I haven’t done any of my holiday shopping at this point, but I’m going to declare a new theory of relative proportion at Your Smart Money Moves today. My theory is that the amount of gift cards you buy from stores increases with direction proportion to the number of days you are away from Christmas Day. Let me explain. If you are truly a good planner, some of you have been shopping for gifts during the course of the entire year. You may have used the game plan of going shopping on Black Friday or Cyber Monday with a complete naughty and nice list of what presents you were going to get for each person in your family. There’s a group of you that either this week or the next will lug yourself to the indoor and outdoor malls to pick up all the holiday presents. As each day looms closer to the actual day or Christmas, it creeps up slowly on you that you really don’t have any gift ideas or any notion whatsoever for that matter what the loved ones in your life want for Christmas. So the closer the day of Christmas approaches, the easier it becomes to say to yourself, “I don’t know what they would really want (and I don’t want to pick out the wrong gift), so instead I’ll just get them a gift card and they’ll love it!”
Here’s the news flash Moms, Dads, Grandparents, and siblings alike. We don’t like gift cards! In 2006, the financial services firm Tower Group estimated that $80 billion dollars would be spent on gift cards and over $8 billion would not be redeemed. (source nytimes.com) A survey by Marketing Workshop, Inc. found that only 30 percent of recipients use a gift card within a month of receiving it, while Consumer Reports estimates that 19 percent of the people who received a gift card never used it all. (source: nytimes.com). Stores love it when people purchase gift cards because they know that most consumers will either spend more money in their store when the cards are redeemed or the cards won’t ever be used by the consumer. Either way it’s a win except for those of us who actually receive these as our stocking stuffer.
First of all, nobody within your family coordinates gift cards. After all of the packaging is unwrapped, what you end up with is six different store gift cards all with minimal values that don’t really get you an amount necessary to buy something meaningful that you like. Second, your loved ones don’t estimate the time and gas money it will take to go to all of those stores. If you have to travel all around town, you could end up spending a tank of gas just to get to all of your shopping destinations. Third, you’ll be faced with the mass attack of shoppers all trying to get to these stores to go shopping with their gift cards which means you are likely to wait to spend the gift card until the spring or summer. Last, by that time occurs prices may be higher and if you wait too long your card could lose value or cost you extra fees. Thanks a bunch Santa for my eight store cards! How I relish spending an afternoon in Game Stop or in Target watching my kid pick out six more things they don’t need.
Here’s the advice for Your Smart Money Moves readers. Get a game plan this week and figure out what your family wants and buy them some presents. If you know that procrastination is going to set in and you are a last minute shopper, then cold (I mean warm) cash will do just fine. It’s better than the Clark Griswold Jelly of the Month club and you know it won’t go to waste even if it means you treated your brother or sister to a fine meal instead of a Nike sweat suit. Just don’t give me any gift cards this Christmas!
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc – The Leaders in Gen X & Y Financial Advice and Services
Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
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