Scrooge writes on saving Christmas
By Peter Andrew
Bah humbug. Don't get me wrong. I have no problem with the holidays. It's great when people observe the religious elements, exchange cards, eat too much, drink too much and give joy and wonder to children in the form of seasonal spirit and extravagant presents. After all, most kids have just two opportunities a year to have their material dreams fulfilled, and only one comes with seasonal magic.
Get a grip, grown-ups
But it's different when it comes to gifts for adults. When you want something, don't you just save up (or get out the plastic) and buy it? Do you really think someone else could do a better job of buying the thing you want? It's not as if the exchange of gifts between grown-ups isn't a zero-sum game: You're almost always trying to guess how much the other person's going to spend so you can match it. And, if you get it wrong, don't you even things up the following year?
After years of faking happiness over slightly off (or downright bad) gifts, adults in my circle of family and friends have agreed on a $15 holiday present cap for each other. Amazingly, some of the inexpensive ones I've received remain precious many years later.
Unless they're your own, it can remain very difficult to buy gifts for kids. Of course, that's been the case since the very beginning. One wise man turned up in 1st century Bethlehem with gold, but the other wise guys decided on frankincense and myrrh. And, back then, they didn't have eBay, return policies or even store credits.
Small wonder that since then many wise people have decided that giving gold (or nowadays money) is the safest option for other people's kids. For babies, it remains so. Cash put into a tax-efficient college savings plan (see "Hey, baby. How's your college fund?") during a child's earliest years can make the biggest difference to the final total. Older kids still appreciate receiving money, though they're more likely to want to spend it.
But cash acquired a bad rep. People said giving it required zero thought or effort, and that somehow suggested the giver cared less than others -- even than those who bought wildly inappropriate wrapped gifts.
That seems an odd idea to me. But not as odd as the notion that giving cash in the form of a plastic rectangle emblazoned with a retailer's logo requires more thought or effort -- or implies a more caring giver -- than banknotes or a check. And yet, as a nation, we seem to have wholly bought into the gift card fiction. A survey by the National Retail Federation (NRF) for the 2015 holiday season found 58.8 percent of respondents saying they would like to receive a gift card, making this form of plastic the most widely wanted present for the ninth consecutive year. The NRF forecasts spending on these cards is going to top $25.9 billion this year.
None of this would matter if gift cards were as good as cash and checks. But they're not. They can attract fees -- including "dormancy" fees if they're not used by month 13. All the money can be lost if the retailer goes bust. Up to $1 billion loaded onto gift cards went unspent last year, according to one industry estimate. And, of course, they're often tied to a single retailer, making them less flexible than actual money. As Consumer Reports advised in the run up to the 2014 holiday, "Don't give gift cards."
A better alternative
As importantly, parents may be missing a trick when it comes to an important holiday teaching opportunity. A child can begin to learn about money management while he or she is still young, and discovering about saving is a great place to start. Plenty of high interest savings accounts that cater for kids are available both in local bank branches and online.
Holiday gift money can be deposited in one of those by the parent or the giver, and the child can choose (maybe with a little gentle guidance) whether to withdraw and spend it -- or save it and see it grow. He or she can learn that money can only be spent once and to prioritize those purchases that are really valuable.
Such an account could help provide the foundation for a lifetime of good money habits (though there are no guarantees), which may well be among the most valuable gifts a kid can ever receive. True, it probably won't bring the same shining joy to a small face as a yearned-for toy, but no doubt there are still going to be plenty of those come present-opening time. And it sure beats frankincense or myrrh.
Peter Andrew has over 25 years of experience writing about marketing, advertising and management. He regularly covers consumer credit card topics for IndexCreditCards.com and other personal finance publications including Fox Business, TheStreet and MSN Money. He also writes frequently about mortgages and auto loans. Peter has spent extended periods living overseas, in the UK, France and Africa. He lives with his partner of 20+ years, and wastes too much of his time on cryptic crosswords.