When it comes to giving gifts, the prevailing adage is, “It’s the thought that counts.” That’s usually uttered when you get a pair of socks or an ugly sweater. In some instances, though, you might be better off with just that “thought.” This might happen when the gifts have an unintended financial consequence for the recipient.
For the record, what a gift recipient expects to pay is zero. Although you might have good intentions, you need to think through some of these gifts before pulling the trigger.
Years ago, Oprah made a big splash when she gave everyone in her studio audience a car. The videos of the happy, screaming recipients were blasted across the airwaves. What a great idea — until you get into the details.
Every one of those new car owners were compelled to pay taxes on that car. In some cases, those taxes amounted to around $6,000. Think on that: You get the keys to a car handed to you, and before you can put 20 miles on the thing, you have to pay the IRS $6,000. For most folks, that would be $6,000 too much, even for a new car.
If you’re giving a car as a gift to someone special, you might need to assume all the financial payments. You can’t expect someone to take on that burden without asking beforehand. That includes the gift tax.
You can prove your love by standing in line at the Apple store on the first day of the release of a new iPhone. Imagine the smile on your special someone’s face when they open the box on a phone that no one else has. Then, imagine their face when they’re forced into a cell phone contract they didn’t want and haven’t budgeted for.
There’s also the issue of their current contract, which might require a penalty to get out of. Suddenly, that idea of buying a new smartphone isn’t so smart.
Depending on the recipient, a box of Valentine’s Day chocolates could last a whole week. And if that person is binge-watching “This Is Us,” then those chocolates might not last even that long. The gift of a pet is going to last a lot longer. We’re talking upwards of ten to twelve years of dedicated care.
In exchange for all the unconditional love, there will also be food, toys, grooming, boarding and vet bills to contend with. That could add up to around $1,000 a year. Let’s also hope you’ll be in the picture as long as the pet. Otherwise, that poor animal will be a constant reminder of heartache. Not a pretty picture.
Plus, at the end of the journey, there’s the painful saying goodbye. As George Carlin once quipped, “Buying a pet is just buying tragedy.”
A Gift Card
How can a gift card cost the recipient money? Often, folks armed with a gift card will end up spending more to get what they want. They’ll apply the gift card and drop more cash for the perfect present. That’s totally on them, and you’re not forcing that action, but it’s still money out of their pocket.
You also have to consider that gift cards might come with an expiration date. Someone could show up to spend that gift only to find out it’s invalid and they have to use their own money. Awkward.
Suppose the person you’re buying a laptop for is a PC person, and you want to give them a Mac. Wars were started over issues like this. If you do get the type of computer right, then there are all the “add-ons” that need to be considered. A new wireless mouse, a carrying case, apps and programs — it adds up.
Again, those are all unintended financial consequences, but somebody has to pay them in order for the gift to be practical.
All of this might scare you off from buying a gift altogether. But go back to the idea that it’s the “thought that counts.” If you really know that person, then you know what to buy them that’s practical and fun, and shows you care without costing them extra money. Just think about what happens after they say, “Thank you.”