The Class of 2021 has been through a lot in the last year. Of course, high school or college graduation is always a big accomplishment. But there’s usually not a pandemic going on at the same time. This year’s grads have faced and overcome many challenges -- from fear, uncertainty, and Zoom classes -- and it makes that new diploma extra sweet. What’s the best kind of gift to give a new grad that will help them start planning for their financial future?
For new graduates, one of the best things is all the gifts from family and friends. Those gifts, and especially financial gifts, can go a long way when you’re just starting out in life. While you may have considered gifting cash or a gift card, there are other types of financial gifts to consider. And they could support your graduate for years to come
Learn about four unique financial gifts for 2021 graduates.
1. Credit Builder Secured Visa Credit Card
Good credit is important, but it can be hard to get started building it when you don’t have any credit history to your name. This is especially common for young adults who don’t have much financial history.
An Armed Forces Bank Credit Builder Secured Visa Credit Card* is perfect for those looking to start building up their credit score. With automatic reporting to the three major credit bureaus, Armed Forces Bank is here to help your grad start to build their credit history.
The cardholder can set a credit limit between $300 and $3,000, based on the amount deposited into the Credit Builder Savings account. With no application fee and no over-the-limit fee, it’s a great way for graduates -- or anyone -- to start building a strong credit history.
Setting up your new graduate with a credit card is just one important step toward financial success, now and in the future.
2. Starter Emergency Fund
Emergency funds -- or “peace of mind” accounts, as we like to call them -- should be a major part of anyone’s financial strategy. Those of us in military families understand the importance of being prepared for life’s big and small surprises.
However, most people don’t have emergency funds, according to research by Bankrate. In fact, only 28% of Americans currently have emergency funds. On top of that, many people said they would have a hard time coming up with $400 for an emergency, according to the Federal Reserve.
Emergencies happen. Whether it’s something big or small, there are always going to be surprise expenses we can’t fully anticipate. But we can help teach our graduates the importance of preparing for those surprises. Help them start their financial future off strong by getting them set up with an emergency fund -- and making the first contribution.
Tell your grad not to worry if they aren’t able to set aside very much right now. Every little bit helps, and it adds up over time. But helping them get started and teaching them to save for hard times can help set them up for success.
3. Individual Retirement Account Contribution
This might initially seem to make more sense for college grads, but a contribution to an IRA retirement account can still be a great financial gift for high school graduates, too.
Many high school and college grads have the benefit of time on their side. The sooner they start saving for retirement, the more time their money has to grow. Even starting to invest at 20 years old, rather than 30 years old, can make a huge difference in accumulated funds, including interest, by the time they reach retirement age.
If your graduate is starting a full time job with an employer-sponsored retirement account, such as a 401(k), it may be fairly easy to make a contribution. For a high school grad, or someone under 21, the rules are likely to vary slightly based on your state. You may have to open a “custodial” IRA account for them.
However, there are often contribution limits based on the beneficiary’s income, so be sure to do your research about specific laws for your state if you choose this option.
4. Appointment With a Financial Advisor
Many young adults have heard the importance of planning for a healthy financial future. But they may be feeling confused or overwhelmed about how to get started managing their money. While they might not always be in the mood for a life lecture from their parents, grandparents, neighbors, or family friends, one unique graduation gift idea is paying for an appointment with a financial advisor.
A financial advisor, especially one who has a passion for working with young adults, can help them get on the right track for financial success. These appointments can often be set up in-person or virtually, which can be especially helpful for those in military families.
Your grad can learn about topics such as budgeting, saving for retirement, investing, debt avoidance, taxes, and more. They’ll also have the opportunity to ask any questions they may have. Plus, the financial advisor may help them come up with a plan and financial goals.
While a visit to a financial advisor may not be something they’d consider spending their own money on, it can make a great gift. It’s just one more way that young adults can learn the importance of financial health and creating good financial habits for the future.
Armed Forces Bank Is Your Financial Partner
At Armed Forces Bank, we’re working hard to be your financial partner. We’re here to do whatever we can to help you and your family plan for a strong financial future. Congrats to all 2021 graduates and their families!
*Subject to credit approval. Improved credit score is not guaranteed. Credit score is determined by credit reporting agencies based on multiple factors, but satisfactory performance on a credit card product can improve your credit score. Default on a credit card, including missed or late payments can damage your credit score. Once added, funds cannot be withdrawn from the savings account without closing the savings account and the credit card.