3 Alternatives to Cash Gifts for Graduation
With graduation season upon us, you may be thinking of rewarding your new grad with a fancy keepsake or even a check—but why not consider something more purposeful?
Cash, gift cards, and personal items are certainly fine gifts, but if you really want to help your grad get off to a good start, you might consider these gift alternatives with the potential to last.
1. Help establish a Roth IRA
A jump-start on retirement savings can help pave the way for financial well-being down the road. A Roth IRA, in particular, is a good option because the money can grow tax-deferred during their working years, and withdrawals in retirement could be tax-free. (To qualify for tax-free withdrawals of earnings, account holders must be 59½ or older and have owned and funded the account for at least five years.)
But note that your contribution toward a Roth IRA will be limited to your grad's total earned income or the annual maximum contribution ($7,500 in 2026), or whichever is less. Also, unused 529 plan assets, if they satisfy certain conditions, could potentially be rolled over to a Roth IRA. You can roll those assets—up to a lifetime limit of $35,000—into the account beneficiary's Roth IRA without incurring the usual 10% penalty for nonqualified withdrawals or generating any taxable income. But there's still a requirement that the Roth IRA beneficiary must have earned income at least equal to the amount of the rollover. This might be an attractive option if your grad is all done with higher education and you have no other plans for the remaining 529 plan assets.
Interested in stock investing?
2. Help them buy stock
Introducing young people to the inner workings of the stock market is an important lesson in financial literacy. And helping a new grad invest a cash gift allows you to teach them important concepts, such as research, diversification, and rebalancing, or adjusting an investment portfolio to maintain a desired asset allocation and risk tolerance over time.
And fractional shares might be a good option for young investors. Generally, when you buy stocks or ETFs, you have to buy at least one share. But some stocks or ETFs sell for hundreds of dollars per share and that might be more than a young grad has to spend. Fractional shares allow them to buy a set dollar amount that is less than one full share, often starting as low as $1. (Mutual funds are sold in shares but can be purchased fractionally in dollar amounts.)
3. Lighten their student loan load
For students who graduated in 2024 with a bachelor's degree, 47% graduated with debt, and for those students, the average loan burden was $29,560.1 And about a third of graduates with loans are still making payments when they're 35–44 years old, based on Federal Reserve data from 2022.2 For many grads, it can be daunting to start out in the workforce—likely in an entry level position—while paying hundreds of dollars per month in loan payments on average. Instead of chipping in a lump sum, however, you might match a new grad's student loan payments for a specified period of time to give them a helping hand while still encouraging them to practice good money habits like paying their bills on time.
Bottom line: It's about more than money
Monetary gifts aside, one of the best things you can give a new grad is the benefit of insight. Imparting some of your own hard-earned wisdom—including, maybe, some of the mistakes you made along with way—might steer them away from some potential pitfalls and help them make smarter financial decisions in their own lives.
1 "Trends in College Pricing and Student Aid 2025," New York: College Board. Page 44.
2 The Fed - Chart: Survey of Consumer Finances, 1989 - 2022 (federalreserve.gov)
Interested in stock investing?
Explore more topics
Investors in mutual funds and/or ETFs should consider carefully information contained in the prospectus, or if available, the summary prospectus, including investment objectives, risks, charges, and expenses. You can request a prospectus via calling 800-435-4000. Please read the prospectus carefully before investing.
This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
Investing involves risk, including loss of principal.
This information is not a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager, Estate Attorney) to help answer questions about specific situations or needs prior to taking any action based upon this information. Certain information presented herein may be subject to change. The information or material contained in this document may not be copied, assigned, transferred, disclosed or utilized without the express written approval of Schwab.
Diversification, asset allocation and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets.
Rebalancing does not protect against losses or guarantee that an investor's goal will be met. Rebalancing may cause investors to incur transaction costs and, when a non-retirement account is rebalanced, taxable events may be created that may affect your tax liability.
The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.