Thrifty Thinking: 4 Gifts to Get Grads Ahead Before They Get Behind

Nearly 2 million people earn a bachelor’s degree each year - add in high school grads and that number skyrockets. Here are four gift ideas they’ll be throwing their caps in the air for while your audience is happy for an alternative to the typical cash-in-a-card, from MyBankTracker.com - a financial comparison site.

1. A starter emergency fund
   Every grad needs savings in case disaster strikes, but a recent study showed 45.9% of 18- to 24-year-olds have no emergency savings set aside. When on the hunt for their first job, having that cushion can keep them from ending up in debt if unexpected expenses arise. Steer your grad toward an online savings account; they tend to charge fewer fees and pay higher interest rates. If you're giving money to your child, think about setting up a joint account if you want to add money in the future.
    
2. A CD ladder for long-term savings
   Grads want to save for things like their first new car. Setting them up with a CD ladder makes it easy for them to keep earning interest until they need to use the money since you agree to leave the money alone until it matures. The longer the terms, the more interest earned. After the maturity date, they cash it out with the earned interest. Tip:Since the grad isn’t a minor, you’ll need to name him or her as the co-owner.
    
3. Roth IRA
   Help start a Roth IRA for his or her future nest egg. Since they’re funded with after-tax dollars, withdrawals are tax-free. Even if grads don’t max it out each year, you’re helping them get started which helps if their employer doesn’t offer a 401k. Tip: Single graduates who earn less than $31,500 for 2018 may be able to get a saver's credit on their taxes for some or all of their IRA contributions.
    
4. Individual stocks, mutual funds and bonds
   Gifting individual stock shares or cash for mutual funds or bonds will help them start to invest and build wealth. There are sites where you can choose individual shares (FrameAStock or GiveAShare) or Betterment lets you buy stocks and bonds and transfer them to your grad’s online account. For mutual funds, you’ll buy them up front and then transfer them.

Tip: Beware of the gift tax - it applies when you give someone money in excess of the annual exclusion limit. If you're married, you and your spouse can gift up to $28k jointly per student ($14k per individual).