Think about all the gifts you’ve given or received in the past month or in the past few years. What emerges?
If you’re like me, the answer is surprisingly very little. It’s sad, but true, considering the amount of time, energy and, yes, money, that goes into giving. When it comes to gifts for our children, it’s good if we can create lasting positive effects.
With that said, as we enter 2023, consider changing your routine. Here are five financial gifts that can make a big difference for your child:
1. Help them reverse the trend of student debt.
Student debt is, naturally, a hot topic. And while I don’t have a macro solution, you can do your part to help your child graduate from college without the burden of student debt.
The Department of Defense has delayed implementation of its plan to limit the transfer of Post-9/11 GI Bill benefits to service members who are under the age of 16. If you qualify and plan to transfer benefits, do so today.
In addition to these benefits, skipping games and participating in a 529 savings plan can help create an education fund to avoid loan defaults. Everything you save represents a debt that your children will not carry.
2. Start your investment game.
Wouldn’t it be even cooler if, in the distant future, your kids would tell their own “look how my parents got started” story related to how you started their interest in investing? . For young children, this can mean a piggy bank that starts a lifelong savings habit. Older children may want to own a stake in one of their favorite companies.
3. Inform Mr. Roth your child.
If your child reports income from self-employment, part-time or part-time employment, they may be eligible to contribute to a Roth IRA to the extent of their income. Consider this: At 8%, $1,000 in a 16-year-old’s Roth IRA can grow to more than $50,000 by age 66. Talk about spending time with your child. Unlike many gifts I forget over the years, this is a gift your child will remember for years to come.
4. The promise of matching contributions.
Delayed gratification is a tough sell. If your financial situation allows, you can soften the blow by strengthening the contract. Offer free money to encourage your child to save and invest — instead of buying things now — with matching contributions. My parents did it for me, we did it for our children, and maybe it will work for your family.
5. Be a Teacher.
We play an important role in our children’s world. And even if it doesn’t seem like it sometimes, they value our contribution. Don’t forget to give the gift of time – in this case, time spent with your child to promote and encourage good financial habits. If you’re not sure where to start, check out the FDIC Money Smart program. It offers lessons for children of all ages.
Many of these gifts do not come at a high price, but they all hold the promise of an outcome that we all value: a better future for our children. Map out your gift planning plan for 2023 today.
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