Christmas is a wonderful time to take a moment and reflect on the year. I personally love getting all of the personalized photocards from all over of our friends and family. I have an entire wall where I hang these cards and I keep them up all year long. Every morning when I walk into the kitchen I’m greeted by and reminded of the many wonderful people in our lives.
Christmas is also a time for giving gifts. It’s an exciting (anxiety-inducing) time to think of others and gift them something you hope they will very much appreciate, without breaking the bank. Mr. Moneyaire and myself give each other and others some unconventional gifts to accomplish this. We’re very fortunate and have all the stuff we need. We also very much want our gift to be appreciated and benefit our recipient (who doesn’t, right?).
The year we got married, when we went through our “getting married checklist,” we both said financial security was a paramount priority. The following Christmas our gifts to each other reflected that. Since that first Christmas we’ve given some unconventional gifts that reflect our values. Here are some of the unconventional gifts we’ve given.
We would max out each other’s Roth IRAs.
What’s more romantic than investing in your partner’s financial security? Go on, tell me. I’ll wait. In all seriousness though, this was a big deal for us. Every month we’d allocate money to go towards our Roths but it wasn’t enough to max out the account. Towards the end of the year we’d figure out how much was needed to max out each of our accounts and we’d fund them. In the early years of our marriage we were just above entry-level salaries. Maxing out our Roths was a big chunk of our income. Early on, we worked with an advisor we’d meet with towards the end of the year and work with him to move extra payments to our accounts. We’d be really excited filling out the paperwork to make the extra contributions.
We no longer can contribute to each other’s Roths – we’re in the fortunate position of having too high an AGI to contribute to them anymore. We now add extra contributions to our after-tax brokerage accounts.
We’re very fortunate to each have Roth accounts with 6 digit values. That didn’t happen by accident – it was very deliberate.
In 2021 & 2022 if you’re single and have an AGI of $129,000 or less or married filing jointly with an AGI of 204,000 or less you can contribute $6,000 ($7,000 if over the age of 50) to each person’s Roth. If you make above those limits, how much you can contribute starts to phase out and at certain income levels, phases out completely. The IRS has a table of this you can check out.
This sounds a lot more “baller” than it really is. There are many discount brokerages out there now. You can open an account, buy and sell stocks, index funds, ETFs, REITs, Bonds and mutual funds for free and even just buy stock “slices”, i.e. fractions of a stock. We gift between $25 and $50 for Christmas depending on how much we love each child. Just kidding! The amount they are gifted is based on their age. 10-12 years old get $25 and once they are teenagers $50. We encourage the kids to have conversations with us about what stocks they want to purchase. We ask them questions so they critically think about the stocks they want to invest in. Ultimately, they can buy whatever stock they’d like. It’s been really wonderful to see how the kids make their decisions to buy, hold and occasionally sell.
These accounts are after-tax brokerage accounts. We control the accounts and plan to turn over the account to the kids when they’re “adults.” (Still some debate on whether that’s 18, 21 or 25.) The kids have to talk to us about what they want to buy and sell, the quantity and price. There’s not a lot of money in the accounts and the tax consequences have not been significant. Additionally, we cover all taxes on any profits as well.
I should add this system of gift giving helps us budget – we know well in advance what each child is getting and the anxiety about getting the right thing and not going over budget is gone. I wrote a post about this gift giving technique in a post you should check out.
Its been great to see how much knowledge the kids have gotten and how their confidence has grown.
One nephew has really gotten into investing and has impressed us with his decision making. We view this gift as an opportunity to learn, take risks and make mistakes without huge consequences. When we finally turn over the account, they’ll understand the basics and especially how time in the market can really boost their growth.
Baby Moneyaire’s 529 plan gets a Christmas contribution
Every month we contribute to Baby Moneyaire’s 529 Plan. It’s our hope to have a healthy fund so she (or we) won’t have to take out huge loans to go to school. Our own parents leveraged their home and worked extra shifts to make tuition payments. We are very aware of how their sacrifices have propelled our lives; we want Baby Moneyaire to have the same advantage.
Baby Moneyaire isn’t lacking in toys or clothes. She has plenty of everything she needs. She also is at an age where presents aren’t really meaningful to her. Now is the time to front load her 529 Plan. She’s too young to really understand what getting a gift means. We decided that instead of getting her a well marketed plastic toy widget that’ll be discarded well before St. Patrick’s Day, we’re going to invest in her future.
We also encourage family and friends to contribute to Baby Moneyaire’s 529 plan, too. This post explains how we go about getting that done. About 30% of Baby Moneyaire’s account is funded from family & friend contributions.
Check out the Moneyaire preferred 529 Plan. Depending on your state it could be the right one for your family. Additionally, many states provide you a tax benefit for contributions to a 529 Plan. Its the gift that keeps on giving.
The best experience gift was when we gifted an outing out to a McDonald’s PlayPlace to our friend’s children whom we were close to. We printed out a “ticket” with the activity. In all transparency, the kids didn’t get it at first, but we worked with them so they understood what it meant to redeem the ticket. When they got it, it was such a hit. One day, they came over with the ticket in hand and demanded a trip to McDonald’s.
We packed them up and brought them to McD’s with a PlayPlace. They got to order their happy meals and whatever else their little hearts desired. We ate at McD’s and let them play in the indoor playground. On the way home, they told us they had the best day ever.
Some of the other tickets we’ve written out had activities like a water balloon fight, a rainy day movie day with popcorn and chocolate milk or a trip to the playground. Printed tickets to the zoo or a children’s museum also make for wonderful gifts. These tickets don’t have to be for expensive experiences. Kids mostly just want to have fun, especially with you.
Gifting experiences isn’t just for kids
We love getting experiences for gifts. A friend gifted us free babysitting for an evening so we could go out for a date night. Given that it can cost anywhere between $12 to $20 an hour for a sitter in our area, this translates to a very, very generous gift.
The Moneyaires also gift each other experiences over things. Recently, for an anniversary Mr. Moneyaire gave me 14 tickets to various themed date nights I can use. Each ticket had an anniversary year and a trip we had gone on. Each ticket was for a themed date night for that year. When they’re redeemed, Mr. Moneyaire has to set the date up including figuring out childcare and reservations for the evening.
I have gifted Mr. Moneyaire concert tickets or event tickets to see his favorite author at a speaking event. We’ve also gifted each other tickets to sporting events and other local events like tickets to a beer fest.
Make this a fun gift – print out the actual ticket or draw them up if you’re crafty. Allow the experience to be something they really love or need – like babysitting, a night out or a fun activity.
There are so many subscriptions these days. Paying for someone’s Netflix or Spotify for a month can be a great gift they’ll actually use. You can easily do this by getting a gift card for the service.
You can also gift magazine or newspaper subscriptions – many times at huge discounts around the holidays. I got myself a Barron’s subscription for 2 years for $52. Not bad considering all the wonderful financial articles that help me with some investing ideas and decisions.
This is a little tricky in that you have to know they don’t already have a subscription. A conversation may be in order. Recently, Baby Moneyaire’s surrogate Grammy asked us for gift advice. I suggested getting Baby Moneyaire a subscription to Hello Highlights magazine and for her to come over and do some of the activities in the magazine. It’s an inexpensive gift that will arrive every month for a whole year. It’s interactive, assists in learning, encourages reading and creativity. Best gift ever!
Don’t limit these gift ideas to just Christmas.
These gifts are perfect all year round for any occasion. A common theme in all of these gifts is that the benefit they bring will last longer than a typical “thing” gift. Investments will grow and help in the future. Experiences will grow people together. Helping will make your loved ones feel happy and supported.
Happy Holidays, Merry Christmas, Happy Hannukah, Happy Kwanza, Eid Mubarak, Happy Birthday, Congratulations!
Whatever it is you celebrate with gift giving, I sincerely hope you feel as great about giving your gift as your recipient receiving the gift!