A college student receiving a check as a gift

As more than one 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 $102, according to a 2018 survey by the National Retail Federation, which also found that most popular gift was cash, followed by greeting cards, often with cash tucked inside. That means someone with multiple generous family members could end up with several hundred dollars or more.

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 vice president for financial well-being at Brighton Jones, a wealth management firm.

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.

“Give the grad something fun to start with,” says Thakor. “Then follow up later with a gift that will help put them on the right financial path.” You can mention the follow-up gift in a note or card at graduation.

Of course, the right gift choice 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. 

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If your grad hasn't already learned budget basics, you can give him or her a budgeting tool, such as YNAB (youneedabudget.com; $84 a year). Or you can help set them up with Mint.com, which is free. 

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," says Achtermann.  

For parents, the budgeting process can also encourage better communication about the financial support the grad can expect and how that money is being spent. "You don't want unstated assumptions and opinions, so it's a way of establishing clear ground rules," says 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, rent, and other expenses. Without a cash cushion, they may resort to costly options, such as running up credit card debt. 

To help the grad 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 $1,000 put away for emergencies,” says Ronnie Colvin, a fee-only financial planner in Madison, Ala. “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 the highest-interest credit cards, which could greatly reduce their overall balance. 

Still, the biggest debt the grad faces is likely to be student loans: The average balance is close to $30,000. If you think the 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 still be job hunting, and if you work in the field they're interested in, you might offer assistance as a mentor. You can also offer to set up informational interviews with colleagues in your industry, says Achtermann.

If the grad is heading out on a job interview that involves an airline flight, you might offer to give money toward the airfare, he says.

An easy and convenient way to provide this help is through an airline gift card, offered by several major carriers. Another benefit of giving a card rather than buying a ticket is that the grad will be in charge of the reservation.

Southwest Airlines gift cards, which are available in denominations of $50 to $200, can be found at supermarkets, Target, Walmart, and Amazon. For other airlines, including Delta and American, you'll need to go to their websites to buy them.

Be aware that most cards must be purchased at least 72 hours before flight time. Most don't have expiration dates, but when they're redeemed for airline tickets, the regular fare rules apply. 

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 as well as gifting some money, or offering to match their contributions to get it started, says Ira Fialkow, a fee-only financial planner in West Palm Beach, Fla. 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 2019.

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 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. 

Additional reporting contributed by Barbara Peterson.