It’s easy to get focused on spending rather than saving and investing during the holiday season. However, some of the best gifts you can give children and young adults are tools that set them up for future financial success. Use the following list, beginning with the youngest person on your shopping list, to help inspire a prosperous New Year.
• A piggy bank. A simple place to store money, a piggy bank is a great teaching tool and the beginning step to help a child understand how to put money away toward a goal. When shopping for a piggy bank, experts recommend choosing a transparent model. It’s helpful for the child to see the money grow over time as it gets closer to the top of the piggy bank.
• A savings account. Help a child open his or her first savings account. Opening a savings account is one of life’s financial milestones and can help a child begin to learn about the banking system, the benefit of earning interest and the importance of saving. MBT’s Kids Savings accounts and Savers CDs make great gifts.
• A prepaid gift card. As a child gets older and begins saving for games and other items, consider giving him or her a gift card that can be used anywhere. As a child enters the teens, he or she may face peer pressure to carry plastic, and a gift card can serve as a safe option: When there is no money left on the card, it can no longer be used. It can help him or her learn how to spend wisely and make his or her money count.
• A 529 investment plan for college. Given the rapidly rising costs of a college education, the College Savings Iowa 529 Plan offers a convenient, tax-advantaged way to help a child afford college. Anyone — parents, grandparents, friends and relatives — can invest in College Savings Iowa on behalf of a child. You can give a child a jump start to pay for his or her college education while reaping tax advantages for yourself. To learn more about the program, visit www.collegesavingsiowa.com. Talk to your tax advisor for details on the program’s tax benefits.
• An emergency fund. Starting an emergency fund is a perfect gift for young adults starting out on their own. Experts recommend saving enough cash to cover six to eight months of living expenses in case of the unexpected — a job loss, illness or major auto repairs. Starting such a fund for a young adult on your list and explaining the importance of having money set aside for the unexpected will go a long way in preparing him or her for the future.
Information provided by Tim Esbeck, community president, Manufacturer’s Bank & Trust Clear Lake Branch, 1919 Hwy. 18 East, Clear Lake. For more information, call 641-357- 6161.