Give a Child a Dollar or a DVD?

Your niece is turning ten and you want to give her a gift that will last longer than the latest High School Music DVD. Giving cold hard cash can be impersonal and buying a share of IBM stock is reminiscent of our parents’ generation. So what kind of gift can you give that doesn’t have too many strings attached but also increases their money know-how? Tired of giving a Treasury bond or $10 in an envelope? Read below for a few updated suggestions.

State University or Ivy League?
There is a good chance that your niece or nephew has a college savings account open, specifically a 529 savings account. If this is the case, you could easily contribute as little as $25 (many plans have a low minimum contribution) and know that you are saving them money and stress by not having to take out student loans. If they don’t have an account open yet, this is an excellent opportunity to be part of opening one together. You might even get a tax deduction out of it. Check with your accountant if you qualify for a gift tax deduction. For more information on your relative’s state college savings plan, visit www.savingforcollege.com.

Buying a Mutual Fund Together
There are a few Mutual Funds that let you buy initial shares for a low entry fee, under $500. For a complete list, visit www.mfea.com, Mutual Fund Education Alliance. Some of the best mutual funds in the market are at Vanguard, Fidelity, and T. Rowe Price because they are no-load and have very low fees. However, their minimums are either $2,500 or 3,000. If your niece already has a savings account setup, perhaps you can scrape together the minimum and open the mutual fund together.

Donating Together
Most little kids have a piggy bank or a charity box in their room in their room. They might already be saving coins towards their favorite charity. However, they are probably far removed from the charity itself. You can help them get closer by emptying out the piggy bank, matching their coin stash, buying a toy together (or other needed product), and then bringing the toy to a local shelter, hospital, church, or temple. They will feel like they were an active participant in the giving process!