If you’ve got graduates in your life and you don’t know what to get them, don’t despair. Here are seven financial gifts that the recipients will appreciate. Some even have tax benefits for the grads and, in some cases, the giver.
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It’s graduation season. If you have a soon-to-be-former student in your life, you might be struggling with what gift would best mark this milestone, whether the diploma comes from high school or college.
There are lots of gifts that can help young adults as they venture into to university classes or the work world. My personal favorite when I was that age was cash. OK, it’s still my preferred present for almost any occasion.
If your graduate is a greenback fan like me, then sticking some currency or a gift card in a congratulatory greeting card will be welcome.
But if you find currency too crass, here are seven other financial gifts that could pay off for the new graduates and, in some cases, the givers.
1. Contribute to your grad’s 529 plan. Most families nowadays have established a 529 plan to help their youngsters meet at least some college costs. The money grows tax-deferred, and withdrawals are tax-free if the distributions are used for qualified education expenses.
But even years of saving might not be enough. Here’s where you can help. As a family member or just a good friend, you can help boost this tax-advantaged educational assistance with your graduation gift contribution. One of a 529 plan’s many benefits is that the accounts accept third-party contributions, regardless of who owns it.
Your 592 plan contributions can help cover a new high school grad’s entry into college, or a college graduate’s continuing work on a master’s or doctoral degree.
Of course, you’ll need to talk with the student’s family. This coordination is essential to avoid overfunding of a 529. You’ll also need to get account details, notably how you can contribute. Many 529 trustees partner with the Ugift portal, an online gifting tool that allows others to contribute to a child’s college savings plan in lieu of traditional presents. This T. Rowe Price article on ways to make educational savings a family (and friends) affair has more details.
And while there are tax benefits for the student using the funds, a 529 gift also could be a tax-smart estate plan move. A 529 plan contribution qualifies for the annual federal gift tax exclusion, meaning as long as you stay under this year’s $19,000 amount, you won’t face any gift tax consequences.
While amounts that size typically are given to relatives, there’s no family requirement in the tax code. You can give up to the exclusion amount to as many people (or graduates), related or not, you choose.
2. Pick up a student loan payment. Even when students and families save, loans are necessary to make college attendance a reality. With the Trump administration’s sweeping federal student loan changes looming — they’re scheduled to take effect July 1, pending legal challenges — some student debtors could have trouble making payments.
A cash gift from you could help with them cover the loan.
One way to do this is to give the amount for the payment to the student borrower, with the condition the funds go toward the loan. That way, the borrower will be able to claim any student loan interest tax deduction associated with the payment. This tax break is an above-the-line deduction of up to $2,500 in interest.
You also could give enough to cover more than one student loan payment. In this case, make sure the grad knows that in sending in the extra payment, they make it clear to the lender that the amount be designated as an extra payment of principal, not an early payment of the loan’s next installment.
If you’re feeling particularly generous, instead of one lump-sum loan payment gift, match your new grad’s student loan payments for a specified period of time. This will give them time to get on more secure financial footing.
Again, you won’t have any problems with the Internal Revenue Service as long as your loan payment gift amount doesn’t exceed the 2026 tax year gift exclusion amount of $19,000.
3. Make an IRA contribution. Did your graduate work while in school earlier this year? Or will they get a summer job before starting (or resuming) classes? Or are they starting a new job that doesn’t have a workplace retirement plan?
You can help them plan for their still far-off post-work years by contributing to or opening a custodial IRA account. This type of retirement savings is a great long-term financial move for younger workers.
Here an adult — usually parents or grandparents, but also any person who is close enough to have access to the personal information necessary to establish an account — can open an IRA and mange it on behalf of the young person who’s earned/earning income. Then when the youngster turns 18 or 21, depending on the state where they live and the account is opened, the IRA can be transferred to a retirement vehicle in the young adult’s name.
Until then, the adult custodian can contribute directly to the account, up to the annual IRA maximum or the total amount the youngster earned if it’s less than that. For 2026, the IRA contribution maximum is $7,500.
Also, while I’ve referred to this gift generally as an IRA, obviously I’m talking Roth IRA for a young person. Money that goes into a Roth is after tax, with the eventual withdrawals of those contributions and earnings being tax free. That’s a fantastic and potentially life-changing gift for young people just starting their careers.
4. Give stock or other assets. If you’re an owner of stocks or mutual funds, you know they are an important component of your overall financial plan. It’s never too early (or late) to pass that money lesson on to others, especially young investors who have decades for the assets to grow.
Your broker can help you with the process of gifting assets, either by transferring assets you already own or by buying, for example, a mutual fund or exchange-traded fund, and putting it into a custodial brokerage account for the new investor. You also can get an overview of the process in this NerdWallet piece, How to Give Stock as a Gift.
Again, if you’re giving assets you own, you won’t face any gift tax liability as long as the values of the stock is less than $19,000.
5. Buy a CD or U.S. savings bond. These financial options are close to cash, but their structures make them harder to spend frivolously. Plus, as I understand it, these kids today are nostalgic, embracing more analog ways to live.
Like equity investments, both a certificate of deposit, or CD, and/or savings bonds are longer-term investments. In fact, they typically lose some (or all) of their value if cashed in early, so to get the maximum out of them, the graduate must leave them alone, at least for a while.
A higher-interest CD will produce taxable interest. You can account for that by offering to pay that amount’s the full tax liability for the first year. And the young owner might not even make enough to have to file a return on which to report it. You can find an appealing CD rate by searching online, for these savings vehicles at brick-and-mortar or virtual banks.
Savings bonds are free from federal tax until they hit their maturity date. The bonds’ earnings are not taxable at all at state or local levels. Check out I bonds, whose interest rate changes every 6 months, based on inflation. The current rate is at 4.26 percent. You can find more on savings bond options at Treasury Direct’s special online section.
6. Cover real-world expenses. Your graduate got a job! That’s good. But it also can be bad if it involves a move to a new place. Back in the olden tax days (specifically before the Tax Cuts and Jobs Act of 2017), the costs of moving for your first job was potentially tax deductible. No longer, unless the new position is in the military.
So, if your graduate has landed a dream civilian job that requires an expensive relocation, help underwrite some of those moving costs. Depending on the distance, this could be a substantial amount. Helping offset any of the costs would be a very welcome gift.
Similarly, new workers likely will face a variety of added career-related expenses before they get that first post-graduation paycheck is safely in place. Helping with these costs — a new apartment’s security deposit, utility connection costs, a work-appropriate wardrobe, commuting costs — can ease the transition to adulthood and its financial strains.
Paying at least some of these independent living expenses can help a new graduate begin this new phase with greater stability.
7. Help with money lessons. To paraphrase an old proverb, give young people some money and they’ll be fine for a day. Teach those young people to budget, and they’ll be set for life.
Creating and following a budget gives us all, young or older, a full picture of income, expenses, and how to manage their interconnected cash flow. You can help your graduate achiever greater financial independence by helping them learn to budget.
Despite their rejection of all-tech all-the time, some good and easy to access budget tools are online. They help track spending, accounting, and setting goals. Monarch Money and Quicken Simplifi are popular choices. You can find more in CNET’s analysis and comparison of budgeting apps.
Some financial management tools are free, but where there is a cost, you could pay for a full year’s subscription.
I hope some of these ideas help you solve your graduate gift dilemma. Whichever you choose, all have the potential to help the young recipient attain financial security, which is the most valuable gift of all.
You also might find these items of interest:
- Uncle Sam’s tax breaks for parents and students
- A lesson plan for maximizing 8 education tax breaks
- 529 plan changes under SECURE 2.0 should boost retirement savings
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