Great Gifts for the Graduate

June is graduation time, an important rite of passage for young students. One-third of all Americans typically give at least one graduation gift at this time of year and sometimes it can be difficult to find just the right one to mark the occasion. The New Jersey Society of Certified Public Accountants (NJSCPA) recommends several money-wise steps to make sure recent grads start off on sound financial footing:

Help with Tuition
Cash is the most popular graduation gift, but there are many creative ways to give it. According to the Project on Student Debt, the average college graduate leaves school with roughly $21,000 in student loan debt. That means they will appreciate any help in cutting that debt load. To ensure your gift gets used for this purpose, find out if it’s possible to write a check directly to their college or student loan company. That way you help them whittle down their debt and remove the temptation to spend a cash gift on an impulse purchase.

Start Them on the Right Road to Retirement
The years after college are a great time to begin saving for retirement, but few young people do it because there are so many expenses associated with beginning their adult lives. In addition, it’s often tough to take retirement seriously when it’s so far away. You can do a new graduate a favor by making the first deposit in a Roth individual retirement account for them. Earnings on a Roth IRA are tax free and the withdrawals are tax free if they are made after age 59½. Even if the graduate doesn’t begin chipping in right away, you’ve started him or her on the right path and begun a nest egg that will grow as the years pass.

Get the Right Gift Card
It’s hard to go wrong giving a gift card, since the graduate can pick out the item he or she really wants. In fact, gift cards are the second most popular type of graduation gift, after cash. To make yours special, think ahead to what your graduate will need in the coming months, including linens for a dorm room or first apartment or new electronics or books for classes, and decide which store or online option will best meet their needs. Remember, though, to be aware of the potential drawbacks to gift cards when you buy one. Find out whether there are any restrictions on how or where the recipient can use the card and if it has an expiration date. Ask if there are any fees that will be deducted from the card’s value. Some merchants charge purchase fees, transaction fees, inactivity fees and shipping and handling costs, which can slash the card’s value in a hurry.

Improve their Financial Savvy
Whether they are graduating from high school or college, young people are facing a new wave of financial responsibilities as they enter this stage of life. To educate them on how money works, consider buying your graduates subscriptions to your favorite personal finance magazine.

CPAs Can Help
Visit www.MoneyMattersNJ.com, the NJSCPA's public service website, and click on the Life Stages menu item. You'll find selections with articles designed to boost financial literacy among young people.
Young adults who are just beginning their careers can also find good advice on managing money. CPAs have created the Feed the Pig campaign. Turn to www.feedthepig.org for articles, podcasts, tools and tips designed to keep young earners on track and help them build a sound financial future.

No matter what financial questions you have, remember that your local CPA can provide the answers you need. Be sure to turn to him or her with all the money issues facing your family. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.



Produced in cooperation with the AICPA
©2009 The American Institute of Certified Public Accountants

June 1, 2009