Emergency funds -- or “peace of mind” accounts, as we like to call them -- are an important part of anyone’s financial strategy.
But unfortunately, most people don’t have emergency funds, according to research by Bankrate
. In fact, only 28% of Americans currently have emergency funds. Not only that, but 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 a fender bender on the college campus, or your first major dental expense as an adult. And you can help your graduate 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. But helping them get started and teaching them to save for hard times can help them understand the importance of having that little safety net.
3. Make an IRA Retirement Account Contribution
While this may seem geared toward college grads, a contribution to an IRA retirement account can still be a great financial gift for high school graduates, too.
Many graduates have the benefit of time on their side. That means that, 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 college graduate is starting a full-time job with a retirement account, it may be easy to make a contribution. If you want to contribute to an account for your high school grad, the rules may vary based on your state. In most places, if your student is under 21, you will 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. Set Up an Appointment With a Financial Advisor
As young adults start making their way in the world -- and making money -- they may feel confused about how to get started with managing that 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 your graduate get on the right track for financial success in their future.
By discussing topics such as budgeting, saving for retirement, investing, debt avoidance, taxes, and more, graduates can get sound advice and 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.
Academy Bank Is Your Financial Partner
At Academy 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 graduates and their families!