1. Open a savings account for your child
If your child is old enough to be receiving an allowance or earning income from a job, they should be learning how to manage this money through their own bank account. A savings account is a great gift that gives your child access to a new form of financial independence, while also allowing the parents control in overseeing their account management.
"Parents have to sign up as co-owners of the account with their child, but this gives their children the ability to develop money management skills under adult supervision," says Brad Scheidt, Executive Vice President (EVP) of Oklahoma Central Credit Union. "If you're considering this as a holiday gift, parents might be interested in funding the initial deposit to open the account—giving their child a little financial head-start as they pursue their own goals."
2. Dedicate money to cover college expenses
Saving for college gets harder every year. Parents can provide a big boost to the educational aspirations of their children just by setting aside money to cover those costs. For children already in school, this could include a lump-sum payment to cover a portion of tuition, books, or living costs. For younger children planning ahead for college, parents may consider placing dedicated funds into a savings account, including a 529 College Savings Plan or another savings vehicle that may offer tax benefits for making this investment.
By saving incrementally toward college costs, parents can help defray this financial burden, and make college more accessible to their children.
3. Place money in a certificate of deposit
If you're looking to gift a large sum of money, your intended recipient might benefit from receiving this gift in the form of a certificate of deposit (CD). A certificate account is typically reserved for lump sums in excess of $1,000, and they offer a better rate of return than a savings account, as long as you meet certain criteria.1
"The biggest condition of a certificate account is that when you make your deposit, the money in that certificate is locked away for a pre-set amount of time," says Scheidt. "In exchange for this commitment, you get a much better interest rate than a standard savings account. If you face an emergency and need access to the money you can always cancel the certificate agreement, but you'll most likely be charged an early withdrawal fee."
Money doesn't have to be a boring holiday gift. By placing money in a savings vehicle or putting it toward a thoughtful area of need, a savings-minded financial gift can show your support and commitment to the well-being of the loved ones in your life.