Planning to give a monetary gift? Money can be an easier option than trying to find the right present for that hard-to-buy-for person. While U.S. consumers are expected to spend as much as $720.89 billion for the 2018 holiday retail sales season,1 we are not always sure that the presents we buy are items the recipient wants or needs. A monetary gift can remove the guesswork of choosing the appropriate size, color, style or flavor — and gives the recipient the gift of flexibility to buy what he or she really wants.
A few ways to give money:
For adults
Because adults often have most items they need, a donation to a nonprofit organization, made in their name, can be a thoughtful gift that aligns with their interests.
Is your friend or family member particularly fond of animals? Consider a gift to the Human Society or local animal shelter. You can also support that person’s interests through a donation to a local museum, symphony or another nonprofit organization the recipient is involved with or likes. If in doubt, a gift in their name to a food bank or library foundation can be a thoughtful choice.
For a young couple
If your recipients are like many young couples, money is the item most needed at any time of the year. If shopping for a wedding, check to see if the couple has set up a gift fund to pay for their honeymoon or another big expense. You can consider giving foreign currency if an overseas honeymoon is planned. Or you can buy a gift card to a store where they have registered for wedding gifts — allowing the couple the flexibility to purchase any items that might still be lingering on their registry.
Seeking a present with more lasting value? Consider a savings bond from the U.S. Department of Treasury or a certificate of deposit from a local bank. These are gifts that add extra financial security for the long term.
For teenagers
What teenager doesn’t appreciate a gift of money? This notoriously hard-to-buy-for group also can benefit from the financial education that comes with receiving money. Giving a check can help the recipient learn to manage deposits and save for the future. To add to the recipient’s education, you can include a book about saving and investing — helping to create good habits that reward the recipient well past the gift.
Or you can give a monetary gift that helps fund a favorite activity. Consider covering your granddaughter’s guitar lessons, for example, and she may invite you to her first concert. If you have a budding artist in the family, you can encourage that passion with a museum membership or art store gift card.
For youngsters
If your gift recipient is very young, or even a newborn, consider a financial contribution the parents would appreciate. Funds for a child’s education can jump-start the process of planning for one of a family’s largest single expenditures: college. 529 college savings plans are a tax-advantaged way to help a family to pay for designated education expenses. One way to learn about these investment accounts is to go to www.savingforcollege.com, which can help you decide if a 529 donation is the gift you would like to give. To contribute to an existing 529, you will need the account number and can use the contribution form found on most plans’ websites. Thirty-four states and the District of Columbia offer a state income tax deduction or state tax credit for 529 plan contributions,2 according to the College Savings Plan Network.
For everyone
Still not certain about a monetary gift? For anyone who makes purchases online, you can consider going digital by gifting credit on an app store or via an e-gift certificate to a favorite store.
A financial gift can be a rewarding option for both giver and recipient and is often a much-appreciated alternative to the ugly Christmas sweater. Money, in any form, can be a gift that keeps on giving well after the excitement of many other gifts has disappeared.
Be sure to review IRS tax rules and discuss with your tax advisor if you decide to give any significant financial presents.
1 https://nrf.com/media-center/press-releases/nrf-forecasts-holiday-sales-will-increase-between-43-and-48-percent
2 http://www.collegesavings.org/
Information contained herein has been obtained by sources we consider reliable, but is not guaranteed, and we are not soliciting any action based upon it. Any opinions expressed are those of the author and based on interpretation of data available at the time of original publication of this article. These opinions are subject to change at any time without notice. Investors should consult their financial and/or tax advisor before implementing any investment plan.