Holiday Cash for Kids: Which Gifting Strategy Makes the Most Sense?

When the holidays roll around, figuring out what to give the young ones on your list can feel overwhelming. According to financial insights from experts like jennifer taylor, one approach that always lands well is monetary gifts. But here’s what most parents don’t realize—there are multiple ways to hand over money beyond just stuffing cash into an envelope.

Start With the Simplest Option: Cold Hard Cash

Let’s be honest: kids light up when they get actual money. If you want zero complications, cash is your answer. For younger children especially, consider giving smaller denominations—they feel richer when holding more bills. Want to add a fun twist? Hit up your bank for $2 bills to make the present feel special and memorable.

Investment Route #1: Savings Bonds From TreasuryDirect

Thinking longer-term? Savings bonds represent a solid way to help build a child’s financial foundation. The government offers two main types through TreasuryDirect: Series EE and Series I bonds.

Here’s the current breakdown for bonds issued between November 2025 and April 2026:

• Series EE bonds lock in a 2.5% interest rate for a minimum of 20 years
• Series I bonds offer 4.03% total (including a 0.9% fixed rate), with rates resetting every six months

The catch? You’re limited to $10,000 per Social Security number annually. You’ll need the recipient’s full name, Social Security number, and TreasuryDirect account details to complete an electronic transfer.

Investment Route #2: College Savings Through a 529 Plan

If you’re looking to support their educational journey, contributing to a 529 college savings plan is another smart move. Many plans now make this easy—parents can send contribution links to family members, or you can use platforms like Ugift to add funds to existing Ascensus-managed accounts. No plan yet? You can help set one up with parental approval.

The Middle-Ground Approach: Stock Gifts

Gifting individual stocks introduces kids to market investing early. This strategy also offers tax advantages for the giver—you can sidestep capital gains taxes and potentially reduce your taxable estate through appreciation removal.

One important caveat: the child might owe “kiddie taxes” on unearned income, which could be taxed at the parents’ rate. Plus, it could affect their financial aid eligibility down the line. Running this past a financial advisor first makes sense.

The Flexible Choice: Gift Cards

Not sure exactly what they want? A gift card splits the difference between pure cash and directed spending. Bonus: retailers often run holiday promotions like “buy $50, get $10 free,” so you might snag extra value in the process.

The bottom line? Your choice depends on how hands-off you want to be. Cash wins for simplicity, bonds and 529s win for long-term growth, stocks work if you’re thinking wealth-building, and gift cards hit the sweet spot when you want some guidance on where the money goes.