12 SMART GIFTS FOR GRADS

A SHARP NEW LOOK

Grads can make a good impression and land that job if you help them dress for success. A suit is staple interview attire, so take your grad shopping for a good-quality one that fits well. For women, get a suit that includes a skirt and a pair of pants (for guys, just stick to the pants). Keep to dark or neutral colors. See Dress for Success for Less to learn more.

On a modest budget, give a quality tie, a pair of sensible shoes or a crisp dress shirt.

FILE DRAWER

With a mound of new bills to keep track of, your grad may need help staying on top of her new responsibilities. Buy a small file cabinet, such as this stylish unit from Ikea for $60, and stock it with hanging file folders and labels.

Your grad will thank you later.

JUMP START ON RETIREMENT

If your grad will have earned income from a job this year, he'll probably be eligible to save money in a tax-sheltered Roth IRA for retirement. However, with all the new demands on his finances, this is probably furthest from his mind. You can seed his account yourself, though, up to $5,000 in 2008.

A Roth can also double as savings for his first home. See Why You Need a Roth IRA to learn more.

STUDENT LOAN RELIEF

The cost of a higher education keeps going up, and the average college grad enters the world with about $19,000 in student loans. You can ease the burden by giving the gift of his first loan payment. The standard monthly payment on a ten-year repayment plan at 6.8% interest will be $218.

And a bonus gift: Your grad can write off student loan interest paid by someone else on his own federal tax return.

A FINANCIAL EDUCATION

Unless your grad majored in business or finance, odds are she didn't take a single course in money management. Give a good book that'll capture her interest and teach the basics, such as Life After School Explained by Cap & Compass ($14), Get a Financial Life by Beth Kobliner ($15) or The Wealthy Barber by David Chilton ($14).

And help your grad continue her financial education with a year's subscription to Kiplinger's Personal Finance magazine ($12).

HEALTH & WEALTH

Trading in an active college life for a sedentary desk job can take its toll. Every year after age 25, the average American gains one pound of body weight yet loses about one-half pound of muscle.

Plus, studies show that the healthier you are, the wealthier you'll become (see Want to Get Rich? Get in Shape). So help your grad build his wealth and battle the bulge before it has a chance to sneak in. A set of hand weights ($10-$30), a pair of good running shoes ($70-$100) or a membership to the gym or local YMCA make great gifts for new grads.

ENTERTAINMENT OR TRAVEL

Want to give something fun? A pair of season tickets to a beloved sports team, an annual pass to a local museum or theater or a Netflix subscription all make great gifts.

Now also is an ideal time for your grad to explore the world before he's saddled down with job and family responsibilities. An all-expenses-paid getaway can be just the ticket if your budget can swing it.

LUGGAGE

A nice set of luggage will come in handy for business travel at your grad's new job.

You can get a good-quality set at deep discounts online. For example, we recently spotted this four-piece American Tourister set for $150 at ebags.com with free shipping. (Regular price: $680.)

INVESTOR STARTER KIT

Want to get your grad excited about investing? Give her some seed money -- and the tools -- to be successful. Online broker ShareBuilder has an investor starter kit that makes a great gift.

We found the $20 package at Costco.com, and it includes a $55 stock gift certificate, a copy of the book The Automatic Millionaire by David Bach and a CD-ROM that explains how to invest online.

LAPTOP

Whether your grad is going to graduate school or starting his first job, a new laptop is a welcome gift.

The experts at CNET.com recommend shopping for a laptop with an AMD Turion 64 or Intel Core Duo processor, at least 1 GB of RAM (but 2GB is even better), an 80 GB hard drive (more if your grad will store a lot of pictures and MP3 files on the computer) and a DVD burner.

FURNITURE

A big mistake a lot of young adults make is spending too much to furnish their first place and racking up huge credit card bills. You can help by buying one key piece -- and suggesting they fill in the rest as they can afford it. A comfortable sofa, a dining table and chairs or a good mattress are sensible choices. (See How to Outfit Well-Dressed Digs for tips.)

For the modest gift budget, consider a grown-up set of sheets or a comforter to replace the Simpons set he used at college. Or a new matching set of plates, cups or utensils.

CASH

You can't go wrong with a gift of money. If you want to give money to go toward something specific, say so. "I know you need money for your move," or "this is to help you furnish your new apartment."

If you want to give money for a long-term goal –- say, a down payment on a house -- consider giving it in a bank certificate of deposit. That way, your grad can't touch it until the CD's term expires without paying a penalty.

NEXT: Get more advice for young adults just starting out in life