Holiday Gifts for Children

By Alfred Edmond, Black Enterprise Magazine

Here are gifts you can buy for your kids that will help them to become more financially savvy and, in the long-run, better-positioned to build wealth.

Newborns to Toddlers - Let the rest of the family buy the clothes your young children will outgrow before they get to wear them, and the toys they will ignore, lose, break, or forget in less than a month. You should be the one who sets up the 529 College Savings Plan-for minimum deposit starting from as little as $25 to as much as $1,000 (but many plans waive the minimum deposit if you enroll in a weekly automatic deposit program). Then, remind the rest of the family to contribute to the college fund whenever the child has a birthday, Christmas, or other special event. To learn more about 529 plans, pick up the November 2007 issue of BLACK ENTERPRISE. Also, check out the Websites for SavingforCollege.com and the College Savings Plans Network.

Kids to 'Tweens - Take children to the bank and open a savings account. Your gift can be the seed capital to open the account. You can also agree to match any deposits they make into the account dollar-for-dollar, as long as they make no withdrawals for at least a year-kind of like a kiddie 401(k). Better yet, consider setting up the account online. They'll get a higher interest rate (as much as 5%) and will be able to check their accounts on the home computer.

Teenagers - Take as little as $25 and buy your teen stock in his or her favorite companies using an online dividend reinvestment programs such as ShareBuilder. Open a custodial account for your child and help him or her follow the performance of the stock each day. Keep track of news about the company and discuss how it makes the price of the stock go up or down. Even if he or she doesn't become a stock broker, they'll gain an understanding of how the financial markets work.

High School Grads - This one is easy and obvious: get them a subscription to BLACK ENTERPRISE. The financial, small business and career information they'll get each month will help them to take avoid the mistakes we made in early adulthood while taking advantage of opportunities we may have never dreamed of.

College Grads - Instead of buying your grad a car or sending him or her on a trip to Europe, commit to putting that money toward the down payment on a first home. Set the money aside until they are gainfully employed and can handle the monthly mortgage payments. And start with a small, modest home, with a traditional fixed-rate mortgage-they can trade up later, as their income increases.

Kids of all ages - Buy Monopoly, The Game of Life, Easy Money, and other board games that involve spending, saving, investing, and managing money. The key here is that you can't just buy the games; you have to play them, and use them as a way to get your entire family to consider the pros and cons of different financial decisions and strategies.

These are gifts that will keep on giving, with the potential to enrich and increase the financial literacy of the entire family. Remember, at least one of your kids could end up wealthy enough to care for you in your old age-and grateful enough to be happy to do it.

Alfred Edmond Jr.'s column on Money Sense appears weekly at BlackEnterprise.com as well as on the Doug Banks Morning Show every Wednesday. » Recent Headlines

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