Given the economy, it’s not surprising that when it comes to graduation or other gifts, our thoughts are taking a distinctly practical turn. That’s why I handed my grandson Marshall a check after his high school graduation earlier this month. Even though he’ll pay the lower in-state tuition at the University of Maryland, the costs of getting a college education are high, and many graduates leave college encumbered by debt.

Cash—especially when it’s for a specific, practical purpose—is something many parents and grandparents and uncles and aunts and friends should consider at gift-giving time. Marshall will use my check to rebuild his computer to make it powerful enough to handle software he’ll need as he studies architecture. That’s a task I’m happy to help with, and I’m also proud and gratified that he plans to benefit from his own abilities to avoid the cost of a brand-new computer.

Alison Taylor is at the stage where Marshall hopes to be four years from now. Just graduated from the University of Maryland, she said most of her friends are hoping for “just money—either to pay off bills or to help get started,” for their college graduation gifts. “Since a lot of people don’t have jobs, they need the money to sustain them,” she said.

One way to make giving cash feel less impersonal is to designate cash toward a particular goal or, if you’re the recipient, to tell the giver how you plan to use the cash received. Taylor said that her grandparents always give graduating grandchildren money to put toward computers. “That’s the cool thing. They’re giving money, but they actually know what they are giving toward.”

Early start on retirement savings

If you can afford it, an especially valuable college graduation gift is a Roth IRA. Often it takes at least $1,000 to open an account at major IRA providers. But the great thing is how much that money can grow in the 40 years or so between college graduation and retirement. And all of the growth in a Roth IRA is tax-free. With a Roth the money is taxed going in, not coming out, as it is with a standard individual retirement account. Since the jobs most college graduates are going into don’t offer traditional pensions, this is a great way to help them get an early start on retirement savings.

Michael Byman of the Washington, D.C.-based Capital Management Group notes that one advantage of a Roth IRA for young people is that their earnings are probably lower now than they will be in the future, so they’re better off trading the current tax deduction for a contribution to a traditional IRA for future tax-free withdrawals from a Roth. “Ironically, without much income, they qualify for a Roth contribution but frequently can’t spare the cash to make the contribution,” he noted.

In 2009, earners must have a modified adjusted gross income of less than $105,000 if unmarried and $166,000 if married to be eligible for the maximum $5,000 contribution for people under 50—not a problem for most recent college grads.

If you’re funding a Roth for someone else, that person must have earned at least as much as you’re contributing. If the graduating senior earned only $2,500 in the year in question, that is the max you could contribute. But if earnings were $5,000 or more, you can go up to that limit.

Byman notes that if you set the precedent, and your child or grandchild continues to contribute $5,000 a year to a Roth, with an average annual rate of return of 6 percent, the graduate would have a tax-free $1 million nest egg in 45 years in exchange for combined contributions of $225,000. Of course, that would mean never getting above the earning limits for Roth contributions. But you get the idea: Money invested early has a huge amount of time to grow.

Pay off college debt, pay bills

Another practical use for a cash graduation gift is paying off college debt or paying off credit card balances carrying a high interest rate. I gave my daughter a check for her birthday recently because she will be starting graduate school in September. Even with a merit-based scholarship cutting her academic bill by half, she’s going to have to borrow to meet the costs, so every dollar of debt she can avoid pays dividends in interest not owed.

Graduate Taylor, who majored in marketing, landed a job with an online nutritional adviser. In mid-June, she and her mother were still discussing what kind of gift would be appropriate. “Traditionally in our family, for the girls, we receive a big piece of jewelry, something timeless that you can keep forever,” she said. Since she doesn’t wear a lot of jewelry, she was thinking of following in the footsteps of friends who have asked for money for a purpose. One friend was asking for money for a trip to Paris; another was shopping for a car, and still another wanted tires. Taylor was thinking about asking for help with a down payment on an apartment.

“They’re more sensible,” said Taylor about her fellow graduates. “They know what they have to have money for now. We have to pay our own bills. My friend said, ‘Honestly, what I need is new tires.’ ”

Martha M. Hamilton, formerly with the Washington Post, writes a regular column, Your Financial Future, for AARP Bulletin Today.