Gift Cards – Not Chia Pets

By Justin A. Reckers

The Holiday Season is one of the most financially stressfull times of year for many families. The pressure of holiday gift giving often encourages us to overspend, huge sales entice the reluctant consumer to can’t miss price breaks and ultimately millions of people make terrible decisions to buy fruit cakes and Chia Pets. It is, after all, the thought that counts and we would all rather give than receive.

The number one problem with bad gift ideas is that there is a disconnect between the giver and the receiver. The disconnect I speak of is of financial nature. The giver places a greater economic value on the gift than the receiver. If you spend $20 on a Chia Pet shaped like President Obama you must be prepared for the recipient to be disapointed with your gift. They may not think very highly of President Obama or Chia Pets which probably means they would not have chosen to spend $20 of their own money to acquire the gift. If they value the gift at just $5 the gift exchange has just wasted $15. Most would agree that wasting money is pretty irrational from an economic perspective.

So what really happened? How did such a generous thought go so badly? The gift giver allowed the emotional value of gift giving to cloud their financial decision making. They didn’t think about the value the receiver might place on their gift. Only the value they collected from the act of giving it.

You can do your part to eliminate this economic waste and encourage economic rationality this holiday season. Do not buy gifts for someone unless you are absolutely certain of what they would spend your $20 on given the opportunity to shop for themselves. Instead; give gift cards. That way you know the hard earned $20 you put towards a gift for the lady in the cubicle nextdoor will be spent wisely. Do your part to eliminate uncomforatble moments at gift exchanges and cut down on re-gifting. Call me if you need an ugly tie or Chia Pet.

Justin A. Reckers, CFP, CDFA, AIF is Director of Financial Planning at Pacific Wealth Management www.pacwealth.com and managing director of Pacific Divorce Management, LLC www.pacdivorce.com, in San Diego.