Graduation Gifts to Build Good Money Habits

The best graduation gift will help the young person in your life build savings and ramp up their money skills.

A group of young people in cap and gown celebrating after graduation.
(Image credit: Getty Images)

Want a memorable graduation gift for a high school or college student? Ditch the fancy pen or jewelry and opt for creative financial gifts. The college graduate of 2024 shoulders an average of $28,950 in student loan debt and high school graduates face ever-increasing college tuition. So, while the kids are alright, they could use financial help. But that doesn’t necessarily mean showering the new graduate in your life with lots of money, especially if you’re crunched for cash yourself.

The best graduation gifts

The best financial gifts improve financial behavior, says Len Hayduchok, president of Dedicated Financial Services in Hamilton, N.J. “Leverage those gifts to teach good financial habits.”

Gen Z will certainly need them. New graduates face slowing job growth even though the job market is generally robust. New AI tools are replacing some entry-level jobs in fields in fields like tech. Graduates must also juggle expensive rent, which has increased by 21% since pre-pandemic levels.

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Despite these challenges, this generation has brighter prospects than Millennials did. That generation, which graduated at the height of the Great Recession, spent the next decade trying to make up for lost wages early in their career. Their struggle was so pronounced that a 2018 report from the Federal Reserve Bank of St. Louis determined that those born in the 1980s were at the greatest risk of “becoming a ‘lost generation’ for wealth accumulation.”

Luckily, today’s graduates aren’t destined to share the same fate, especially if parents and grandparents can help them ramp up their money skills and encourage them to save. That’s what the financial graduation gifts that follow aim to do. Besides what you can afford, the new grad’s employment status will also determine which of these gifts you can give.

IRA savings match

There are several places to save your kids' cash that will work for recent high school or college grads. If the college grad in your life has landed a job, building an emergency fund that covers at least three months of living expenses should take priority over all other savings, even retirement. But financial planner Gordon Achtermann of ‌Your Best Path Financial Planning in Fairfax, Va., has a way for you to help your child or grandchild do both while teaching them to save.

He suggests making a pact: For every dollar they put into a savings account, you match it with money in an IRA — up to the annual IRA limit of $7,000 in 2024 — that you set up for them. (You can only contribute to someone’s IRA or Roth if that person has earned income, and those contributions cannot exceed their earnings.)

“If they take money out of the savings for something that is not a real emergency, the IRA payments stop until the money is replenished,” he says. Which is better, a regular IRA or a Roth IRA? “If they don’t need the tax break that a traditional IRA provides, a Roth would be better,” Achtermann says.

Help with debt

Hayduchok suggests a similar pact for paying down debt. Offer to pay a couple of months of their student loan payment, he says, if they put the same amount toward paying off a credit card, According to Best Colleges, the average monthly student loan payment for a borrower with a bachelor’s degree is around $302. For a borrower with an associate degree, the average payment is around $208, while the average payment for master's degree holders is about $688.

And according to National Debt Relief, the average student credit card debt is $3,280.

Financial planning

It seems counterintuitive to give the new graduate, who may have no monetary assets to speak of, a few hours with a financial adviser, but time with a professional can help these young adults start things off on the right foot, says Diane Pearson, a financial adviser with Pearson Financial Planning in Pittsburgh. Pearson has helped new grads evaluate job offers, understand the kinds of insurance they need and determine where they can afford to live.

If they’re considering moving to another city, “we look at the cost of rent and whether they will need to buy a car.” The emphasis, she says, is on financial planning. “If you’ve got a strong foundation, the assets are going to come.”

CD account

Another option is to gift a CD account — or several, if using the CD ladder strategy — to help jump-start a graduate's savings. CD rates are currently high, in many cases over 5%, meaning they'll earn a good bit of interest over time. Gifting your high-school grad a four-year CD means your cash will earn interest from their freshman year of college to their senior year, setting them up for success when they graduate. The best part? They can't access the funds until the CD term is over, a major benefit if you're not stoked on your grad's spending habits.

Use our tool below to compare CD accounts today.

Budgeting app

Nothing helps a young person build a better financial foundation than learning to live within their means. If your finances are also tight, this next gift will be as much of a boon to you as it is to the recipient. We've reviewed the six best budgeting apps, many of which are free. They help users create budgets and track spending, bills and account balances to stay on target. The real gift, however, is spending some time teaching the new grad to use the app, or if it’s new to you, then learn together, says Achtermann.

If you want to avoid technology and get back to the basics, try teaching your recent grad the new 60/30/10 budgeting method.

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Managing Editor, Kiplinger's Retirement Report

Siskos is an old hat with the Kiplinger brand. More than a decade ago, she spent eight years writing about personal finance for Kiplinger's Personal Finance magazine, including a monthly column—Starting Out—that served young adults. That was in her salad days. Now she's turned her attention to an audience she hopes to join in a decade or so: retirees. Siskos is the managing editor for Kiplinger's Retirement Report. In between, she broadened her personal-finance repertoire with real estate and investing stories at Old-House Journal, Investing Daily and U.S. News. She comes to Kiplinger by way of the Newseum, where she worked as an exhibit editor.

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