While it may be better to give than receive, advisors and their more careful clients can't help but feeling cautiously prudent at holiday time. Why, they ask—at the risk of sounding Grinch-like—why buy a bunch of stuff that'll just collect dust?
Why indeed? During the 2010 economic recovery, as American consumers have learned to appreciate the joys of saving almost as much shopping, many are hanging their stockings by the chimney with care in hopes that solvency soon will be there.
This is a happy turn of events for financial gift-givers, who can feel confident this year that their profitable presents will be appreciated.
"By simply expecting less of ourselves—and teaching our families to accept those limitations—not only are we teaching them valuable lessons about how to manage money, but we are also reducing the stress of the season so everyone can enjoy themselves," says Lou Scatigna, president of AFM Investments in Howell, N.J., and author of The Financial Physician. "Because, at the end of the day, holiday presents are just things. The time we spend with our families during the holidays is the true gift of the season."
That said, a thoughtfully selected gift that helps ease a loved one's or a charity's financial burden can't go amiss. Here are the six best financial feel-good gifts to give this holiday season:
1) Cash. Yes, that's right, cash. While it may be considered rude to ask for cash as a present, it's not rude to give it. In fact, when offered in a festive card with a fancy envelope, cash can make both a beautiful and a hugely useful present.
Note: According to the Internal Revenue Service, gifts are not taxable if they are made to your spouse or if they pay for someone's tuition or medical expenses. In addition, gifts of up to $13,000 after Jan. 1, 2009, are excluded from taxation.
2) Gift Cards or Certificates. The downside to gift cards and certificates is that they're not as easy to spend as cash, and they're usually redeemable for just a single merchant's goods or services. The upside is that they feel more like a special holiday present.
For the best of both worlds, a good way to go is buying a "SuperCertificate" from GiftCertificates.com. It doesn't have an expiration date and can be exchanged at GiftCertificates.com for original gift certificates from hundreds of stores, airlines, hotels, theaters and restaurants.
3) Assets. While wrapping a big red bow around this present may not be possible, the gift of assets to a grandchild, niece or favorite charity is a powerful one. As with cash gifts, the IRS allows for asset gifts of up to $13,000 to one person or other donee. Spouses who give an asset together are each entitled to the annual exclusion amount on the gift, totaling a maximum of $26,000 after January 1, 2009. An estate-planning advisor, accountant or lawyer should be consulted by gift-givers who want to give assets.
"We always encourage our clients if they're able to engage in a planned gift-giving strategy," says Tom Astore, tax director for accounting firm Rodman and Rodman in Newton, Mass. "In certain circumstances, a husband and wife may want to increase their gifts up to their federally mandated gift tax exemption, which is currently $1 million, to transfer future growth assets out of their estate."
