By now, most of the holiday gift-giving madness is over.
The presents under the tree have been passed around. The wrapping paper has been ripped open. And children across the country are delighting in their shiny new toys.
But while your little ones may have squealed with joy while unwrapping their “Frozen” Elsa doll or Ninja Turtle sneakers, they're unlikely to cherish these trendy tokens a year or two from now.
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Get started with a free financial assessment.
And that got us thinking: What are some presents for youngsters that grow in worth over time, particularly the kind that teach vital lessons and jumpstart a life of financial security?
From a 529 plan to a Roth IRA account, here are four financial gifts that may not have topped your little one’s Christmas list—but will pay dividends for years to come.
Gift #1: A 529 Plan
Best for: Young children
We probably don’t need to remind you that college is exceedingly expensive. In fact, one year at a private university now costs upward of $42,000 per year.
That said, many parents aren’t taking advantage of the best ways to prepare. In 2010 less than 3% of American families had socked away money in a 529 or a Coverdell Education Savings Account, according to a U.S. Government Accountability Office study.
If you can count your family in that 97%, now is a great time to change course.
You don’t even have to be a parent to open a 529. Anyone—whether you’re the grandfather, godparent or first cousin twice-removed—can open and contribute to the account on a kid’s behalf. Just be sure to do a bit of homework first to ensure you're opting for the best plan.
Not only will it help kick off the long process of saving money for college, but there's another positive side effect: According to a 2011 Washington University in St. Louis study, a student who owns a college savings account—even if it contains as little as $1—is up to seven times more likely to attend college.
Gift #2: Games That Impart Money Lessons
Best for: Elementary-school-aged kids
Passing on your financial know-how to little ones doesn’t have to be boring. Instead, turn it into a fun experience with a classic board game like Monopoly, which touches on such crucial money skills as budgeting, banking and patience.
One key takeaway of the game? When you’re spending money, you typically don’t want to go for the lowest quality investments—sorry, Baltic Avenue—nor waste a fortune on excessive luxury, like that Boardwalk property. Monopoly helps teach kids to stay the course with midpriced, well-made assets.
Other educational board games to break out: The Game of Life, which comes with play money, insurance policies and stock certificates. Pay Day, in which you attempt to collect the highest savings balance. And Settlers of Catan, which helps teach kids how to bargain and manage limited resources.
Gift #3: A Roth IRA
Best for: Teens with a part-time job and young adults
Unless you have an exceptionally mature child, she probably isn't thinking about her golden years—but the secret to a smart retirement strategy is to make sure you have years to capitalize on compound growth.
The good news is there’s no minimum age for opening up a Roth IRA. As long your child earns taxable income—such as a paycheck from an after-school job—she's eligible to contribute.
Once you help your teen enroll in a Roth, you can further encourage good saving habits by agreeing to match whatever funds your child deposits.
So where do you come in?
Roth IRA accounts are custodial until a child turns 18, meaning an adult will need to co-sign. Plus, once you help your teen enroll, you can further encourage good saving habits by agreeing to match whatever funds your child deposits.
Opening a Roth IRA account now not only gives the younger generation a head start on socking money away for retirement, but it also reinforces a crucial money lesson: Consistent, long-term planning is the key to a solid financial future.
Gift #4: A Plan for Their Money
Best for: Recent college grads and young adults just starting out
If you have adult children who are hitting a major milestone this year—whether it’s graduating from college, starting a "real world" job or tying the knot—they’re probably grappling with some big money questions.
Maybe they’re struggling to break down that new paycheck into a workable budget. Or maybe they’re finally coming to terms with their student loans—and stressing about paying them all back.
Help ease that confusion by gifting them a plan for their money—and assistance from a financial expert who can guide your Millennial in every facet of his financial life, from organizing a budget to creating a game plan for paying off debt.
Just be sure to seek out Certified Financial Planners™ who are “fee-only." These pros are paid through upfront fees, as opposed to commissions, so they have no financial incentive to encourage clients to buy certain products.
Similarly, check that the planner you choose is a “fiduciary," which means he has a legal responsibility to act in his clients' best interests—helping them build better money habits that will serve them well over the long haul.