It’s graduation season. And there’s nothing wrong with a copy of Dr. Seuss’s Oh the Places You’ll Go, or What Color is Your Parachute? for new grads setting out in the world. But a graduation gift can also be an opportunity to teach your favorite student a thing or two about money management. Here are some ideas:
Give a lesson in Money 101. Too often, young adults receive a crash course in personal finance. They learn about overdraft fees after botching their bank account balances and feel the nag of steep credit card interest rates by charging a few too many pizzas in a given month. Fortunately, there’s an entire genre of young adult money books that are designed to step in when Mom and Dad’s well-intentioned advice is tuned out. Although author Beth Kobliner must be older than her audience by now, Get A Financial Life: Personal Finance in Your Twenties and Thirties, is the oldie but goodie she wrote 15 years ago and updated this year. Please Send Money: A Financial Survival Guide for Young Adults on Their Own, by Dara Duguay is another good bet.
If you think your grad won’t take advice from someone parent-aged, try recent Stanford graduate Ramit Sethi. He parlayed his blog (IWillTeachYouToBeRich.com) into I Will Teach You to be Rich the book, and promises to turn your allowance-grubbing grad into a financial grown-up in six weeks. For girls, consider The Teen Girl’s Gotta-Have-It Guide to Money, by Jessica Blatt.
Give the gift of good credit habits. Hearing a few credit card horror stories from campus is enough to make any parent question whether getting a child credit is a good idea. But as more students stick with debit cards and shy away from credit, two problems can emerge. First, students don’t learn how credit works until they’re on their own and potentially in too deep. Also, some graduates have trouble qualifying for a card with decent terms after they leave school. Consider giving the gift of a cosigned credit card upon graduation or help a child research and apply for an appropriate card with a reasonable limit and good terms. Set boundaries depending on your child. Perhaps the card can only be used to buy groceries, for example. Or set a dollar limit and require your teen to keep tabs. Make bill paying the student’s responsibility.
How about a piece of a company? Buy low, sell high. That’s the stock market mantra. And there’s no time like the present for 18-year-olds with decades to invest to learn about buying equities. Give a single share of stock as a gift through OneShare.com. Pick a company with name recognition, like Amazon, McDonald’s, or Polo–Ralph Lauren. If you don’t see your graduate’s favorite company try buying a share or two through companies offering direct stock purchase plans, or help them open an online brokerage account through e-trade.com or ShareBuilder.com.
Kara McGuire is personal finance columnist for the Minneapolis Star Tribune and a St. Paul mom. Follow her money musings on Twitter: Twitter.com/kablog.
