The season of gift-giving is upon us! Christmas, Hanukkah and Kwanzaa offer opportunities for celebration and joy which, for most people, includes giving presents. This season also involves potential danger to our financial well-being because, if we don’t keep our wits about us, the momentum of our exuberance might carry us into overspending with an unhappy hangover in January when the bills come due.
This column won’t lecture you about how religious holidays shouldn’t focus on material things, because we already know that (although we often ignore this knowledge), and because December gift-giving is here to stay. But let’s think about how to maintain an intelligent balance between the competing priorities involved in a real life. In other words, how can we give gifts that make other people happy and preserve our financial well-being too?
It’s about balancing emotion and reason — our desires for the present and our goals for the future. It can be done.
What’s It Worth to Ya?
“Is a sweater for Grandma worth $45?”
“Is a mini-iPad for my daughter worth $329?”
“How about a $35 basket of fancy jams for Jane? A $50 computer game for Ricky? A $75 restaurant coupon for Alexandra and Matthew?”
The problem with these questions is that they’re impossible to answer when considered individually. They almost sound like questions about how much a person is worth, or what the person’s happiness is worth, or what our relationship with the person is worth. The answer is probably infinity, but that’s not an answer which can help us plan our holiday shopping.
Expenditures that seem perfectly reasonable on an individual basis sometimes add up to a nightmare when the final bill is toted up. $45 for Grandma’s sweater, a $50 computer game for Ricky, etc., etc., etc., might all be worth the money as separate purchases, but if your holiday shopping total approaches $2000 and you really can’t afford that, your generous impulses have gotten you in trouble. This is why effective planning must start with an overall plan and then move down to individual decisions that are consistent with that plan.
Where We’re Smart and Where We’re Not
Psychologically, our judgments are highly influenced by the settings in which these judgments are made. Kids in candy stores do not have good judgment and neither do adults in the swirl of busy shopping malls, festive music, crowds with shopping bags and stores with shiny objects of every description – unless the adults have done some careful thinking before arriving.
People are able to think effectively in settings that support good judgment with ample time, relevant information, distance from tempting stimuli and an aerial view of the overall situation. In other words, the time to plan holiday shopping is in advance, and the best place is the privacy of your own home, with your bank statements, checkbook, shopping list, and perhaps a calculator at hand. In such settings, you can sit back and think in a reasonable way about what you want to spend.
Make a Grand Plan
Good thinking is holistic – it doesn’t examine decisions in isolation from each other but looks at the relationship between individual decisions and the big picture. In other words, whether or not that sweater for grandma is worth $45 depends on how the purchase would fit into your holiday shopping as a whole. So make a plan that’s grand.
Here’s the math:
Step 1: Decide how much money, in total, you want to spend on presents for Christmas,
Hanukkah, and so forth.
Step 2: Decide who you want to buy presents for, and count ‘em up.
Step 3: Divide the amount of money in Step 1 by the number of people in Step 2. This is the average amount of money you want to spend on each person.
In summary: Budget $ ÷ Number of people = Average Gift $
This average amount of money is not a rigid rule – obviously you’re going to spend more on some people and less on others – but it is your point of orientation, benchmark and balance point. With this framework for decision-making, you’ll be able to make reasonable decisions about whose gifts will be above and below the average cost, and by how much.
You don’t need to feel sheepish about this – it just makes sense to spend more on your spouse than your hair stylist. It’s not possible to buy all your loved ones presents as wonderful as they are, unless you have a huge bank account (or you aren’t very impressed with your family and friends).
Giving ≠ Spending
When our enthusiasm for the holidays causes us to rev up our spending, nothing brings us down to earth like remembering what these celebrations are actually all about. Spirituality flows naturally into love and generosity, and true giving takes many forms in addition to those found in malls.
If your love for family and friends exceeds the resources in your bank account, you can translate this love into gifts that can’t be bought in stores. For example:
- If you’re artistic or craftsy, make a gift by hand.
- If you cook, make a present of homemade foods.
- If you know the person’s musical tastes, make a CD mix that’s perfect for him or her.
- Provide personal certificates for services such as baby-sitting.
Gifts like these are crystallizations of affection and energy, and they mean at least as much to recipients as products found in stores.
You wouldn’t want anyone to spend money on you that they can’t afford, and no one wants you to do this, either. We can honor our religious traditions by using money and things to serve our shared striving for happiness, and this means using good sense and good values to manage the financial aspect of giving.
A clinical psychologist with almost 30 years of experience, Dr. Shapiro, a.k.a. Dr. GoodCents, is ready to answer your questions and offer advice and strategies to alleviate the mental stresses of money management.