One in four Americans have no savings to cover emergencies, according to a new Bankrate study.
Financial gifts can yield big rewards, providing a sense of security for many holidays to come — and who wouldn’t love that kind of present?
Here are five gifts that are just the right fit for everyone on your holiday giving list:
Time with a pro
A financial planner can help you establish financial goals and create a plan to achieve them. While there is no wrong time to consult with a planner, one study found that only 27 percent of Millennials sought help with investing in savings and retirement. A gift certificate for a financial planning session now could pay major dividends for the next generation of retirees.
529 savings plan
The average college graduate has $39,400 in student loan debt. Help your favorite future scholar cover the cost of their college education by starting a 529 plan. You’re allowed to contribute $15,000 per year. Contributions are not tax deductible, but the interest is tax free and withdrawals to cover qualified education expenses aren’t taxed either. Work with a financial advisor to decide between a college savings plan, which is an investment in future educational expenses and a prepaid tuition plan that allows you to prepay tuition at current rates. All 50 states offer 529 plans.
Remember when your grandparents handed out savings bonds for special occasions? These old-school financial gifts have never gone out of style. The government-backed bonds come in denominations as low as $25. While there isn’t a huge financial return on bonds — the Treasury Department notes hat bonds earn annual fixed rates between 0.10 percent and 2.52 percent — bonds can help teach children about savings and investing. You can purchase bonds through the U.S. Department of the Treasury.
Instead of buying the newest sneakers or electronic gadgets, consider gifting stock in the companies that make those products. Similar to savings bonds, stocks can help introduce children to investing; thanks to the value of compound interest, a small investment now can pay huge dividends in the future — though recipients will have to pay taxes if the stocks are sold at a gain in the future.
Need the perfect gift for the person who has everything? Make a donation to their favorite charity. You can ask the non-profit organization to send a note to the recipient letting them know that a donation has been made in their name. There’s another reason Charity Navigator reports that 31 percent of annual donations are made in December: You’ll get a tax deduction for your donation, making it a gift for you, too.
Instead of another gift card, talk to your Farm Bureau agent about financial gifts that recipients will treasure long after the holidays.