Graduation season is right around the corner. Whether you have a child graduating college, high, middle, or elementary school, it’s always challenging to figure out what the right gift should be. Over the next several years, I’ll have at least one of my kids graduating some level of school. This year, my son is graduating 5th grade, then next year my middle daughter will graduate 8th grade, and the year after that my oldest will be graduating high school. If you are a parent, you may debate about whether to do a party, give a gift, or perhaps some combination of both. Here are Your Smart Money Moves for budget-friendly graduation gifts.
First of all, let’s make sure you don’t get too carried away when your child graduates elementary school and completes 5th grade. Remember, you’ll have an eighth grade graduation coming up soon with high school quickly following. At this graduation level, here are three simple ideas on what you can do for your child.
- Cell Phone – In my personal opinion, kids don’t really have a need for cell phones prior to middle school, so if you already bought one for your 3rd or 4th grader, you missed out on an opportunity here. If you haven’t, then make sure to get some type of phone that gives them exposure to texting, but avoid high-end smart phones or giving unlimited access to Internet and multimedia messaging.
- Gift Card – Rather than cash, a gift card to one of their favorite stores such as Game Stop, Target, or the Gap can be a neat idea. I would keep the gift card limit to around $50 or less to let your child know congratulations, but to also leave the option open for future higher end gifts as better rewards.
- Stock Account– In prior articles, I have discussed many websites that will allow you to buy one share of stock. Since your child has learned basic math skills, this can be a great time to get them involved with a stock they can track throughout middle school and get them started on their own personal finance education.
The move into high school can be a daunting one for most kids. If your child is in a larger public school, the class size can be 400 to 600 children, and potentially over 2,000 throughout the entire high school. At this graduation level, here are several ideas on gifts that may make sense for your child.
- Smart Phone – Now that your child has been getting used to the idea of owning a cell phone over the past three years, now can be your opportunity to upgrade them to a smart phone. Sometimes, parents cave on the social pressure of getting their kids a smart phone. Remember, that you are teaching them money habits today that will stick with them for a lifetime. This is a great transition time to get them an Android or iPhone. However, when getting your new teenager a smart phone be sure to follow these rules: make your child pay ¼ of the bill in their freshman year of high school and gradually work them up to paying the full bill by the time they graduate; if they lose or damage their smart phone, have them either work or do chores to buy a new one; a great teaching tool when gifting your teenager a smart phone can also be to restrict the usage. One of the more creative ways you can do this is to restrict their minutes and data plan to the most basic plan your carrier has and upgrade it each time they achieve a higher than average grade or whichever reward system you choose.
- PC – We all know as parents that more and more of the homework is coming through e-mail, or is done online. I’ve been a big believer in “community computers” while the kids go through elementary and middle school. Once they graduate eighth grade, getting them a low cost PC, like an Acer or similar brand, can be a great gift to teach them responsibility around managing their own PC.
- A New Pet – It depends on your family structure, but this is the age where you are really trying to teach your kids to be responsible for themselves as well as other professional values such as how to multi task. If you can digest the cost of a pet within your own budget and your child has been nagging you for that new dog or cat, this can be a great age to give them that gift. However, use this as an opportunity to teach your child prime responsibility about the care of others. Make a plan about feeding and clean up of the new pet and ensure that your child sticks to it. This can be an incredible budgeting and time management teaching tool that is sure to instill great professional values in your teenager.
When your child gets into the later years of high school or college, what to gift can be a much more exhausting process because of what the right dollar amount can be for our kids (or sometimes nieces, nephews, or family friends). Here are several suggestions for a high school or college graduate.
- Side Fund For First Home – Most kids will be staring student debt squarely in the face when they graduate college. It can be harder and harder for younger accumulators to get enough money in the bank to put a down payment on a first home. Make a gift that they can access ONLY if they plan to buy a home. Many local and major banks have “First Home Club” savings plans that can be a great starting point. Check with your financial advisor for more information about First Time Home Buyer Savings Plans.
- Overseas Vacation – If your child wasn’t lucky enough at this point to experience the culture of another country, I think a two-week vacation on another continent is a fantastic idea for a graduation gift. You’ll definitely need to see what fits within your budget, but getting your graduate to experience life in a foreign country in something that they will never forget. Some great ideas are: funding a post-graduate study abroad trip through their university, covering expenses for an overseas volunteer trip, or even a cruise in another part of the world. When organizing these trips be sure to budget out enough money to cover all expenses and to ensure the safety of the region in which your child will be visiting. It also helps to speak with the parents of one of your child’s friends to see if the both of you can fund trips for both of your children to go on together.
- A Family Heirloom – If you give your child cash in their hands, they will likely buy merchandise that you wouldn’t approve of, or could squander it on some meaningless adventure. Giving your child a piece of old family jewelry, a piece of a collection you have been doing for years, or even the gift of something your parents owned can be a great idea. Remember that your kids won’t remember a new Coach purse or Neiman Marcus leather jacket, but a family heirloom is something they can cherish for a lifetime.
You’ll notice that I am not fond of the idea of large parties or a new car, because in the end the party is mostly for you and I can assure you that your child will not truly value the luxury car that you buy them. Especially when it comes to automobiles, you don’t want to set your child up with unrealistic expectations with a luxury car that they can’t even afford to maintain in the future. This is list is not an end all list, but hopefully it will give you a few ideas going into the graduation season. The best memory you can give your kids is to be there in the audience seeing them accepting their diploma or degree and expressing just how proud you are of all they have and will continue to accomplish. All the money in the world won’t replace that memory, so make it special since the big graduations only
come around once or twice in your child’s lifetime.
Written by:
CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Editor in Chief of Your Smart Money Moves
Co-CEO and Founder of oXYGen Financial, Inc – The Leaders in Gen X & Y Financial Advice and Services
Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
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