Holiday Spending Worries? Generosity Doesn't Always Come With a High Price Tag

Key Points

  • With a little creative thinking you can be generous without blowing your budget.

  • A gift of your time or financial education can have lasting—even lifelong—value.

  • Thoughtful gift-giving can be mutually rewarding rather than financially stressful.

Dear Readers,

Feeling generous but worried about overspending? The holidays can do that to you. But I believe with a little creative thinking, you can express your spirit of generosity without blowing your budget. Of course, giving traditional gifts is fun and I enjoy choosing what I think is ideal for someone. However, I also like the idea of wrapping that gift in a package that may have a bigger meaning. So before we all get caught up in the holiday buying frenzy, here are some ideas on how to do just that.

Start with a list

As your circle of family and friends grows, it can be a challenge to give meaningfully to everyone. To help you focus, make a list. Put your dearest family members and friends at the top and work down to the others that you want to acknowledge in a smaller way.

Think carefully about each recipient. What would be most appreciated? It's not just about how much money you spend—even if money isn't an issue—but rather about why you think a certain gift will be just right. For some people on your list, a small token will be meaningful. For others, your creative approach may make the value of it even greater.

Wrap up your gift in financial know-how

One way to give your gift added meaning is to include some financial know-how as part of the package. Everyone in your life—from your youngest child to your parents or grandparents—could likely benefit from some extra help in managing their money. For instance:

  • The perfect sweater might make your teenage daughter momentarily happy, but attaching it to a clothing allowance that she'll have to manage would give you the chance to teach her about budgeting, saving and spending wisely.
  • A piggy bank for a younger child could come with a savings account and a trip to your bank to learn about how money grows over time.
  • Is someone on your list a student working part-time or a young adult who has recently entered the workforce? How about helping them open an IRA, traditional or Roth, perhaps with some initial funding from you? You could even offer to match their contributions for a time. Get them started investing for the long-term and you've given a gift with a potential lifetime of value.

Even older adults, perhaps your parents, might benefit from a gift of knowledge. If they're struggling economically and you can help out in some way, that's great. But if you can also help them budget more wisely, and help make certain they're making the most of their Social Security and Medicare benefits, that could take your economic support further. Even if they aren't struggling, you could help them fine-tune their finances or estate plan by offering to help them meet with the appropriate professional.

Be generous with your time

Sometimes the best gift is just spending time together. Whether it's with a friend or family member, arranging a special event together—a dinner, a visit to the museum, a ballgame, a special vacation—can be the most perfect gift of all. If you can foot the bill, that's great. But even if you can't pick up the complete tab, sharing the cost as well as the experience can be just as thoughtful.

Give a special meaning to your monetary gifts

A gift of cash is always appreciated. But you can give that money a meaningful context by earmarking it for a larger purpose or a long-term goal.

For example, opening a savings account or custodial account for a young person is a way to introduce personal finance basics and perhaps initiate an interest in investing. Creating a 529 plan for a child or grandchild is a gift to the parents as well as to the child. Or if kids are already in college, you could offer to make a direct tuition payment to the school.

Another idea is to jumpstart the process of saving for a big-ticket item like a car, a computer or a family trip. Or if you know that someone on your list has a cause or charity that is of particular importance, you could make a donation in that person's name.

Make it mutually rewarding

So often during the holidays, people worry about over-extending their budgets or they feel bad that they can’t afford the type of gifts they’d like to give. But to me, being generous isn't just about money. It's about enriching our lives. By being thoughtful and willing to share your time and knowledge as well as your good fortune, you're not only giving a gift with lasting value, you're also giving yourself a wonderfully rewarding experience.

Have a personal finance question? Email us ataskcarrie@schwab.com. Carrie cannot respond to questions directly, but your topic may be considered for a future article. For Schwab account questions and general inquiries,contact Schwab.

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