Money-Smart Gifts for College Grads

These five strategies can help put them on the road toward financial independence

Photo Illustration: Consumer Reports, Getty Images Photo Illustration: Consumer Reports, Getty Images

As more than a million college graduates collect their diplomas this spring, many will also be receiving gifts from proud family members and friends.

The average person buying a graduation gift was expected to spend $119, according to a 2021 survey by the National Retail Federation, which also found that the most popular gift was cash, followed by greeting cards, often with cash tucked inside. That means someone with generous family members could end up with several hundred dollars or more.

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That extra money can be welcome, especially in today’s uncertain economy. But simply handing out cash can be a missed opportunity to make a more meaningful gift to graduates, such as helping them learn money management skills or encouraging them to start building their savings, says Manisha Thakor, a certified financial planner and financial educator at MoneyZen in Portland, Ore.

Granted, for most young adults celebrating the last day of college, financial planning help may not top their wish list. That’s why you may want to consider splitting your graduation gift into “now” and “later” components.

“You may want to give the grad something fun to start with,” says Thakor. “But follow up with a gift that will help with their financial education, which is a gift that will keep on giving.” You can mention the follow-up gift in a note or card at graduation.

Of course, the right gift will depend on the goals of the grad as well as your budget. Here are five money-smart gift ideas to consider:

Build a Budget

“The best gift you can give a grad is to help them create a realistic budget,” says Gordon Achtermann, a fee-only financial planner in Annandale, Va. Having that budget in place allows the grad to get a full picture of his or her income and expenses, which is key to managing cash flow. 

If your grad hasn’t already learned budget basics, you can give him or her a budgeting tool, such as YNAB, or ($99 a year ) or, which is free. Achtermann also recommends Tiller Money ($79 a year), a spreadsheet program that works with Google Sheets and Excel. 

Even if your grad doesn’t have a job yet or is taking time off before starting grad school, learning to budget now is valuable. “Wherever the grad is headed, he or she is going to have limited resources and will have to fly solo,” Achtermann says.

For parents, the budgeting process can also encourage better communication about the financial support the grad can expect and how that money will be spent. “You don’t want unstated assumptions and opinions, so it’s a way of establishing clear ground rules,” according to Achtermann.

Jump-Start an Emergency Fund

The challenges of building a rainy day fund can be especially difficult for young adults just starting out, when they may be juggling student loan payments (which are set to resume this fall), the rising cost of rent, and other expenses. Without a cash cushion, they may resort to costly options, such as running up credit card debt. 

To help avoid this scenario, you can offer to direct your gift toward building a rainy day fund, as well as suggest online savings options that pay above-average yields. 

“Ideally, an individual should have at least $1,500 put away for emergencies,” says Ronnie Colvin, a fee-only financial planner in Reno, Nev. “Your graduation gift alone may not get them there, but having that additional money can help.”

Over time, most people should aim to save enough to cover three to six months’ worth of expenses.  

Pare Down Debts

Many grads leave college with credit card debt, perhaps incurred to pay student fees or costly textbooks. If you know that’s the case with your family member, you could offer to direct your gift toward paying down their highest-interest credit cards, which could greatly reduce the overall balance. 

Still, the biggest debt a grad faces is likely to be student loans: The average balance is close to $30,000. If you think your grad could use help figuring out repayment options, you can offer to set up a session with an adviser to sort out the different strategies.

To find this help, you can hire a financial planner by the hour through the Garrett Planning Network. Free advice is available through the Institute of Student Loan Advisors

Help With Job Hunting

Many grads will be looking for a job, and if you work in the field they’re interested in, you could offer assistance as a mentor. You can also offer to set up informational interviews with colleagues in your industry, Achtermann says.

Another option may be to fund the cost of a professional headshot to include in job applications and on social media.

“A great headshot helps encourage someone to stay on your profile a little longer, and sometimes that’s all it takes to land a job,” he says.

And depending on your budget, you can consider paying for a career coach who specializes in working with recent grads, says Achtermann. 

Boost Retirement Savings

Saving for retirement might not seem particularly urgent for twentysomethings. But it’s the best time to start saving, because the money will have decades of compound growth. A $500 investment at age 22 can grow to $6,556 by age 65, assuming a 6 percent annual average rate of return.

If the student has earned income this year, parents might help them set up a Roth IRA and give them some money for it or offer to match their contributions to get it started. With a Roth, you contribute after-tax money, which will grow tax-free; those under age 50 can put away up to $6,000 in 2022.

For grads who have landed a job with benefits, offer to help them make the most of these programs. If the employer offers a 401(k), for example, encourage the grad to contribute at least enough to get the full match, if one is offered, because that’s free money.

A 401(k) will also show savers the impact of contributing small amounts consistently over time, says Ryan Firth, a CPA and fee-only financial planner in Houston. That will provide another incentive for the grad to stay on track toward their financial goals. 

Photo of CR Money editor, Penny Wang.

Penelope Wang

I cover everything from retirement planning to taxes to college saving. My goal is to help people improve their finances, so they have less stress and more freedom. What I enjoy: walks through the city, time with family, and reading mysteries, though I rarely guess who did it. Follow me on Twitter (@PennyWriter).