Forget this year’s must-have gadgets and give your loved ones presents that will endure.
As the holidays approach we all begin to think about what gifts to give our spouse, parents, and children. What do they really want? “Just get Granddad another sweater!” said my ten-year-old daughter. At that moment it occurred to me that the annual sweater sounded as ridiculous to me as it did to her. What was I thinking? As my husband always says, “I have enough sweaters to die in.” This year give them a gift that will change their lives, a gift that really matters, a gift that will last a lifetime and beyond.
For your employed teenager or young adult child
If your teenager or young adult child is employed, consider giving the gift of a financially independent retirement. No doubt this is on everyone’s wish list, whether they know it or not. Who knows what will be left of Social Security by the time they hit 62? Do what you can now—even though they may not thank you until later. How? Fund their retirement account. If your child does not have one, set up a Roth IRA for her and deposit what you can afford. The maximum contribution for 2012 is $5,000; as long as your child has earned income you can deposit any amount up to that figure. The deposit does not have to come directly from their earnings—it can come from you. If your child has a retirement account at work like a 401(k), have them contribute an additional amount (the amount of your gift) into the plan. Then you can reimburse them for the contribution. This is certainly not the most fun or glamorous gift for 2012, but you will likely make up for that in another 40-45 years!
For your parents
The best holiday gift I ever received came in a poorly wrapped, second-hand, dented brown box. It was something I had been wanting for years. I was surprised and delighted when I opened the package to find a healthcare directive for my husband! He had previously been stubbornly reluctant to contemplate his inevitable end. You see, he is a real “foodie” and had resisted as he did not ever want to be denied the feeding tube. He could not imagine anything worse than starving to death. After years of thought, my husband decided he wanted to leave a different legacy and completed his directive. Why not treat Mom and Dad to an updated estate plan complete with wills, health care directives, and powers of attorney? Like me, it could be the best holiday gift they ever received.
Another idea for Mom and Dad came from a friend of mine who just asked me how she could help her parents fund their retirement. What an incredible gift idea—the gift of quality of life! She is now trying to decide between several options: Should she buy her mother a long-term care insurance policy, an annuity, or stock? No doubt whichever one she chooses, the present will be one given and received with love and admiration.
For your young child or grandchild
There is nothing my daughter loves more than playing a game with Mom and/or Dad. This year make it a personal finance game! Wrap up The Allowance Game, The Game of Life, Monopoly or Money Bingo. Teach your children the money skills they will need throughout their lives while enjoying a fun evening rolling the dice. Too young for a game? Give a fun bank like the kitty version I got for my daughter. You place the coin on the plate and the kitty reaches up to grab it. Your child will want to save over and over again!
If you are fortunate enough to be in a position to help your grandchildren with their education expenses, a donation to their savings or 529 accounts makes a fabulous gift. There are few experiences in my life that I value as much as my Williams College education. With the cost of college inflating at 6% per year, every child will need financial help to get a bachelor’s degree.
For your adult children
Wondering what to get your 30-50 something children? Give them the gift of financial planning! If your children are like others in their generation, their financial education was neglected in school. Get them on the right track now with some professional guidance. Perhaps they need help managing their debt, funding their own children’s education, or knowing how to invest their money? Many 30-50’s still do not fully understand the importance of saving for retirement. A Certified Financial Planner ™ can hit the point home with a retirement analysis and asset projection. In my practice, each holiday gift certificate comes with a beautifully wrapped personal finance book appropriate for the recipient.
Don’t leave yourself off your holiday shopping list this year. Give yourself everyone’s favorite present-money! Finish off 2012 by contributing 1% more than you already do to your 401(k), IRA, or other retirement savings account. If you are wondering how to make this happen, consider cutting back on your gift budget, buying your new holiday outfit or décor from the thrift shop, or forgoing another flash-in-the-pan vacation. There are few guarantees in life, but I guarantee you will never regret your increased savings contribution decision.
As for me, I am taking my own advice and opening up Roth IRAs for my two teenage sons. With the magic of compounding and the power of tax-deferred growth, the funds in these accounts will enable my boys to enjoy happy holidays well into their golden years.
Reprinted From Concierge Financial Planning.
Raskob Kambourian Financial Advisors is an independent, fee-only comprehensive financial advisory firm registered with the Securities and Exchange Commission. We offer expertise, competitive pricing, and personalized financial services to meet your “Life Planning” needs.