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What a new grad actually needs

Cash is always welcome, but it can dribble away before it has the chance to do much good. Try these money equivalents instead.

By Donna_Freedman Jun 11, 2013 9:35AM
Logo: Graduation cap (Stephen Wisbauer/Getty Images)Recently an acquaintance complained proudly of sore fingertips: She'd turned a hundred $1 bills into a "money lei" for her son's high-school graduation gift. Wiring the singles "really tightly" had shredded her digits but she wanted to make sure he wouldn't lose any of those faux florals during or after the ceremony.

The cost of her gift was pretty close to what the rest of us spend on a high schooler: $111 on average, according to a survey from Retail Me Not. College graduation gifts average $243 and grad school gifts are $256.

She was also in step with the 56% of survey respondents who said that cash makes the best gift of all. The problem with money, though, is that it's so doggoned easy to spend. A guy or gal with a pocketful of greenbacks is only a couple of shopping trips, pizza parties or pub crawls away from being just another broke new graduate.

Fortunately there are ways to give cash without actually giving cash.

A cash equivalent gift is a great alternative whether it's for someone heading off to freshman year, getting her first post-college apartment or moving back home until he gets his post-MBA bearings. Most of the suggestions below are short-term cushions. A few have lasting impact.

Paying it forward

Basic expenses are daunting to someone who hasn't landed a job yet or who is just starting at college. Rather than hand over a check, relatives and friends could direct that money to:

The college
. Every dollar toward tuition is a dollar he doesn't have to borrow. Imagine the impact if 50 relatives and family friends did the same thing.

Auto insurance
. Paying the premium for even a month or two could make a big difference, especially if the grad is still job-hunting.

Household items. Sign the new apartment dweller up for six months' worth of periodic deliveries of special food items, toiletries, paper products, laundry soap and the like. Sites like, and will take care of this for you. Order through a site like Extrabux or Mr. Rebates and you'll get a few bucks back.

Experiential gifts. No more free campus fun or student discounts, right? Give a museum membership, or season tickets to a theater company or a concert series, or spot him some sports tickets. Offer to pay six months' worth of fees at a health club near her new workplace. If your grad is outdoorsy, fund a parking pass to a state recreation site or a lift ticket at the local skiing area.

Car payment. If you're flush enough to afford it, make a couple of payments to help your grad get on his feet.

Health insurance. Adults under age 26 can remain on their parents' plans -- quite a gift, since even a minor illness can cost a bundle. If the grad you know needs to buy his or her own insurance, offer to fund a couple of months' worth of premiums.

Student loans.
If you can afford it, make a payment or two. Even an extra month of breathing room while looking for full-time work makes a big difference.

Offer to match a certain dollar figure if the new grad starts a Roth IRA or opens a 401k at work. Compound interest is the graduate's friend.

The landlord
. Pay the security deposit on that first apartment. If you're able, pay the first month's rent as well.

Note: You may not be able to make some of these payments directly. If that's the case, just give the grad the money and hope he or she uses it intelligently.

They're baaaack . . . .

Speaking of places to hang your hat: About 45% of college-educated adults under age 24 live at home, according to The Atlantic. Letting your new grad move back in is a huge gift. Even if you charge a little rent, it beats whatever Junior could find elsewhere.

Be realistic about the impact on your own budget, though, and work with your son or daughter to plan house rules and an exit strategy. Talking openly "can help prevent tension from building," says Kimberly Palmer of U.S. News and World Report's Alpha Consumer blog. But do more than talk: Get it in writing and have both parties sign.

Similarly, keeping that 22-year-old on your health insurance is a tremendous benefit. As noted above, a tight budget can be ruined by something as ordinary as strep throat.

You might also be able to save your kid some money by insuring his or her car along with your household's other vehicles. Talk to your agent about a multicar discount.

Lower-cost ideas

Don't have a big budget but still want to recognize a grad? How about . . .

Gift cards. Love them or hate them, you can't deny their utility. An card for freshman textbooks, a gasoline card to defray the costs of job interviews, some supermarket scrip to help stock that first-apartment pantry -- whatever works for your grad's situation. Note: Discounted gift cards bought on the secondary market stretch your giving dollars to the utmost; visit Gift Card Granny to look for the best deals.

Public transit pass.
Will your cousin take the bus or a train to that new job? Give her a one-month pass (or a bigger one, if you can afford it).

Shop your pantry
. An obvious choice for those who use coupons to stockpile great deals: Go through your stash and outfit the new renter with canned goods, cleaning products, dish towels, seasonings, teabags, toiletries and the like. Not having to buy these things to set up housekeeping will be a nice budget boost.

Frequent flier miles.
Donate them so your student can get to school in September, or maybe get to a summer internship.

Temporary wheels.
What if the grad is car-less and the job interview is 60 miles away? Lend him your car or drive him there. Or let him get his own: Mark Henricks of the blog recommends a gift certificate to a car-sharing service such as Zipcar


Personal finance books. Some are written specifically for young adults and others are just all-purpose frugal living tomes. A few suggestions: "Living Large in Lean Times" by Clark Howard, "The 10 Commandments of Money: Survive and Thrive in the New Economy," by MSN Money columnist Liz Weston, "How to Be Richer, Smarter and Better-Looking Than Your Parents" by Zac Bissonnette, "More Money, Please" by Scott Gamm and "10,001 Ways to Live Large on a Small Budget," by the staff at the Wise Bread blog.

Warehouse membership.
If your grad is already a fan of Sam's, Costco or BJ's Wholesale Club sign him up for a year and give the biggest gift card you can afford to his warehouse of choice. Whether he uses it for gasoline or a trampoline is up to him. Here's hoping he's mature  enough to know which one he needs more.

: Got any tips for useful, practical graduation gifts?

More on MSN Money:

Jun 11, 2013 10:08AM
The first thing a new grad needs is an reeducation about how to properly manage money. That should be their entire last semester of college before they can graduate. It could literally save their future marriage and prevent future monetary pains.
Jun 11, 2013 5:11PM

A coworker and I were talking about this very thing last week.  He told me a great one that I thought was very clever.

When he graduated, his oldest brother gave him a wallet as a gift.  After digging in it for a few minutes and not finding any money he asked his brother where the money was.  His brother replied that now that he had graduated, it was his job to fill it.

Jun 12, 2013 2:53AM
Yowza! Pay an apartment security deposit? or a couple months' rent? or a loan payment? Those are some really, really generous gifts. I think the single largest gift I got for college graduation was 50-bucks.
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