Buying gifts and giving them feels good. Its great to see the look in a friend or family member’s eyes when they open something they really like. But if that look is going to give you indigestion when the credit card bill comes, you spent too much. The financial aspect of gift giving is rarely discussed but as important as getting the perfect gift (which we will discuss in an upcoming post).
OK, so your girlfriend saw a piece of jewelry she absolutely loves and her birthday is coming. What do you do? Before you plop down your credit card in the heat of the moment and buy it for her, its good to think about three things:
How Much Can You Afford for Buying Gifts?
Money for buying gifts really should be in your budget, especially if you are someone who tends to be a gift giver. It would be something you put money aside for so you have it when you need it. This is especially true for the end-of-the-year holidays when most of us buy lots of gifts at one time. However, its a good idea to also put money aside for times when you might buy more expensive gifts like birthdays, anniversaries, and engagement rings. A good time for a guy to start saving for an engagement ring is as soon as he meets a girl he may want to spend the rest of his life with. The time to buy the engagement ring is when he has save enough to cover the cost of it.
If a gift is not (yet) in your budget, take a few minutes to determine how much disposable income you have. Disposable income is money that is not earmarked for necessary things like rent/mortgage, bills, insurance, food and so on. It’s the money you’d have left at the end of the month if your bought nothing extra. It could also be money you have saved, but not for something else.
How Much Does the Gift Cost?
This is always a consideration. Can you get it for a better price somewhere else? Is it the best quality for the money. I don’t mean you can never buy a gift on the spur of the moment, but be mindful of your disposable income. The cost of a gift is not just the price. It’s the price in relation to the want or need and the quality. Weigh how much something is really wanted and how much and how long it will provide joy relative to the cost and your ability to pay for it. This may sound heartless, but also evaluate how much it will be appreciated by the person receiving it. All other things being equal, why spend the money on someone who takes it for granted?
How Are You Going to Pay for It?
Sure. Pay for it by credit card if you can easily pay it off in total when the card comes. Points or cash back are good. However, if you choose to pay by credit card and can NOT pay it off in total, you are paying a LOT extra for the convenience. If you do use the card and can’t pay it right off, be sure you are prepared to pay the huge interest. Do it only if you know that you can pay it off within 3 months. If not, don’t get the gift.
Someone who wants you in debt isn’t your friend (or love). Anyone who likes or loves you based on what you give them isn’t worth your affection. Buying friends or lovers wont make you feel good about yourself, especially if you are still paying off a gift after the person is no longer in your life. Find something less expensive, but thoughtful instead.
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