Give cash on Christmas day. There’s no greater gift is there than cash.

Giving
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At least that’s what I think former Wharton professor and economist Joel Waldfogel is implying in his book Scroogenomics: Why you shouldn’t buy presents for the holidays (Princeton University Press).

In a 2012 interview with Bloomberg, Waldfogel argues that Americans end up wasting billions of dollars on presents during the holiday season every year:

“Normally, when we spend money on ourselves we only buy things that they’re worth at least the price. So if I see something worth $50 to me, I’ll buy it. Normally, spending provides some measure of satisfaction.”

He then contrasts this to giving gifts to others.

“Gift giving is really different. If I set up to spend $50 on you, I’m operating at a huge disadvantage– I don’t know what you like or what you already have. I could spend $50 and buy something that is worth nothing to you.”

So it’s not that Waldfogel is a total Scrooge. According to him, he’s not attacking Christmas. He is attacking the “value destruction” with which we celebrate Christmas. In fact, his suggestion is to keep buying presents, but only for people that you know very well.

I couldn’t agree more. In my opinion, whoever said “It’s the thought that counts” doesn’t really know how to make it count. As a responsible giver, we should minimize wasteful spending.

Whoever said “It’s the thought that counts.” doesn’t really know how to make it count. As a responsible giver, we should minimize wasteful spending.

When I was a freshman high school student in the Philippines, our class played Monito Monita during the Christmas season. It’s the Filipino version of Secret Santa or Kris Kringle, (depending on whether you’re based in the U.S. or Canada). The rules are very similar except that (1) you don’t get to choose your giftee– they’re raffled out, and (2) the gift should follow a specific theme (e.g. something long, something hard, something wet).

Since we barely knew each other, many of the giftees received gifts that they can’t use or simply don’t want. A few got completely inappropriate gifts from bullies. One of my classmates received a deodorant. Another received a dental floss and a toothbrush. Both gifts ended up in the trash.

But isn’t spending, regardless of whether the recipient is satisfied or not, good for the economy? To some extent, yes. But that doesn’t mean that it’s an efficient use of our resources. Otherwise, we would be building malls in the wilderness.

When Jesus was born, the Wise Men didn’t bring cash. But they did bring him gifts that have a practical use for an infant. Gaspar brought frankincense, which is an essential oil that is great for skin care. Balthazar brought myrrh, a valuable medicine that can cure ailments as diverse as mouth sores to snakebites. Last but not the least, Melchior brought gold, which is as good as cash (or better).

Follow their suit, be wise with your giving this Christmas.

I remember the Monito Monita. And I hated it. For OFWs, sending cash is way better. It’s more affordable especially of high exchange rate. What I follow is that if I would give a gift, it should be useful (something to wear) and not expensive (on sale). I still long for the day that I would wrap a personal finance book for someone (other than for myself) or any book or ebook. Just read. Reading will never go out of style and a great investment for the future self.

Agreed. Sending money is better and safer. I don’t trust the local mailing system back home. I once mailed my mother-in-law’s dentures and it ended up getting stolen… Monito Monita can be fun given the right participants. I have to admit, I was the one who gave the dental floss and toothbrush. I regret doing so– I was an immature 12-year-old back then.

Was it the Philippine Postal Corporation? I prefer DHL although it’s a bit expensive but cheaper than UPS. (Greyhound Package Express is another option for Filipinos in Canada.) Or if I’m sending something that is not urgent, I put it inside a small balikbayan box which is easier to fill and I’m not force to buy de lata or anything salty/junk just so the box will be full.

No, it was a third party. I spent a lot of time as a kid helping postal workers sort mail at the Manila Central Post Office because my late mom used to be the Director there when she was alive. So I’m familiar with what goes on there. Maybe, it was just the making of a few bad apples. That’s good to know. You’re the expert, judging from the name of your blog 🙂

I say that all the time. I think cash is king period. Even when it comes to gift giving. I read an article that says many people forget about gift cards they receive and so many of them expire. This gives the banks free money. I have yet to hear any stories of people forgetting to spend that cash you gave them. Just my thoughts and two cents.

Thanks,
GBM

You are absolutely correct, Greenbacks (how appropriate). And thanks for reminding me of the IKEA gift card that I have in my pocket.

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