Finding appropriate, nice and affordable holiday gifts is not always easy. While some shoppers are obsessed with searching for toys for the kids, a laptop for the teenage girl, and an elegant jewelry set for the loved woman, others make it simple by giving cash. You may find it tasteless and sometimes it is, but actually money can make the perfect gift this Christmas, as long as you know how to give it.
The general gift-giving etiquette says never to give cash, and indeed, many people opt for gift cards for this reason. But in some cases, money is the most appropriate present and let’s face it – the most wanted gift of all. In fact, you can give not just cash – giving bonds or income-producing investments are also great financial gifts. Typically, cash gifts are perfect when the receiver is a member of your family and you are aware of his or her needs or financial difficulties.
Money teaches kids responsibility and saving habits
Giving cash to children is the first step towards teaching them the basics of finances – how money works. This is essential because they will learn how to plan and fund their purchases, and of course, how to save. It may be a boring gift, but the self-discipline and the good habits of spending and saving will last much longer than any toy. This will also teach them independence – an essential part of growing up.
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Money introduces teens to the financial world
Teens in high school and even those in college should already have a good understanding of money. But do they know how to best repay their college debt or manage their growing expenses? Opening a custodial bank or brokerage account on their behalf is a great start and you don’t have to be the parent to be a custodian. If the teen has already a part-time job, you can even make a contribution to their individual retirement account. There are various options, so make sure you consult with professional in advance.
Bonds are risk-free, compared to stocks
Of course, you can give your grandson for instance stocks and while they may be attractive in terms of short-term profit (you need to know the basics, as well), they also come with the risk of market losses. Bonds on other hand provide some inflation and are much more reliable and risk-free. They come with fixed interest rate and even if it is 0%, an inflation rate of 1.5% will mean, they earn 1.5%. This will be a great lesson in long-term financial planning, besides the obvious financial benefits.
Real estate can also make a great gift, if you are rich enough to afford it and if you think the other person deserves it.