Financial Gifts to Consider Giving to Babies, Kids, & Adults

Video Transcript

Did you know that the right financial gift can do more than just put a smile on someone's face—it may help secure their financial future? Today, we're exploring thoughtful financial gifts that can make a lasting impact for your loved ones.

Starting early can mean a world of difference when it comes to finances. Contributing to a 529 college savings plan may help reduce future student loan debt. These accounts grow tax-free and can be withdrawn tax-free for qualified educational expenses under qualifying circumstances.

Want to teach a child about investing early on? Buying shares of stock from their favorite companies can be both exciting and educational. Remember, stocks come with risk, but they offer valuable lessons about investing.

Custodial accounts. Custodial accounts are financial accounts managed by an adult but owned by a minor. Once they turn 18 or 21, the child can take control. It's a great way to give a gift that grows over time.

Certificates of deposit. For secure, steady growth, certificates of deposit (CDs) offer fixed interest rates. Typically, the longer the term, the better the return, making CDs ideal for long-term savings goals.

Next savings bonds. Offering a secure investment, savings bonds can earn interest for up to 30 years, making them ideal long-term financial gifts for children.

For teens and adults, giving a financial gift can also mean helping them establish good financial habits. Prepaid debit cards unlike traditional gift cards, can be reloaded and used widely, making them a practical tool to teach teens about budgeting and financial management. IRA contributions help teens jump-start their retirement savings. For teens that are currently earning an income, contributing to their IRA can teach them the importance of planning ahead. And lastly, knowledge is powerful and a personal finance book can empower teens and young adults to make smart financial decisions, covering everything from budgeting to investing.

Thinking of giving a large financial gift? The IRS sets an annual gift tax exclusion which allows you to gift up to a certain amount without owing gift taxes. For 2025 that amount is $19,000 per individual donor and $38,000 for married couples. For larger gifts, it's wise to consult a tax professional to ensure you're making the best decision.

Financial gifts go beyond immediate gratification—they're investments in the future. Whether you're helping someone pay for college, teaching valuable financial skills, or contributing to their retirement, your gift can have a lasting impact.

For more information and resources, visit westernsouthern.com.

As we enter the holiday season, you're probably starting to brainstorm gift ideas for your friends and loved ones. Putting cash in a card can be an easy, generous way to show someone you appreciate them, but there are other money gift ideas that may come across as more personalized and meaningful.

Whether you're shopping for a baby or an adult, here are some ways to give money as a gift.

Financial Gifts for Kids & Babies

Some financial gifts can be valuable for babies and young kids because they'll have more time to potentially benefit from compound interest and the tax advantages offered by certain investment accounts. Here are some financial gifts to consider for this age range.

College Savings

Helping a child save for college can help reduce the amount they may one day have to borrow in student loans. 529 plan contributions grow tax-deferred and can be withdrawn tax-free as long as the money is used to pay for qualified higher education expenses.

Shares of Stock

Some kids may be excited to be a shareholder in one of their favorite companies. Purchasing a single share of stock for a child can help them learn about the stock market and potentially earn some money. Of course, this investment type can't guarantee growth, and may instead lose value over time. But even then it could still provide a learning opportunity.

Custodial Account

A custodial account is a financial account that's set up by and administered by an adult for a minor. Money that's deposited into a custodial account immediately and irrevocably becomes the property of the minor. When the child reaches the age of majority, they can take over control of the account. You could open a custodial savings account at a bank to give to a child as a gift.

Certificate of Deposit

A certificate of deposit (CD) is a federally insured investment that offers a fixed interest rate for a set period of time. Generally, CDs with longer term lengths earn higher rates of interest.

Savings Bonds

Savings bonds offer fixed or variable rates of interest, depending on which type of bond you have. Bonds can be a great gift for a baby or a young child because they are structured to reward long-term borrowers. Savings bonds can earn interest for up to 30 years.

Donation to a Charitable Organization

For kids who have everything, consider donating to a charity in their name. You may want to consider a children's hospital, a wildlife sanctuary or an organization that aligns with something the child is passionate about.

Financial Gifts for Teens & Adults

For teens and adults, you may want to consider financial gifts that can help them establish good money habits and build their personal finance skills. Here are a few suggestions to consider.

Prepaid Debit Cards

Prepaid debit cards are similar to gift cards, except that they can be used to withdraw cash, pay bills and shop at almost any retail store. The cards are also reloadable, so if you're shopping for a teen, this gift could help them develop good money habits. Prepaid debit cards often come with fees.

IRA Contribution

Do you want to help a teen get a head start on saving for retirement? You can open and manage an individual retirement account (IRA) for someone of any age, as long as they earn income from a job or self-employment, such as babysitting, mowing lawns or other service. You can contribute up to $7,000 per child, or the amount of the child's annual earnings, whichever is smaller.¹

Personal Finance Books

Sometimes, the best financial gift is a gift of education. There are many personal finance books geared toward teens, covering topics like saving and investing, credit cards, budgeting and entrepreneurship.

Gift Tax Considerations

You can give fairly large financial gifts to a child without owing taxes on them. Grandparents who are in the estate planning process may consider giving large gifts to reduce their taxable estate.

The annual gift tax exclusion amount is $19,000 ($38,000 for married couples) per child in 2025.² Taxes can be complicated, so if you're planning on giving a large financial gift, you may want to consult with a tax professional.

The Bottom Line

Financial gifts can have a lasting impact on a person's life. Whether you're helping a child save for college or teaching a teen a valuable personal finance lesson, your gift can be an investment in their future.

   Give a gift designed to grow and support financial wellness. Get My Free Financial Review  

Sources

1. 401(k) limit increases to $23,500 for 2025, IRA limit remains $7,000. https://www.irs.gov/newsroom/401k-limit-increases-to-23500-for-2025-ira-limit-remains-7000.
2. What's New - Estate and Gift Tax. https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax.