Holiday Shopping? Give the Gift of Financial Stability

With Black Friday behind us and Christmas fast approaching, many will be gearing up for travel, spending time with loved ones and, of course, checking off those holiday shopping lists. And while you may be dazzled by this year’s "Hottest Tech Gifts" or "Must-Have Toys," consider giving gifts that will keep on giving long after the holidays, especially when it comes to kids and young adults.

When I was 12 years old, my grandfather gave me what I thought was the worst Christmas gift ever—shares of a publicly traded stock. Typically, he would give us a cash gift, so this was new and unexpected. He showed me how to look up the stock in the newspaper and track the price. Along with the gift, he taught me about long-term investing, dividends, and other valuable investing lessons. The stock went up and down with varying economic events, but we never sold. The stock happened to perform well, and when I turned 22, the worst Christmas gift ever became the down payment for my first home.

While there are seemingly endless gift options this holiday season, consider one of the non-traditional presents below to help put your loved ones on the path to success:

SparkGift: A great alternative to cash (or clothes that kids grow out of), SparkGift offers a simple way to gift shares of stock or mutual funds hassle-free. The site lets you buy fractional shares of individual stocks and shares in a variety of exchange-traded funds, and you can spend anywhere from $20 to $2,000. This concept can serve as a great way teach kids about investing or saving. And, if the recipient holds on to it for a long time period, that gift can keep on giving.

Banking Basics: With most schools on break, December could be a great time to teach kids and young adults about money. Whether it’s a traditional piggy bank or a bank account, it’s important to start the savings conversation sooner than later. Helping a child establish their first account – a foundation of financial education – creates an opportunity to teach about savings, fees and interest. Rather than just opening an account at your current bank, ask your kids to help you research finding the right bank. Understanding the basics and developing good habits early on can be very beneficial to their financial future.

Start a 529: Known as a qualified tuition plan, a 529 is a savings plan designed to cover future education costs at qualified colleges across the U.S. It offers great tax benefits and an option to make a one-time contribution or set up continuous payments. Opening or contributing to the plan for the holidays is yet another opportunity to discuss the ins and outs of finances with your loved ones. Also, consider asking relatives to contribute to the plan as part of their gift—with minimum contributions starting as low as $50, family members can partake in setting up kids and young adults for a lifetime of success.

Taylor Schulte, CFP® is founder and CEO of Define Financial, a San Diego-based fee-only firm. He is passionate about helping clients accumulate wealth and plan for retirement.