With the holiday season just around the corner, you might be thinking about what would be a great gift for your children or grandchildren. And perhaps this year, instead of trying to guess what material or trendy item they would enjoy, you’d like to give something a bit unusual, but still meaningful and memorable.
In keeping with our Wealthwhile℠ philosophy, my suggestion would be a financial gift—something that could not only grow in value over the years, but could also teach valuable personal finance lessons and provide meaningful lifetime benefits for which they’d remember and thank you in the years to come. If you’re looking for a gift that could leave a lasting impact, here are my top five picks for making their financial journey just a bit smoother.
1. Help Them Build Wealth With a Roth IRA
If the child or grandchild has earned income, funding a Roth IRA is a powerful way to set them on a path toward financial independence. This gift leverages the benefits of tax-free growth and future tax-free withdrawals, which can be huge with so many years of compounding before the young person reaches retirement. Plus, it’s a great opportunity to teach them about taxes and investing.
For minor children, you can open a Roth IRA as a custodial account with the single child as beneficiary. They would take over the account when they turn 18 years old; you control the account and the investments in the meantime. As long as they have earned income, they are eligible to make contributions. You might even make a deal with them that you will match (every dollar or a percentage) what they contribute, as long as the total doesn’t exceed what the child earns in a year or the maximum of $7,000 (for 2024).
2. Contribute to Their College Education
It’s no secret that college costs are challenging and expensive even for affluent families. My core savings recommendation is a 529 college savings account. Make a contribution to a child’s existing account or open an account with the child as a beneficiary (and provide a card explaining your gift). When used for qualified education expenses, withdrawals can be tax-free. The contribution limits are generous and some states offer further tax benefits.
For high net worth families, front-loading a 529 plan with a lump sum (of $90,000 for 2024, utilizing the 5-year gift tax averaging) can maximize growth potential and leverage tax-free gains.
What’s more, starting with the 2024-2025 FAFSA aid application form, students are no longer required to report gifts from grandparents or contributions from grandparent-owned college savings accounts toward college expenses.
3. Open and Contribute to a Custodial Investment Account (UTMA)
This account type allows for flexible gifting of financial assets that can be used for various expenses as the child reaches adulthood. High net-worth individuals can leverage these accounts to pass down assets while retaining some control over how funds are used until the child reaches the age of majority.
Helping a child understand the benefits of long-term compound growth and investing patience is a timeless and memorable gift. If the rules of a Roth IRA or 529 account are too restrictive, a UTMA could be the answer, as it offers greater flexibility. Start investing in an index fund or two, and have statements made available to teach them about market volatility and compound growth over time. In addition, others besides you may give/contribute to the account.
Be aware of the tax rules regarding custodial accounts. Earnings up to $1,250 (for 2024) are generally exempt from federal taxes, but any excess up to another $1,250 may be taxed at the child’s rate. Any earnings above $2,500 are taxed at their parent’s rate. Custodial accounts are still considered a child’s asset in the financial aid assessment formulas.
4. Teach About Inflation by Gifting I-Bonds
I Bonds are U.S. government savings bonds that offer a fixed rate combined with an inflation-linked rate, making them a safe investment with built-in protection against inflation. They offer tax-deferred interest until redemption. When used for qualifying education expenses, I Bond interest may even be tax-free, adding another layer of benefit for recipients planning for future educational costs.
I Bonds are a thoughtful way to introduce younger generations to the importance of inflation protection and diversify their early financial portfolio with a stable, low-risk asset.
The minimum purchase is $25 and you can buy I-bonds online directly from the U.S. Treasury.
The online maximum is $10,000/year and there are withdrawal restrictions for the first five years.
5. Buy Stock Shares or Transfer Stock You Own
Being an actual part-owner of a real company (especially a company whose services or products the child may see or use) can be a real thrill to a young person. If you own shares of stock in your own brokerage account, you can arrange to transfer those shares to the custodial brokerage account established for the child.
Many companies (like Disney, Starbucks, Hershey, and Coca-Cola) still have Direct Stock Ownership programs where you can purchase common stock from the companies themselves. The shares are held by special custodian companies, such as Broadridge, that hold the stock and can reinvest dividends, make distributions, and have online access to account information.
Stock certificates are generally not available anymore, but you can have a non-negotiable replica certificate made by companies such as Give A Share.
Choosing a financial gift doesn’t just create a one-time moment of joy; it’s a decision that can set your child or grandchild on a path toward lasting security and understanding about money. These options aren’t simply about saving for the future—they’re ways to help young people appreciate the power of growing wealth, building confidence, and making thoughtful financial choices early on.
If you’d like help in setting up one of these gifts or exploring more personalized ideas, feel free to reach out. The best gifts often go beyond the holiday season, guiding them toward a lifetime of financial well-being.
About Marcus
Marcus Miller is Wealth Manager and Shareholder at Deerfield Financial Advisors, a fee-only financial services and wealth management firm with offices in Indianapolis and Chicago. His role includes strategic planning, income tax optimization, insurance and estate planning, and investment management for a diverse group of clients. Implementing Deerfield’s unique financial planning approach called WealthwhileSM, Marcus helps clients live their best lives and focus on their most worthwhile passions. He is passionate about helping them pursue, experience, and maintain true financial independence for their families, without the sales pitch. He truly enjoys helping people and developing deep, meaningful relationships with clients.
Prior to joining Deerfield in 2012, Marcus gained valuable experience at a Big Four accounting firm, a nationally recognized brokerage house, and a distinguished independent advisory firm. He holds a Bachelor of Science and Master of Science in Accounting from Ball State University, the Certified Public Accountant and CERTIFIED FINANCIAL PLANNER® designations and is a NAPFA Registered Financial Advisor. Marcus serves on the Board of Happy Hollow Children’s Camp and on the Planned Giving Committee at the Indianapolis Zoo. He is a member of the Professional Advisor Leadership Council at the Central Indiana Community Foundation (CICF) and is involved at his daughters’ school.
Marcus resides in Carmel, IN, with his wife, Andrea, and their two daughters. They love spending time outdoors hiking, bicycling, camping, and traveling to national parks. (They have a goal to visit all 63 national parks; Yosemite is the current favorite.) An avid reader, especially of non-fiction, history, and finance books, Marcus also trains in Brazilian Jiu-Jitsu, likening it to a physical chess match that involves problem-solving and mental strengthening with physical consequences. To learn more about Marcus, connect with him on LinkedIn.
