News & Trending Money News

9 Meaningful Money Gifts Every Grandchild Would Love To Receive

Choosing the right gifting method depends on your goals.

grandson gives card to grandmother
Updated May 28, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Investing in your grandchildren's financial future is a wonderful way to pass on wealth, and grandparents who want to give money to their grandchildren have a variety of ways they can do so.

So, what is the best gift to boost your grandchild's financial fitness? It depends on your goals for the money. Here are some options to consider.

Steal this billionaire wealth-building technique

The ultra-rich have also been investing in art from big names like Picasso and Bansky for centuries. And it's for a good reason: Contemporary art prices have outpaced the S&P 500 by 136% over the last 27 years.

A new company called Masterworks is now allowing everyday investors to get in on this type of previously-exclusive investment. You can buy a small slice of $1-$30 million paintings from iconic artists, all without needing any art expertise.

If you have at least $10k to invest and are ready to explore diversifying beyond stocks and bonds,see what Masterworks has on offer. (Hurry, they often sell out!)

Custodial IRA

Vitalii Vodolazskyi/Adobe book with title Custodial IRA on a desk

Once your grandchild begins to earn taxable income — such as through a summer job — you can open a custodial IRA for them.

Both traditional and Roth versions of the custodial IRA are available, and the contribution limits are the same as they are for adults: the amount of earned income or $7,000, whichever is less.

This can be a great way to give your grandchild the ultimate head start on saving for retirement. With any luck, starting young might help them to retire early decades down the line.

Want to learn how to build wealth like the 1%? Sign up for Worthy to get ideas and advice delivered to your inbox.

529 plan

zimmytws/Adobe 529 plan key chain with graduation hat

A 529 plan is designed to help kids with future educational expenses. The account can be held in a parent’s name or a child’s name, and the money receives favorable treatment. In short, the money that you withdraw from this account is not taxed as long as you use the cash for qualified educational expenses.

Contributing grandparents do not get a federal tax break for gifting funds to a 529 plan, but they may receive a state deduction for doing so. The IRS does not place limits on how much you can contribute to a 529 plan, although some states might.

Savings bonds

jetcityimage/Adobe us savings bonds

Savings bonds offer a safe place for your grandchildren to build up some money. EE bonds earn a fixed interest rate, while I bonds earn a fixed rate that changes every six months, plus an additional rate that is tied to the rate of inflation.

These bonds earn interest for up to 30 years but can be cashed in as soon as one year has passed. However, if you or your grandchild cash in the bond before five years, you will forfeit the last three months of interest.

Get a free stock valued between $5 to $200

Secret: You don't need thousands of dollars to buy thousand-dollar stocks or create a diverse portfolio.

Robinhood offers a method of investing called “fractional shares.” On its own, one share of a single stock could cost a lot of money, making it difficult to diversify. Robinhood allows you to buy pieces of stock instead, so you have the option to build a diverse portfolio quickly.

Let’s say you want to invest $250, as an example.

With that amount, you could build a relatively diverse portfolio with an investment of $50 in a big tech stock, $50 in a retail stock, $50 in an energy stock, $50 in a manufacturing stock, and $50 in a bank.1

Even better news? Add a Robinhood Gold membership, and you’ll get access to 4.25% (as of 11/15/24) APY2on your uninvested cash3and the ability to buy and sell stocks 24 hours a day, 5 days a week.

Open and fund a Robinhood account and earn up to $200 in stock

UGMA/UTMA

SnapVault/Adobe child learns to save

Two types of accounts — the Uniform Gift to Minors Act (UGMA) and Uniform Transfer to Minors Act (UTMA) — are taxable investment vehicles that allow grandchildren to invest in everything from stocks to real estate.

The account is held in the minor’s name, but they don’t gain full control over the funds until they reach the age of majority as specified by their state. The rules for each account differ slightly, so you might want to consult with a financial advisor or other professional who can guide you to the right choice for your goals.

Consult with the child and their parents before contributing funds to one of these accounts, as an account’s asset value may affect the child’s eligibility for financial aid during their college years.

Cash

Africa Studio/Adobe little girl counting money

There’s nothing wrong with slipping a few bills into your grandkid’s birthday card. It’s a great way to give your grandchild the opportunity to get a little instant joy by spending money today instead of waiting until the future.

There isn’t a tax advantage to you for gifting this way, but it’s simple and appreciated by grandchildren of all ages.

Debit card

shurkin_son/Adobe shoppig online

To make a cash gift go further, you could coordinate with the child’s parents to put money on a debit card in the child’s name.

Using a debit card will help your grandchild become familiar with digital payments and to learn to manage money responsibly. Some banks and financial apps issue debit cards to teens as young as 13. Others might issue debit cards to children who are even younger.

Gift cards

studioprodakshn/Adobe woman in headphones

Instead of cash, you can also purchase gift cards or a gift certificate to your grandchildren’s favorite stores. There are even gift cards that are good at multiple stores, as well as Visa or Mastercard gift cards that are accepted almost anywhere.

Some gift cards have activation fees or expiration dates, so check for those before you purchase.

Trust fund

InsideCreativeHouse/Adobe female Investment advisor consulting retired woman

Setting up a trust for your grandchildren will allow you to pass on assets in the manner that you think is best.

You can determine when and how the grandchild will receive the cash. For example, if you want to leave your grandchild $20,000, you can stipulate in your trust that $5,000 will be made available at age 18, with the rest of the money being issued at intervals you choose.

It is essential that you consult with an attorney if you plan to set up a trust.

Personal finance books or games

MNStudio/Adobe  toddler boy holding a piggy bank

Teaching your grandchildren how to handle the money they earn throughout their lives may be the best way to help them build long-term wealth.

There are personal finance books and wealth-building games available for children of all ages. It’s never too early to help your grandkids develop sound money habits that will help them build wealth.

Earn up to a $300 bonus and grow your money with up to 4.20% APY

This powerful combination checking + savings account from SoFi® allows you to earn up to a $300 bonus with direct deposit and grow your money with up to 4.20% APY.4

This is one of the top accounts we’ve seen, and offers like this can be rare. You work hard, and now it’s time to make your money work for you — with SoFi, you can grow your money with hardly any effort!

SoFi has no account or overdraft fees5 and additional FDIC insurance up to $2 million on deposits is available through a seamless network of participating banks.67 Plus, you can receive your paycheck up to 2 days early.8

How to earn up to $300: Sign up and make a direct deposit within the first 25 calendar days of the promotional period, then collect a $300 cash bonus with a direct deposit of $5,000 or more.

SoFi is a Member, FDIC. 7

Open your SoFi account and set up direct deposit

Bottom line

David L/peopleimages.com/Adobe grandfather piggy back on bed

Gifting money to your grandchildren can be as simple as putting $20 in a birthday card or as structured as a trust. Before making a gift, consider the age and needs of the child as well as any tax advantages that may come with your method of gifting.

The right financial gifts can start your grandchildren on a pathway that helps them get ahead financially — and stay there for the rest of their lives.

Masterworks Benefits

  • Invest in art like a millionaire for a relatively low cost
  • Art investments have outperformed the S&P 500 by over 131% for 26 years
  • Purchase shares of artwork by top artists
  • Hedge against inflation and diversify your portfolio