest egg – will encourage good financial habits and support long-term financial security,” said Towell, who responded by email while traveling to a family graduation event. “What more can any parent or grandparent want?”
Buy an experience
For hard-working grads, this is your chance to fund a once-in-a-lifetime celebration, such as a gift certificate for sky diving or funds to fuel a cross-country road trip. It’s an investment in memories.
Invest in them
Consider a small investment in stocks and bonds, said Towell, or even a life-insurance policy. It’s never too early, she said, “to introduce the next generation to various financial assets and empower them to think beyond just earning and spending.”
Help with work world
Some of the best gifts are those that help a new graduate enter the hypercompetitive job market. “An engraved pen or an expensive frame for your diploma doesn’t exactly help tackle tens of thousands of dollars in student-loan debt or help you better compete with the hundreds of other applicants vying for the same entry-level position,” said J.M Henderson, a financial blogger and Forbes.com contributor.
Instead, she suggests: Pay for their membership to a professional association related to their major, whether it’s PR, engineering, business, architecture or other. It’s “a gift of access,” Henderson said. “Grads get the opportunity to network with others in their field (including potential mentors), participate in professional development opportunities and get access to relevant job postings.”
If the grad hasn’t used his or her campus career center, a gift certificate to a professional résumé writer or career coach can help refine their résumé, develop a job-search strategy and learn interviewing skills, Henderson said. Choose coaches who specialize in the industry the graduate wants to enter or who have experience working with college-to-career transitions.
In the end, it’s not how much you spend, but the thought behind it. Perhaps the most meaningful gift of all is simply a personal message. Bay Area-based Pam Krueger, host of PBS-TV’s “MoneyTrack” financial series, says graduation is such a “milestone moment” that putting down a few words of inspiration can have a lasting impact. Decades after her own college graduation in the 1980s, she still keeps a card from her late father that has five simple words she’s never forgotten: “I have faith in you.”