If you are planning to ditch the traditional gifts for kids, like toys because they will be quickly forgotten about or broken to pieces, consider shopping for more valuable presents that can leave a lasting legacy for your kids (or grandchildren). This year, help to secure their future with financial gifts that literally keep on giving.

529 Plans

Qualified Tuition Programs, commonly known as 529 plans, are popular tax-advantaged college savings vehicles named after their section in the Internal Revenue Service (IRS) code. In general, they are investment plans sponsored by each state.

There are two kinds of 529 Plans:

  • 529 Prepaid Tuition Plans: Also known as guaranteed savings plans, they allow Parents to pre-pay college tuition, securing today’s tuition rates for public colleges and universities. Money saved in these plans can be used for eligible in-state, out-of-state, and private schools.
  • 529 Savings Plans: In these plans, financial contributions are invested in mutual funds or other investment products for the beneficiary to use for qualified college expenses (books, tuition, and room-and-board).

In a number of states, the contribution limits are as high as $300,000. Individuals can contribute up to $14,000 per child each year without being subjected to the federal gift tax.

Funds that are withdrawn from the account for higher education expenses are not taxed. Money withdrawn for other reasons is taxed, along with a ten percent penalty. If the beneficiary is granted a full scholarship to college the penalty is waived.

Ages: This gift is appropriate for any age. Get started saving as early as you can, to save more money in the long run.

Coverdell Education Savings Accounts (ESA)

Coverdell Education Savings Accounts (ESA) are tax-advantaged custodial accounts used to pay for education expenses, similar to 529 Plans. In addition to college expenses, an ESA can be used to pay for kindergarten through 12th-grade expenses at qualified elementary and secondary institutions.

The maximum annual contribution limit for an ESA is $2,000 per year.

Contributions to these accounts cannot be made after the beneficiary turns 18 years old. Funds in an ESA account must be used by the time the beneficiary reaches 30 years old (unless they are qualified as special needs). Withdraws that do not qualify as educational expenses are subject to federal income taxes and a ten percent penalty.

Ages: Birth to age 18 years old.


Collectable coins are small shiny gifts that can light up any child’s eyes.

Not only are coins fun to place on display, they also tend to increase in value over time. The U.S. Mint offers a variety of historical keepsake coins ranging from former presidents and Native Americans to famous astronauts and the Tuskegee Airmen.

Ages: Kids and teenagers alike can benefit from this gift.

Roth Individual Retirement Account (IRA)

If your child has a job or side hustle where they receive earned income, they can invest their taxable income (up to $5,500 annually) into a Roth Ira. A 14-year old that annually invests $2,000 ($1,000 of his earned income + $1,000 match/gift contribution from parents) into a Roth IRA, that yields seven percent interest, will retire with $1,002,460.64.

While an individual that invests the same amount starting at 35 years old would retire with significantly less $220,436.31.

Money saved in a Roth IRA does not have to be used solely for retirement purposes, it can also be withdrawn to purchase a first home or for educational expenses. Any other withdrawals would be federally taxed and receive a ten percent penalty.

Ages: As soon as your child legitimately begins receiving earned income. In general the earlier the better because time is on their side. Ideally, you could help make your kid a millionaire!


Teach your kids how to be an investor by purchasing stocks in companies of their choice. Let them watch the value of their stock both decrease and increase over time while they learn how to invest. Purchase a gift card from Stockpile and your kid will be able to create wish lists, track their favorite stocks, and make trades that you approve. They also provide free mini-lessons to aid with the stock investment learning curve.

Ages: 11 and up.

Trust Fund

If you would like to leave money for your children but wish to control how it will be used, a Trust Fund may be the perfect gift. A trust fund contains an assortment of assets that can be left to an individual or group of individuals. A trust fund can be set up at any age and can reduce estate taxes to parents gifting $25,000 or more.

However, contrary to popular belief, trust funds are not only available for ultra high net worth individuals, the Kiss Trust provides an affordable option for families that are not affluent. While a traditional trust can cost several thousand dollars to get started, a Kiss Trust can be started with a minimum balance of $25. Payments can be deposited on a regular basis or in a lump sum.

Payments deposited into the trust do not require that you pay income tax on money made from the assets, since the assets no longer belong to you. With the right financial expertise and planning, the assets can be exempt from both estate and gift taxes. You can build a legacy for future generations with a trust fund.

Ages: This gift is appropriate for all ages.

Uniform Gift/Transfer to Minors Act Account (UGMA/UTMA)

UGMA/UTMA accounts are custodial accounts held in the child’s name permitting them to receive financial gifts without needing a guardian or trustee. These accounts do not have contribution limits, but any amount gifted over $14,000 annually will be subject to the federal gift tax. When the beneficiary comes of age, funds in their UGMA/UTMA account can be used for any purpose. Your child will also receive a tax break on the gifts, up to a fixed amount.

At age 18 the money is typically automatically transferred to the beneficiary, but the custodian can opt to postpone the transfer until age 21 or 25.

Ages: Birth to 18 years old.

Final thoughts

These financial gifts may not be the most celebrated gift at holiday time (your hug might get ignored) but they will certainly be the most valuable and appreciated for years to come. These gifts provide a solid foundation for learning about personal finance (a subject that is either briefly grazed over or forgotten altogether in grade school). These financial gifts also teach delayed gratification -- the capability to forgo a smaller immediate reward to gain a larger or long-lasting reward.