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The Basics

12 gifts to jump-start your grad

Practical presents may not have your recipient jumping for joy, but they will reveal their worth (and your foresight) in time.

By Kiplinger's Personal Finance Magazine

When I graduated from college, my mother gave me a brand-new sewing machine. It seemed like an odd gift . . . considering I didn't sew.

Mom knew this. After all, she'd seen that purple potholder I'd stitched in my seventh-grade home-economics class.

But her gift was about more than just commemorating the day I got my degree. She wanted to give me something of value -- a gift that would come in handy in the real world. It was superpractical and not an ounce sentimental.

I never thought then I'd say this now: It was the perfect gift. Don't get me wrong: I'm still no seamstress. And the sewing machine spends most of its time in a closet. But it has saved me a lot of money at times and taught me a life skill. (For example, instead of buying an $80 pair of jeans that fit perfectly, I can buy a $25 pair and hem them.)

In the spirit of Mom's gift, I've come up with a dozen smart gifts for grads. These gifts will give them a head start in the real world at a time most young adults are cash-strapped and cash-clueless. Each one lends a financial hand or teaches a valuable life lesson. Some are immediate "Wow!" gifts; others, like my sewing machine, will reveal their value over time.

A sharp new look

Grads have better chances of making good impressions and landing the right jobs if you help them dress for success. A suit is staple interview attire, so take your grad shopping for a good-quality one that fits well. For women, get a suit that includes both a skirt and a pair of pants. Keep to dark or neutral colors.

On a modest budget? Give a quality tie, a pair of sensible shoes or a crisp dress shirt.

File drawers

With a mound of new bills to keep track of, your grad may need help staying on top of new responsibilities. Buy a small file cabinet, such as a stylish unit from Ikea for $60, and stock it with hanging file folders and labels.

Your grad will thank you later.

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A start on retirement

If your grad will have earned income from a job this year, he will probably be eligible to save money in a tax-sheltered Roth individual retirement account. However, with all the new demands on his finances, this is probably furthest from his mind. (See "To get rich, start saving in your 20s.")

You can seed his account yourself, though, up to $5,000 in 2008. A Roth can also double as savings for his first home.

Student loan relief

The cost of a higher education keeps going up, and the average college grad enters the world with about $20,000 in student loans. (See "How much college debt is too much?") You can ease the burden by giving the gift of his first loan payment. The standard monthly payment on a 10-year repayment plan at 6.8% interest is $218.

And a bonus gift: Grads can write off student loan interest paid by someone else on their own federal tax returns.

A financial education

Unless your grad majored in business or finance, odds are she didn't take a single course in money management. Give a good book that'll capture her interest and teach the basics, such as "Life After School Explained" by Jesse Vickey, "Get a Financial Life" by Beth Kobliner or "The Wealthy Barber" by David Chilton.

And help your grad continue her financial education with a year's subscription to Kiplinger's Personal Finance Magazine.

Health and wealth

Trading in an active college life for a sedentary desk job can take its toll. Every year after age 25, the average American gains a pound of body weight yet loses about a half-pound of muscle.

Plus, studies show that the healthier you are, the wealthier you'll become. So help your grad build his wealth and battle the bulge before it has a chance to sneak in. A set of hand weights ($10-$30), a pair of good running shoes ($70-$100) or a membership to a gym or the local YMCA makes a great gift for new grads.

Continued: Fun stuff

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Kiplinger's Personal Finance Magazine