975. Laura answers a listener's question about gifts to give kids when you want to help build their financial futures.
975. Laura answers a listener's question about gifts to give kids when you want to help build their financial futures.
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Welcome back to Finance Friday, another special edition of Money Girl, where I answer your burning money questions! I love hearing from you and want to answer yours. So, if something finance-related is on your mind, leave me a voicemail at 302-364-0308. You can leave your name or remain anonymous.
Today's topic comes from Patrick, who sent me an email saying, "My in-laws asked me what my two kids, ages 8 and 14, want for holiday gifts. Instead of toys or clothes, I'd love to encourage them to think about my kids' financial futures, but I don't want to seem greedy or pushy. What are the best gifts I could recommend to relatives for helping my children build wealth?"
Thank you, Patrick! With the holidays right around the corner, I'm sure many parents have also received this annual question from well-meaning relatives about what the kids want this year. I understand the fear of seeming greedy by asking for an investment in your children's financial futures.
No matter a child's age, this post will review holiday gifts that can improve their financial futures. Plus, we'll discuss how to make the conversion with family about holiday gifts as easy as possible.
6 holiday gifts that build wealth for kids
Here are six potential holiday gifts for kids to help them build strong financial futures rather than accumulate more stuff.
1. A 529 savings plan contribution.
A 529 savings plan is a tax-advantaged investment account designed specifically for education expenses. Contributions to the account can come from anyone and grow tax-deferred. When you're ready to withdraw 529 funds for the beneficiary's qualified education expenses, withdrawals are entirely tax-free.
You can use 529 funds on a variety of expenses, including college tuition, room and board, books, supplies, computers, and up to a lifetime limit of $10,000 on student loan repayment.
Starting in 2026, you can even use a 529 for up to $20,000 (up from $10,000 in 2025) in tuition, supplies, books, tutoring, and admission tests per year for kindergarten through high school. In addition, funds can be used for trade schools, certifications for various professional programs, and apprenticeships. That makes a 529 plan a potent tool for managing current and future education costs.
If you have already opened a 529 plan for a child, many allow direct online gifting by sharing a link. If you want a new 529, consider an app designed to make saving feel more like a modern crowdfunding campaign, like Backer.
You can link an existing 529 plan or start a new one through the Backer platform. It creates a beautiful, personalized gifting page for the future student. You can give anyone a link to the page so they can easily contribute and see the student's progress toward a significant milestone.
Patrick could respond to his in-laws by saying, "I'm so grateful you asked about holiday gifts. We've set up a simple college savings link for each child. I can send you a link to contribute directly to their 529 plans, and it's even easier than buying a gift online. Can I email or text you the link?"
That way, you're not asking for or receiving cash. Giving a family member or friend a link to click to contribute directly to a child's account removes any awkwardness and allows them to participate in reaching the goal you set on the gifting page.
LISTEN ALSO: How a 529 plan saves money for students of all ages
2. A kids' banking app subscription.
If your kids or teens want to save money for any purpose, paying for a subscription to a kids' banking app would be an excellent holiday gift. For instance, Greenlight is a popular service that gives kids an app and a debit card, but the parent(s) retain control of the account.
You can set up allowances, create "parent-paid" interest on savings, and assign chores for money. Parents set flexible controls and get real-time notifications of their kids' money activity. Plus, every debit card use earns 1% cash back to savings.
Greenlight moves the abstract concept of money into a practical, digital tool that kids can use, learn from, and manage with parental oversight. A relative can purchase a subscription credit and choose to email the recipient instantly or print it to deliver however they like.
RELATED: 6 ways to prepare kids for financial freedom
3. A Roth IRA contribution.
Many people don't realize that kids qualify for an individual retirement account (IRA) if they earn income from a part-time job or self-employment. You can make an IRA contribution on a child's behalf for as much as they earn, up to the annual limit of $7,000 for 2025. But you can't fund an IRA for an infant or toddler who can't legitimately earn income.
With a Roth IRA, contributions go in after tax, but grow tax-free for life. For instance, if a 15-year-old earns $1,000 from a summer job, a relative could gift up to $1,000 to invest in their Roth IRA. That single contribution could grow to over $100,000 by the time they retire, and they'd never have to pay taxes on the growth.
LISTEN ALSO: Can I start a Roth IRA for my child?
4. A high-yield savings contribution.
Kids of any age can appreciate getting money to put in a real or online bank savings
account. It teaches them how a bank works and introduces them to the concept of earning interest.
First, a parent would need to open a savings account in the child's name. Then, a relative could gift them money with the specific instruction to make it the first deposit for their new high-interest, money-making account.
RELATED: 4 strategies to earn more interest on savings
5. Financial literacy books.
A gift doesn't have to be cash to give kids a financial benefit — education is just as valuable. For instance, award-winning author John Lanza created The Money Mammals series to help kids up to about 10 years old and families get comfortable with money. It turns goal saving and basic financial literacy into something fun for kids. The titles include Joe the Monkey Learns to Share, Joe the Monkey Learns to Save, and Joe the Monkey and Friends Learn about Spending Smart.
Here are more options for young kids and preteens:
Teens might like the following titles:
6. Financial literacy games.
Games are a terrific way to build a child's financial knowledge. Classics like Monopoly, The Game of Life, or Pay Day teach basic concepts of income, expenses, investing, and career choices in a fun, competitive way.
Let's go back to Patrick's question about what to say when a relative asks about holiday gifts for your child. If someone asks, they genuinely need help or ideas about what you or a child would like to receive, so be honest.
A polite response is something like: "Thank you so much for asking! The truth is, they're set for toys, but what we're really focused on this year is their college savings, bank savings, financial literacy (or anything else that's appropriate). A small contribution to their 529 savings plan or their savings account would be the most amazing and long-lasting gift."
If you have a terrific financial gift for a child that I missed, I'd love to hear your thoughts. And if you liked this episode, share it with someone wondering what to buy a kid this holiday!
That's all for now. I'll talk to you soon. Until then, here's to living a richer life!
Money Girl is a Quick and Dirty Tips podcast, and I want to thank our fantastic team! Steve Riekeberg audio-engineers the show. Holly Hutchings is our director of podcasts, Morgan Christianson is our advertising operations specialist, Rebekah Sebastian is our marketing and publicity manager, and Nathaniel Hoopes is our marketing contractor.