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Fiscally savvy gifts for grads

Graduation_invitation_2008_2 Mailboxes are starting to fill up with graduation announcements, from both high school and college seniors. Yep, that image there to the right is one we got last week.

If you're like the hubby and me, you're stunned to learn that friends and distant family had kids that old.

In most cases, these notifications will merit no more than a congratulatory card. I mean really, you haven't heard from these people for years -- that Christmas form letter doesn't count -- so the senders shouldn't expect gifts. 

A few kids, however, do deserve a bit more recognition for their academic efforts. For those youngsters, whether heading off to college or out into real world, here are five fiscally savvy gifts they will appreciate.

$ Everybody loves that old standby, cash. As the saying goes, it's always the right size and everybody looks good in green. Heck, with the pastel-highlighted $10s, $20s and $50s, the cash should be even more complementary.

Your bank should be able to supply you with some crisp new bills you can tuck into a "Congrats Graduate!" card.

If your graduate is taking a break to broaden his or her horizons, the currency appropriate for the travels would be welcome. Sure, credit cards are accepted worldwide, but it never hurts to have a bit of the local money on hand for taxis and tips.

If your locale doesn't have a currency exchange, you can order online from Wells Fargo or eZforex. This currency conversion calculator will help you get the correct amount of $ to €, ¥, ₧, £ or whatever legal tender is used in the grad's travels.

$$ Cold cash a bit too crass for your taste? Then give a gift certificate (yes, a few places still offer them) or a prepaid gift card.

If you go with the plastic option, one from Visa, MasterCard or American Express offers your graduate flexibility. The cards can be used at any store that accepts the brands' regular charge or debit cards. You should be able to buy one at your bank.

You also can go more specific. Every national chain store or restaurant now offers gift cards.

$$$ If you want to make sure the graduate doesn't immediately blow your monetary gift, give a certificate of deposit. A short-term one will mature just as the kid is getting to college, so the new student can then use the money to buy books and other campus necessities.

For this fiscal gift, you'll need the student's Social Security number, so this likely will be an option only for very close friends and relatives. To protect against identity theft, the financial institution also might require that the student come in with you to set up the account and sign the appropriate paperwork, so that takes the surprise element out of the gift.

And be sure to warn the grad that, depending on the young person's filing circumstances, the CD's interest is taxable income.

$$$$ Feeling like a patriotic gift giver? Check out the many U.S. Treasury products.

The most common gift in this category is savings bonds. Series EE bonds pay a fixed rate of interest for up to 30 years. Series I bonds offer the earnings some protection against inflation through a combination fixed rate, set for the life of the bond, and one based on the current inflation rate and updated every six months.

You can purchase either type at most financial institutions or, if you set up an account at TreasuryDirect, you can buy them online. Get details on purchasing savings bonds as a gift here.

The tax situation for savings bonds is a bit better than it is for the CD. Interest from all savings bond series is exempt from state and local taxes, and federal tax is deferred until the bond is redeemed.

$$$$$ Contribute to the graduate's continuing education. If the student has a Coverdell education savings account or a 529 tuition plan, a gift to these accounts would probably be welcome, by the grad as well as his or her parents. Check with the family for details and to coordinate your gift to ensure that limits and other guidelines are met.

Celebrity commencement speakers: It's been a long time since I sat through a graduation ceremony, either as a participant or observer. And to be honest, I don't remember who spoke at any of them!

That's not so much a slam at the speakers. It's just that other things were on my mind each time.

These day's, however, schools pull out all stops to get a speaker who will be memorable. Some of the commencement speakers of note for 2008 ceremonies include J.K. Rowling, Cal Ripken, Jr. and Oprah.

If you're looking for an event to attend based on who will be trying to inspire the grads, check out this list. And good luck wrangling those tickets!


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Rachel @ Master Your Card

Giving money is always a great idea for graduates but I agree that if you think they are not money savvy it is better to give them it in the form of an investment. They may not appreciate it initially but when it matures they will sure be grateful!

Austin Chu

Great and imformative post. I work for a company that manages and tracks gift cards, and we blogged about gift card issues on We believe great cards are a great alternative to cash. However, consider this: Last year, $100B was spent on gift cards, and around $8B was lost and unredeemed. Just keep that in mind. Be careful and happy spending!

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