How to Give a Gift that Matters

December 22, 2020
financial gifting

Buying gifts for kids is the easiest thing in the world, right? 

They know exactly what they want. They have never-ending lists. And they love every part of the experience — from the anticipation of opening the present to diving in and playing with it.

And that’s where the fun ends. Come back a week later, and your carefully chosen gift is already forgotten in a corner. 

So how do you choose a gift that matters this holiday season? 

In this article, we'll walk you through three fundamental rules of gift-giving and help you choose five gifts that matter this Christmas.

Three ground rules for giving gifts that matter

When you were a kid, you probably rolled your eyes every time well-meaning loved ones began a sentence with, “In my day…” and ended it with, “We knew the value of things.”

But as trite as it might sound, the value of things is an important concept we should be transmitting to the children in our lives.

Let's start applying this thought process to gift giving. To give the perfect gift, stick to these three simple ground rules.

1.  Offer experiences over things

Let’s face it, we’re living in a material world. And maybe the child in your life is a material girl (or little guy). But there is such a thing as too much of a good thing. 

Having too many toys can be both distracting and overwhelming for kids Instead, science says it’s experiences, not the fleeting excitement of wishlists and gift toys, that brings greater and longer-lasting joy. 

In a 2020 study of more than 8,000 people, researchers found that individuals get more joy out of “experiential” gifts than they get from material ones.

So instead of giving kids loads of “stuff” that will lose favor quickly, try to give them an experience they’ll never forget.

2. Give gifts that matter to the child's developmental stage

There are hundreds of toys, games, and kits you could choose as a thoughtful gift for a child. 

But, if you’re a grandparent or a godparent, you may not see your special little ones very often. And the thing about kids is, they grow — fast

That’s why you should give gifts that matter by developmental stage.

  • For babies, sentimental keepsakes and significant symbolic gifts are something the family will treasure and a child will appreciate when they get older. For example, gifts for grandchildren could include a financial investment in a custodial account. Using EarlyBird’s UGMA options, your contributions can also include a short video that creates a treasured memory for children when they get older. 
  • For kids in preschool to early elementary school and beyond, choose “open-ended” gifts. During and after this developmental stage, you can incorporate gifts that help them understand a real-world concept, like financial literacy, or master a skill, like a sewing machine. 

3. Make gift-giving teachable and memorable

Teachable and memorable gifts include your presence. 

For example, giving them a board game like Monopoly and then sitting down to play with them while they learn about financial concepts, is both memorable and teachable. 

Without an understanding of how a monetary gift impacts their world, kids could end up squandering or misusing any funds they receive. 

Again, a great solution here would be a custodial account using the EarlyBird app. It enables you to show a child first-hand how investments generate income and how to manage assets.

5 gifts that matter for the kids in your life

The single most significant lesson you can teach children is how to take ownership and responsibility of balancing their wants with needs. 

And that starts with financial literacy. You don’t want them graduating from high school without learning the basics of personal money management, right?  

So before you rush off to buy the latest gift that promises to “boost their IQ,” start with these five gift ideas, instead. 

1. Investing in the stock market

Investing in securities as a gift for the kids in your life might sound a bit odd. But it’s easier than you think, and it will be a gift that keeps on giving long after those kids have grown up.

With an app like EarlyBird on your side, investing in stocks through a custodial account becomes a great way to visually show kids how their gifts are growing through the years. 

Here’s how EarlyBird simplifies investing in stocks as gifts for kids:

  • EarlyBird partners with a range of experts in wealth management and financial planning experts to curate investment portfolios. These portfolios are composed of exchange-traded funds (ETFs) that have both carefully selected securities and bonds.
  • After setting up an account with Earlybird, parents are then offered a fixed portfolio model comprising various ETFs based on the age of their child, investment goals, time horizon, risk tolerance, and other factors.
  • Family and friends can also gift investments which directly contribute to the child’s Earlybird account.

The result: the children in your life can see firsthand how investing in stocks works in real-life. You’ll be contributing to educating the next generation of savvy savers and informed investors.

2. Saving for college

Parents whose children are of high-school age are usually fretting less about the angst of teenagedom and more about how to pay for college.

Grandparents, aunts and uncles, and godparents can often eliminate that stress by setting up and contributing early to 529 plans for the child or children in their lives.

But while a 529 plan is a great way to save for a child’s future college expenses, it’s not the most flexible. Unlike UGMA custodial accounts, 529s have strict requirements about what assets can be spent on. 

Your kids are limited to “qualified education expenses” such as tuition, books, and on-campus housing. But other associated costs like paying rent to live off-campus, groceries or your cellphone bill don’t count. If you do use these funds for non-qualifying expenses, the amount will be taxed like income and you’ll have to pay a 10% penalty.

Since there’s always a chance that your kids may decide not to go to college, it’s smart to give them a more flexible option. 

One way to go is to create a UGMA custodial account on EarlyBird in tandem with a 529 college savings plan. That way, grandparents, aunts, uncles and godparents can contribute to either (or both!) and their someday-scholar will have the freedom to use the funds wherever their life takes them.

3. Setting up a trust

Trusts are a useful “container” for holding and passing down wealth between generations. 

As instruments for saving money, trusts are as useful as custodial accounts. But the purpose of each is slightly different. 

Custodial accounts allow families to divert funds to save money for a child, but parents are just the “caretakers” of the account. The funds belong to the child. 

Trust accounts are not property of the beneficiary until they’re actually passed to the beneficiary (with a few legal exceptions). 

Here’s how it works:

  • The language around the setup of trusts gives the account holder granular control over how funds are distributed, when, and to whom
  • If you work with an attorney, you can use trusts to protect your own “estate” or financial wealth from taxation and you can create a situation in which your beneficiaries also save on taxation, beyond the prevailing estate tax rate. 
  • With most kinds of trust accounts, even creditors can’t touch the “contents” of a trust
  • Their strengths are also their disadvantages: it takes a lot of time, legal expertise, and paperwork to set up these entities. They’re also extremely inflexible once they’ve been set up

If these are your goals, setting up a trust when giving gifts to children can be like giving them a multi-purpose, Swiss army knife of an investment option. 

But if your only goal is to make sure your loved ones have access to funds when they come of age, a custodial account with EarlyBird helps you skip all the hassle, paperwork and the need for any “strategic” terms and conditions. 

4. Giving micro-lending or crowdfunding gift certificates

Instead of outright monetary gifts, you can give gift certificates for micro-lending campaigns on platforms like Kiva that allow older children to ‘spend’ their gift right now and still learn about investing.

You can also give kids gift certificates to crowdfunding sites. Crowdfunding campaigns often offer different types of compensation in exchange for funding — ranging from equity in a company to an advance order of a product the campaign is associated with.

This allows kids to grasp important concepts like the difference between purchasing equity in a “startup” company versus using their money to essentially fund a prototype and purchase the end product.

Either way, the financial lesson your loved ones will come away with is that money can contribute in a positive way when you focus your choices on supporting others. 

5. Introducing them to financial literacy

Apps for meditation, apps for nutrition — why can’t we have apps that teach kids financial literacy? 

That’s where apps like EarlyBird come in.


The EarlyBird app is a crucial part of the broader “money picture” that kids are building as they grow. 

Through an EarlyBird app account, you and your child can monitor the growth of their investments and watch how those investments grow over time. 

Their engagement with the app allows them to learn how money truly works, so they’re making smarter choices when they enter into adulthood.

Conclusion 

They may not know it (yet), but children love gifts that will grow with them. Give them a goldfish or a plant, explain how to care for it, and watch them diligently follow-up. 

There’s something their little brains love more than novelty — and that’s the familiar. 

Watching their money grow, decline, and rise again will be one of the most engaging (and educational) ways to give the gift of financial literacy. 

Do all this and more, while getting the rest of the family involved when you use EarlyBird’s easy and secure next-generation investing platform. 

Download the EarlyBird app today and start investing in your loved one’s prosperous future.

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