The post below is being shared with permission from Adam J. McKay, C.P.A. of Nelson & McKay CPAs, LLC. Although written for the holidays, we feel this information is useful throughout the year.
Looking for Holiday Gifts with Lasting Impact? These 3 Could Change Your Life
If you’re still brainstorming about what gifts to get your loved ones this holiday season, and want to be sure you give something that’s appreciated and not quickly forgotten, these gifts are designed to deliver real and lasting value.
1. Give the gift of financial education
It’s never too early to start with financial literacy—even very young children can begin learning about spending, saving, and the value of money. And when family members don’t know much about personal finance, or they don’t ask questions, they could risk losing money through poor decisions.
A report prepared by the Federal Research Division of the Library of Congress found that many people do not understand the most basic financial concepts. Understanding topics such as compound interest, inflation, diversification, and the differences between stocks and bonds are all critical to becoming financially literate. Being able to evaluate investment costs and their impact on investment returns can have a long-term impact on financial well-being.1 And many behavioral finance experts report that clients exhibit overconfidence, where they believe they’re more knowledgeable than they actually are.2
In the past 20 years, lack of financial literacy may have cost investors $200 billion, according to researchers from the Global Financial Literacy Excellence Center.3 The gift of an appointment with a trusted financial professional can help bridge these gaps in financial awareness. Sign up your loved one for a financial workshop or call the office to set something up in the new year.
2. Give the gift of transparency
Family conversations about finances can be difficult at the best of times. Sometimes parents or grandparents are secretive about their finances, because they consider it a private matter, a difficult topic or because inheritance is a touchy subject.
The lack of transparency with family members can lead to complicated situations, familial tensions, and potentially alter a family’s financial future. In addition, it can make it easier for older adults to become targets for the unscrupulous, and regrettably sometimes this can happen within the family itself. More open communication helps everyone in the family keep an eye out for elder abuse, or signs of reduced abilities.
If you are uncomfortable sharing specific dollar amounts with your children or grandchildren, you can still have meaningful conversations, letting your children know your general situation and how you have planned for the future, including your plans for retirement.4 In addition, it’s a good time to discuss how you would like to be represented if you are not able to speak for yourself.
3. Give the gift of a financial review
Feeling good about one’s financial situation is an extraordinary gift. It doesn’t matter if your gift recipient is an individual or a family with children, consider giving an appointment to set up a for a financial review.
A financial review can help with more than financial literacy—it’s an opportunity to take a measured approach to setting goals, saving for emergencies, learning about investments, conquering fears about finances, getting a handle on debt reduction, and discussing strategies for handling money. In short, it can uncover new options, and be the gift that sets them on a good course for life.
We wish you a festive and meaningful holiday season, and look forward to working with you in the new year.