Only fourteen states require a high school course in personal finance, says the Council for Economic Education – and just 22 require one in economics. That means the majority of young Americans are completely unprepared to enter a complex financial world filled with difficult decisions. So this holiday season, a finance-focused gift may be the best present a child can get.

For many aunts, uncles and grandparents, the default gift for kids is cash. Whether it’s a twenty slipped into a Christmas stocking or a hefty check, money can become the basis for teaching a variety of financial lessons about saving, spending and even investing.

The old piggy bank has taught young kids how to save money for generations. But now that trusty piggy comes in a variety of forms that can help them understand the difference between savings and investing, and even what it means to donate money to a charity or cause. Products like the Money Savvy Pig come with different labels for saving, spending, donating and investing to help kids manage their money and understand financial concepts. Board and video games built around money and investing, from the old standby Monopoly to more sophisticated online versions can also boost financial awareness.

Tax laws for 2013 allow tax-free monetary gifts to $14,000. Gifts like this can help the giver reduce assets and thus their own tax debt. One way to manage a larger financial gift to a child is through a 529 savings plan for college expenses. These special savings accounts allow the funds to grow tax-free and remain untaxed as long as they’re used for college expenses.

Charitable donations in a child’s name can teach a lot about social issues and money. For middle school and older kids, a donation to a charity of their choice can help reinforce a family’s values and raise awareness about taking action to solve problems. It’s a way to help children define what’s important to them and demonstrate another use of money.

Holiday gifts can teach kids about investing, too. Giving a child a few shares of stock in a company they like can help them understand basic investing concepts and how markets work. And the old standby of savings bonds can also teach lessons about immediate and delayed gratification.

Older teens might benefit from a newcomer on the financial gift scene: a session with a financial planner. Parents in some cities are buying their high schooler or college bound student an hour o so of time with a qualified financial advisor who can answer questions and help kids define their short and long term financial goals.

Finance focused gifts may not be greeted with oohs and ahs. But the lifelong tools for financial independence and wealth building – as Jason Hartman always advises – may be the best present a child will get this holiday season.(Top image:Flickr/theconsumerist)

Spurce:

Wuorlo, Jeff. “8 Savvy Financial Gifts for Kids.” MSN Money. MSN.com 12 Dec 2013

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