Wise Christmas gifts to give this year
Every year, people spend hours trying to figure out what gifts they should give to their family and friends. Sometimes these gifts are given away or left to gather dust in a cupboard. To avoid this, Moneybags journalist Jessica Anne Wood looks at money wise, practical gifts that you can give this Christmas that won’t be discarded or left unused.
While stores have started their advertising campaigns to draw consumers in, the Association for Savings and Investment South Africa (ASISA) wants people to consider giving financial products that are designed to grow in value over time as gifts this year.
“As the saying goes – all that glitters isn’t gold. Instead of superficial spending on presents, why not consider a financial gift that will prove far more valuable to your loved ones down the road?” suggests Peter Dempsey, deputy CEO of ASISA.
If these types of gifts aren’t for you, try and find ways to cut the costs of the gifts that you give, especially if you usually give expensive, elaborate gifts.
Eunice Sibiya, head of consumer education at First National Bank (FNB), notes: “The biggest difficulty around making the change to giving inexpensive gifts, is managing the expectations of the receivers. If you usually give expensive gifts to your family or group of friends you may find that there is the same expectation this year.”
By being money wise with gifts that you gift this year, you can end up saving money in the long run. This extra cash can then be used to pay off expenses, such as school fees or it can be put into savings. Who knows, you could end up making your family and friends more money conscious in the process.
Below are gift ideas that are suitable for your family and friends, be they young or old, as well as tips on how you can get others to take part in the money conscious aspect of the gift giving as well.
Ideas for children
It may be hard to get young children to understand the idea of saving money on gifts, or to appreciate a financial product, but it is never too early to learn about money and money management.
By giving your children a financial gift this year, you will be giving their future finances a jumpstart. One idea that Dempsey suggests is opening a tax-free savings account in your children’s names. These are ideal long term investment vehicles and could be used to save towards your child’s tertiary education.
“Arguably your children wouldn’t be paying tax anyway, but by investing in a tax free savings product, your children will see the benefit of the compounding on this investment later in their life, free of tax.”
“By allowing this investment to grow over time, your children could receive a significant amount of money to put towards tertiary education, a property or even their retirement,” highlights Dempsey.
The amount to be invested in the account can vary, however, there is a maximum limit of R30 000 a year, and R500 000 in total that can be invested. Once these limits have been reached, however, the investments can be left to earn interest. It is important to note that while you can withdraw money at any time from the account, you cannot replace it.
For those wanting to give their children a gift they can play with and enjoy the benefits of now, there are a few cheaper options to the latest (and probably expensive) toys and board games.
“Explain to the children that you are saving this year, and encourage them to be part of the plan. Encourage them to think about things they can make for family members and be part of the creative process of putting time and effort into the gifts,” says Sibiya.
If your children have a favourite sweet or treat that they enjoy, one gift idea would be to take empty glass jars that you have around the house, and filling them with the treat. Tie a ribbon around it to make it look special.
“If your child has his or her eye set on an expensive toy, electronic device or item of clothing, rather than giving in and purchasing it, sit down with them and make a plan that they will work towards in the New Year,” advises Sibiya.
For more on how to avoid buying rip off toys, click here.
For the teenagers
According to Dempsey, “unit trust investment could be particularly beneficial for teenagers as they move closer to the financial responsibilities of adulthood.”
There are a range of unit trust products available on the market which could be invested in, in your child’s name and given as a gift. The minimum investment amounts vary according to individual portfolios.
“Unit trusts are ideally long-term investments for terms of five years or longer. And as your teens are a few years away from buying cars and houses, or starting to save for retirement, this is the perfect time to teach them about financial discipline and help them save for the future,” notes Dempsey.
Before investing in a unit trust, consult a financial adviser, as there are a number available on the market, but they may not all meet your needs or requirements. “Consulting a trusted financial adviser is non-negotiable in order to make the best choice,” stresses Dempsey.
One of the benefits of giving your teenager the gift of a unit trust is that they can see the benefits of investing and watch the money grow, hopefully teaching them healthy financial habits and saving.
Ideas for extended family and friends
There are some people that you feel obliged to give gifts to, or others who expect to get gifts because of their relationship to you. However, there is no need to go out of your way and spend large amounts of money.
“You shouldn’t feel the need, or be under any pressure to splurge when it comes to gift giving. There are lots of thoughtful gifts that you can give to extended family members and family friends,” points out Sibiya.
If you have a craft or hobby that you enjoy, consider making something yourself to give as a gift. For example, if you like to bake, make some homemade treats that you can give away.
For adult family members
If you have a large family, purchasing gifts can be expensive. Rather than buying a gift for everyone, Sibiya suggests doing a ‘Secret Santa’ instead, where each adult picks a name of a family member out of a hat and you purchase a gift just for that person.
To make is fairer, you can also set a monetary limit to ensure that no one becomes too extravagant with their gifts.
Ideas for partners
“You can be the most open with your partner when it comes to gifts. Sit down and have an honest talk about where you are financially and what you would rather do with the money than spend it on gifts for each other,” says Sibiya.
It is important that you have your partner’s support in whatever decision that you make. Dempsey suggests placing money in a retirement annuity in your partner’s name.
“The future is uncertain, and by making an annuity investment in your spouse’s name, you are really offering them financial independence.
“Should you become insolvent or your relationship end, your partner will still have financial security in later years. An annuity may not sparkle, but it does demonstrate more meaningful thought and care for a loved one’s future,” says Dempsey.
If you do not have money to spend on gifts this year, an alternative is to take part in your partner’s favourite activities rather than buying a gift.
“Giving gifts is supposed to be a joyful experience, so if you find that you are dreading the financial consequences, change your approach