College graduation season is now upon us. And if you’re racking your brain trying to figure out what to get that special graduate in your life, you’re not alone.
You may be inclined to purchase them a new laptop, or a new gaming system, or perhaps something for their new apartment, like a side table or lamp. But here’s why the gift of cash could be your best idea yet.
1. They can use it to pay off existing debt
Many college students graduate with debt, whether in the form of government loans or a credit card balance. If you give the gift of cash, they can use that money to pay down their debt and limit the amount of interest that accrues against them.
Also, being in debt can be stressful. Graduating college with debt can be a tough way to kick off young adulthood. The gift of cash could make it possible for your recipient to get ahead of that debt and enjoy the peace of mind that comes along.
2. It can be the foundation of an emergency fund
An emergency fund is something that many college graduates will have to build up over time. But if you give a cash gift, and so do other members of your family, then your recent graduate may be able to approach their first job with a solid savings cushion.
Let’s say your college graduate is about to rent their first apartment and take on car payments for the first time. If they were to lose their job after committing to those expenses, their financial situation could quickly deteriorate. So helping them build an emergency fund is actually a really wonderful thing.
3. They can invest it and grow it into a larger sum over time
When you give the gift of cash, your recipient has many options. And one thing they may decide to do is invest the check you give them rather than spend it. That could do a lot of great things for their future.
Let’s say you decide to give a $200 cash gift. If your recipient invests that money in the stock market, they might enjoy a 10% yearly return on that sum over time, since that’s consistent with the market’s average return over the past 50 years. In that case, in 50 years from now, that $200 gift could be worth almost $23,500.
4. You don’t have to worry about getting them something they don’t need or want
You might buy your college graduate a nice bag that just isn’t their taste. Or you might get them a Smart Watch they don’t really end up using.
When you give the gift of cash, you don’t have to worry about disappointing your recipient, and you don’t have to burden them with returning something that isn’t useful to them. Even if they don’t save or invest that money or use it to pay down debt, they can at least go out and buy something meaningful to them, whether it’s a physical item or an experience.
Many people worry that the gift of cash is impersonal. But chances are, your recipient will appreciate it immensely. So don’t feel bad if you decide that cash is the way to go.
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