Your grad just earned their diploma and now you want to reward them with something special as they enter the job market and move forward with their life. During this pivotal period, it’s a smart idea to provide them with a gift that will impart an important investment lesson, give them a financial boost, and offer them a head start as they pursue their career.
Consider an IRA
Your grad probably isn’t thinking about retirement. However, if they have secured a job and are earning a paycheck, they are eligible to tuck away money in a tax-sheltered Roth IRA. The great part is you can actually help them with a $5,500 seed contribution, the maximum possible in 2015. If you were to max out their IRA contribution when they’re 22, they would theoretically be able to retire at 65 with more than $100,000, assuming a 7 percent annual growth rate. The nice part is a Roth IRA can also be taken out to pay for a first home with no penalty.
Help Pay Off Your Grad’s Student Loans
Student loan debt is weighing on grads across the country, with the average grad leaving school with more than $29,000 in debt. You can do your part to help by giving them a gift towards their first student loan payment. This is a gesture that will demonstrate the importance of paying off their loan as soon as possible. In addition, your grad can also write off this student loan interest payment on their federal tax returns, even as a gift from someone else.
Give the Gift of Stock
Buying shares in a stock with a solid track record is a great way to help a grad enter the stock market while they’re young. Consider purchasing a blue chip stock that pays a decent dividend for reinvestment purposes. It’s an excellent opportunity for grads to learn about stock market swings, the benefit of buy and hold, and how cumulative interest can add up to big returns over time.
Fix Their Credit Score
If you are a parent and want to help your graduate go off into the world with great credit, you can add them to your credit card to help them build positive credit. If your graduate has amassed a large amount of credit card debt while in college, offer to pay off a large chunk of their debt, which can help lower their credit utilization ration, which will raise their credit score. (And it’s better than just giving them money, which they may not use so wisely.) Finally, if your graduate has already wrecked their credit score, you can sign them up for a credit repair service to help them repair their score.
Help A Grad Land That First Job
Unemployment remains high for young people, averaging around 13 percent in 2014. To help your grad land their first job, think about purchasing him or her a suit or pantsuit to make sure they look great for their first interviews. In addition, consider paying for a career service coach or resume adviser who can sit down with a job seeker to advise them for interviews, review their application and give them direction on which industries can most benefit from their skill set and experience.
Ultimately, with the above tips, you’ll give your grad a financial gift that truly makes a difference.