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By Alaina Trivax, WCI Columnist

The holiday season is quickly approaching, and soon all the kids will see the gifts under the tree–it’s the best time of year for the family, just like NSYNC once told us.

For many families, the fall and winter seasons bring with them an abundance of gift-giving occasions and holidays. My husband, Brandon, and I celebrate Christmas with our two boys; he also grew up observing Hanukkah with his extended family, and we usually incorporate that in some way, too. It’s a fun-filled time of year!

Brandon is a private practice PM&R attending and I work as a middle school teacher; we have a pre-schooler and a 1 1/2-year-old. The winter holiday season is busy for us. I’ve pre-ordered an “Elf on the Shelf” kit with little activities for our elf to do each day. (I know, I know—I’m doing this to myself!) Our holiday event schedule is pretty much set already: dinner with the in-laws on this day, a party with my extended family on that day.

Amidst all the family celebrations, there will also be lots of gifts exchanged. I’m sure that’s true for your holiday get-togethers, too. We’ve tried to tone it down, but we’ve got a few of those “my love language is gift-giving!” folks on each side of our family and there’s really no stopping them. And even for the rest of us normal gift-givers, it is fun to see the joy on someone’s face when you’ve found something they immediately love.

The whole point of financial independence is for your money to work for you. If you want to get the shiny, new tech toy for your teenage nephew (and you cleared it with his parents!), then do it. He’ll love it and you’ll love seeing him love it. When giving gifts, I’d imagine (hope!) your first thought isn’t, “How do I get the most out of this for me?” If you want to offer a significant amount of financial support toward your granddaughter’s college degree, though, you might as well get the legally allowed tax credit.

There are plenty of gift options, big and small, that are just fun to give. And, really, that’s what it’s about. Here are a few financially savvy gifts to consider this holiday season:

 

A Contribution to a 529 Savings Account

Perfect for: Young kids all the way to teenagers—your own children, nieces/nephews, etc.

A big warning to start: a 529 is not going to be a super enticing gift for a lot of recipients. Even the most studious high school student is not going to be excited about receiving a credit to an account that will eventually pay for a college tuition bill they won’t even receive for another few years. It’s just too abstract. Young children aren’t going to get it at all. Go into this knowing that the recipient is unlikely to fully appreciate your gift in the moment. They’ll figure it out eventually (like, years from now) and will be grateful then. If that’s fine with you, then proceed.

Depending on the account you are contributing to and the state you’re in, this gift also has the potential to benefit you with a bit of a tax break.

You could make this a more fun gift by pairing it with something else—see the fancy new toy section below. Maybe you contribute to your 6-year-old nephew’s college savings account AND buy him a super cool new Hot Wheels race track.

Who we’re giving this to: Our two boys. Funding their college tuition is a low priority until we’ve paid off my husband’s medical school loans, but we do make small contributions to their 529 accounts for each birthday and holiday. We pair the contribution with other more “fun” gifts and, to be honest, I’m not sure we’ve even told them they have a college savings account. They’re little and they don’t necessarily need any college pressure just yet.

More information here:

How to Handle Making More Money Than Your Friends

 

The Cash Gift

Perfect for: Your adult children.

You (and your spouse, if married) are allowed to give up to $17,000 per year exempt from gift tax laws [in 2023]. Some people might take advantage of this to lower the value of their estate. It’s also a great way to enjoy your money—you’ll get to see the joy it brings to your adult children or whoever the recipient is.

If you’re giving a good chunk of cash, you might need to consider your relationship with the recipient. Do you want this person to know that you can give away that kind of money? If they’re your sibling, is that going to make things weird? Would your parents be insulted if you gifted them with money?

Having given a lifetime of support already, parental gifts to their children seem to be the most natural progression. About 15-20 years before my grandparent’s death, my grandparents started giving each of their adult kids a pretty significant check at our family Christmas parties. My grandpa was never a high earner—he started his career in the military and then retired in his 60s after three decades in the automotive industry. They managed his money with incredible attention and responsibility, ultimately building wealth through investments. I know it brought them both a lot of joy to see their money being spread throughout the family.

Who we’re giving this to: No one, unless giving money to our student loan servicer counts. Otherwise, giving large cash gifts is not a phase of life we’re in quite yet. When we talk about our long-, long-term financial plan, this is something we eventually want to do for our kids. We’d love to see them enjoy the money while we’re still alive—using it to start and settle into their own adult lives. We’re a few decades away from that, though.

 

The Fancy New Toy

Perfect for: Your sister-in-law or your nephew who loves to try out the newest “thing.”

holiday gift giving guide

No tax credit here—just a whole lot of fun. You’ve got to do some thinking and maybe a little investigating for this one. What are the person’s interests? What equipment do they already have for this? Maybe your sister-in-law loves coffee, and she would enjoy a home espresso machine. Your nephew might love a new video game system.

Depending on your budget, there’s a lot of opportunity here to really spoil someone. And that’s what makes this fun. Sure, you want to use your money responsibly. But you’ve got your financial plan in place—you’re paying your debts and saving what you need. The rest is yours to use however you want. If you want to spend some money on a fun holiday gift, then do it.

Who we’re giving this to: My brother. Possibly, at least. We have a family farm in rural central Michigan, and my brother spends a ton of time there. Brandon—the better gift-giver in our marriage—would like to get my brother a drone that he can use to take pictures of the property. Brandon also has incredibly expensive taste, so this idea is under consideration pending a killer sale between now and Christmas. Otherwise, the kid is getting some new Carhartt gear.

More information here:

We’re (Finally) Broke! Why Being Worthless Feels Amazing

 

An Experience Gift

Perfect for: Your cousin who has everything (and who you’d rather just spend time with anyway).

What’s the point of having money if not to have fun with it—and to invite others to have fun, too? While the holidays are always super busy, I love all of the family time. Growing up, my cousins and I saw each other at least once a month; when we get together each holiday season, I’m reminded of how fun it is to hang out and I wonder why we don’t do it more often.

If you can relate, consider giving tickets for the group to attend an event after the busy holiday season—maybe a concert or a play. You’ll all have a great time together and make even more treasured memories.

This can still be a great gift even if you can’t (or don’t want) to tag along. Your niece with the young family might love a membership to their local zoo. Your parents might enjoy making a date night out of a cooking class. Whether you join in, the experience will be thoroughly enjoyed beyond the business of the holiday season.

Who we’re giving this to: Our twin nieces and our nephew. They live close to us, and they are close in age to our own kids. Rather than getting them another toy for Christmas, we usually get them a pass to a local play place and all get together for the kids to have fun. Last year, we did a toddler playland. This year, I actually might take the girls on a spa day instead of doing the whole group thing. We’d rather make memories with them than buy a toy that may or may not get played with at all.

 

The Upgrade

Perfect for: Your parents who have been using the same set of cookware for the last 27 years.

This is a great option for the more practical gift-giver or the utilitarian recipient. This is probably the easiest one to identify a specific gift—you need to consider the person’s daily habits and then find a way to improve their routine. Last year, we upgraded my father-in-law to a Nespresso from a different pod-coffee system. He will always be a single-serve coffee guy, but the Nespresso options and flavors are a tremendous improvement over what he had before.

My husband got me a pair of gold earrings with screw-on backs a few years ago—an upgrade that I had no idea I needed. And even if I’d considered it, I’d never have spent $100 on a pair of earrings—even though I’ve now worn them day and night for almost three years straight. I’m an incredibly practical person and loved getting a gift that I continued to use every single day.

You might notice that your own parents have been using the same set of pots and pans for as long as you can remember. You could upgrade them to a new set of ceramic cookware or pick out a few stainless steel pans for them to try.

Who we’re giving this to: My mom. She inherited one of her dad’s watches that he received as a retirement gift from his employer. It’s a beautiful vintage watch, and it obviously has a lot of sentimental value. We are going to get it serviced, polished, and cleaned for her. We might even have it put on a women's band so she can wear it. (We cleared all of this with my mom’s sister first!) My mom would never do this on her own, and I’m certain she’ll love it. (And, if you’re wondering—yes, this is another one of Brandon-the-better-gift-giver’s ideas; I probably would have gotten her some cute hand towels for her newly refinished bathroom.)

 

I’m ready to put on some throwback holiday tunes and get to wrappin'—ready to be “spreading the joy, spreading good cheer, [and] toastin' to another year's end.” Whatever gifts you’re giving this season, give them with love and joy (and if the recipient is a teenager, maybe throw in a gift receipt, too). You’ve worked hard to achieve financial stability and, oh, what fun it is to share a little of that with others!

What other financially savvy gifts can you give? What have you received in the past that made a difference in your own financial life? How do you convince a kid that contributing to their 529 is actually a really lovely gift? Comment below!