Are You Giving the Gift of Consumerism?
By Pinyo • Dec 20th, 2007 • Category: Frugal LivingI didn’t give this topic too much thought until very recently. While I was driving to work, I heard on the radio that you could give “Mall Cards” as a Christmas present. With one of these gift cards, the recipient isn’t restricted to buy something from just one store, he could buy anything in the mall — e.g., movie, soda, ice cream, popcorn, cloth, etc. On a different note, my son recently received some cash gift from my parents to celebrate his birth (this went straight to his 529 plan). Upon reflecting on these two things, a question occurred to me: Are We Giving the Gift of Consumerism?
Photo via Gear Diary
Gift Cards
The concept of gift cards was foreign to me until I came to the United States. In Thailand, people either give items or cash, but never gift cards. However, gift cards are very common and popular here in the U.S. Why does this matter?
When someone a gift card, he has no choice but to buy something from the particular store (or mall) chosen for him. A purchase must be made, whether or not the recipient needs or wants anything from the store. There is no refund or exchange (well, there is always re-gifting, but that’s another story).
Even if the person can buy the item cheaper elsewhere, he cannot choose to spend less because he has to use the gift card up somehow. Worse yet, people tend to spend more than the value of the gift card, otherwise the remaining value goes to waste.
So here is my ultimate conclusion: Gift cards are evil. They breed the habit of consumerism.
Cash
Aside from giving something thoughtful as a present, I think giving cash is a great alternative. Some may argue that giving cash is not meaningful and impersonal. My argument is that giving cash gives the person a choice. If he wants to spend it that’s fine, but now he has the choice of saving it, investing it, and growing it. What can be better than giving someone $50 today, that could grow to $900 or more in 30 years?
In fact, this is how most children in Thailand learn about responsible money management. They are given money by their parents, grandparents, aunts, uncles, and other relatives. Financially responsible parents then use these opportunities to teach them how to save and invest.
I think it is the opposite here. The U.S. is dominated by the paradigm of giving possessions, or gift cards to acquire more possessions. Could this be the reason why we are more materialistic as a nation? Is this why our saving rate is so low, and why our debt to income ratio keeps rising?
I am sure a lot of my readers will disagree with me, and another half will probably agree. This is a very personal thing and there is no one right answer. Just an observation. Your thought?
More about gift cards and gift giving:
- Holiday Helper: Tips for Buying Gift Cards @ Gather Little By Little
- Save Money with Discounted Gift Cards @ Cash Money Life
- We Still Have Gift Cards Left Over From Our Wedding @ My Two Dollars
- Why Am I Unpopular at Christmas? @ My Dollar Plan
- If You Work the System, You Can Save a Good Amount of Money @ Free Money Finance
- Gift cards are not gifts @ MSN Money (Liz Pulliam Weston)
- Gift cards are gifts @ Mighty Bargain Hunter
This post was featured in:
- The Carnival of Ethics, Values, and Personal Finance hosted by Money and Values. For more information please visit the Carnival of Ethics, Values, and Personal Finance.
- USA Today Blog Talk: Carnival of Ethics, Values, and Personal Finance
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I hadn’t thought of gift cards in that way before - if anything, I see them as mildly thoughtful gifts. But I would have to agree with your notion that cash is a better option. At the least, a lesson can be learned besides spending for the sake of spending. I do believe that consumerism is taught, mostly implicitly. There have been times when i was younger that I would buy something when I felt down. Now I walk through a mall and marvel at how focussed people can be on buying things and how garish the messages to BUY BUY BUY are.
Christmas is a great time to discuss these things - we’ve curtailed our spending for ourselves and got some family members to do a ‘Secret Santa’. (Just in case you’re not familiar with ‘Secret Santa’: everyone puts their name into a hat and each person takes out one name. For 5 people, the result is 5 total gifts instead of 20.)
I’d like to think that gift cards restrict the buyer to buy something I want to give them. For example, I want to get my brother something electronic, but I’m not sure exactly what he wants. I gave him a gift card to Best Buy. Had I given him cash he could have spent it on anything.
I do see your point. I wouldn’t say they are evil, but they are somewhat inconvenient for the recipient. But it’s about giving, not about receiving… or at least it is supposed to be!
The recognition that gift cards are sometimes bad for the receiver must have hit the gift card market this year because now you can buy a gift card through American Express that can be spent anywhere. There is also, besides the mall cards, a startup company that offers a card that is linked to all the stores in their listing that allows you to purchase across the board. So I think that all the talk across the personal finance blogs may have played a part in raising the awareness of the limits of the gift card.
Meanwhile, the other thread of your post about consumerism can also be seen this way. The pressure of gift giving year after year to the same group of people can bring a person to the point where not having to think about, but just give a gift card, is a welcome relief.
I never actually thought about it that way before. I love receiving gift cards. My mother-in-law gets me one every year (and she always calls to give me a choice of stores first). I work really hard to make my gift card stretch as far as I can get it to go, without going over by more than a couple of dollars.
I can see your point, too. I’m going to have to ponder this a bit.
I hadn’t thought of it like this before. Good point…hmm.
Since I don’t spend as much on myself, it’s nice sometimes to have a gift card that lets me get things I’d been wanting for a while. At the same time, cash might be even more useful in attacking my debt or other financial goals. For example, if I want something big from Best Buy, I can’t get it if I have Best Buy, Sears, and Kohls cards instead of 3 from Best Buy…
This is a thought provoking article, but I can only agree with part of it. I don’t see gift cards as evil, especially for someone who you know has a specific need. For example, if you know someone remodeling a house, a gift card to Lowe’s or Home Depot is an awesome gift. If you know someone who has an iPod (or if you give an iPod), giving a gift card to iTunes is another great gift.
I do agree with your broad assessment, but I can’t agree with that for every case. And I also prefer cash, but that’s because I am not a big spender and I would end up saving or investing it.
In my country, the Philippines, giving gift cards (or gift certificates as we call them) has been proliferating. It used to be giving items or cash. Not only does it make gift shopping easier, but it makes the buyer/giver buy presents with limits (e.g. I can buy a gift card for as low as US$2). As a recipient, of course this could only mean BUY, BUY, BUY. I’m guilty of giving this type of present myself. You’re right though. It usually ends with the recipient buying something more than the gift card’s worth. I think I will have to carefully consider who to give gift cards too.
I like gift cards, and in particular Visa gift cards. I can use them to purchase what I would like. I like obscure things that aren’t easy for just anyone to purchase.
I don’t like getting store or mall specific gift cards, as I agree they make me spend the money in a particular place.
I’m not a fan of cash - it’s like saying *I couldn’t be bothered to think of something you might like*. It’s worst at Christmas, there’d be little point in exchanging cheques with my siblings. I expect people to put some effort into a gift because they care, otherwise what’s the point. I accept that I’m being difficult on this though.
I’m not a big fan of gift cards either, and I recently wrote about 3 reasons why I don’t like gift cards. Studies have shown that while most people prefer receiving gift cards rather than cash, they end up spending more money with gift cards than they would with an equivalent cash gift.
I agree with Plonkee. Although there is a lack of flexibility with gift cards, I think a lot of Americanos are deeply uncomfortable on a cultural level with giving cash (unlike, for example, in Japan, where cash is king as far as gifts go). A lot of it has to do with a cultural disposition to show, or at least pretend to show, that some thought went into the gift.
The fix though, is to find more flexible gift cards like rhbee mentioned. Also, I wouldn’t be surprised to see E-Trade or Zecco gift cards in the future.
@Arp - Thank you for your comment. Yes, Secret Santa is a great way to celebrate the holidays without going overboard on gifts. That’s what I am doing with my team at work.
@My Dollar Plan - Right, but what if he can get the same item at Amazon for 20% less?
As far as gift giving is “about giving, not about receiving,” I disagree. I think it’s more mutual and intimate, than just giving.
@Rhbee - Yes, those VISA, MC, Amex gift cards are improvement. I do use gift cards too (more in the past), and exactly for the reason you mention — it can be hard sometimes. But with this new thought, I will most likely abandon giving gift cards altogether. Beside, the person who benefited the most from this is the merchant — not the giver or the recipient.
@Lynnae and Mrs. Micah -
I really didn’t think about this much until recently either. Now just this morning, I heard the best gift you can give is not electronics, or DVDs, but CITGO Gift Card. Can you imagine that?
@Patrick - Evil is probably too strong, but it gets the point across. Those are good example of specific needs, and I did the same giving someone a Lowe’s card when he bought a house.
@Tasha - Exactly, once you get a card, it’s all about buying from there.
@Glblguy - I guess those are as close to cash as we’re going to get.
@Plonkee - Not at all. Nothing beats a really thoughtful present. Here, I am just trying to compare the merit of gift cards versus it’s more traditional counterpart…cash. In this respect, GC is a really clever mechanism for companies to extract more profit out of consumers.
@Broke Grad Student - That’s 3 good reasons right there.
@Blubba - I agree, culture plays a big role. Heck, we can get gift cards for gasoline — nothing else will surprise me.
Well that’s assuming my brother shops around for the cheapest price. While I’d love to believe that he does, I know he doesn’t. So I guess it depends on who the recipient is whether or not a gift card is appropriate.
@My Dollar Plan - I hope your brother doesn’t read my blog
But you have a point.
Some interesting points Pinyo, but in reality everything we do promotes consumerism, it’s just that some are more subtle than others. If instead of buying a gift card we bought a sweater or trainers then they are likely to have a brand name on them which advertises the product. I don’t think we can get away completely from consumerism and some elements of consumerism are good in that it promotes choice.