Handling Small Cash Gifts

Recently, the subject of cash gifts came up between my wife and I. Her grandparents both give us moderately sized cash gifts each year (between $50 and $1000, to give a range) as a Christmas gift. In years past, we have almost immediately spent these gifts on some sort of material item, often contributing some of our own money to buy something expensive.

This year, I wanted to do something different with it. I suggested to my wife that we save or invest that money instead of just buying something silly with it. Her argument in response was that it is given as a gift for enjoyment, so we should enjoy it.

Her argument does have a degree of validity with it. When we receive the gift, it is usually with the stipulation that we “do something fun” with it because we “work so hard.” My argument is that we should indeed do something fun with it – but we should save their gifts for something really special, like a trip to DisneyWorld when our son is nine or ten years old. My thought is that if we tell them that we have a long term goal like this and we’re investing the money until then so that we maximize what we have when we go on the trip, they’ll be thrilled. Of course, investing the money now means that her grandparents might not survive to see us really appreciate their gift.

I guess the question is what is the most appropriate way to handle small cash gifts? My feeling is that once the gift is given, it’s up to you to determine what to do with it, and investing it doesn’t necessarily mean that you won’t end up doing something enjoyable with it.

On the other hand, I visualize the reaction of my wife’s grandparents when they receive our thank you note and we tell them that we took their money and bought a five year treasury note.

I suspect that we’ll go back and forth on this until Christmas.

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  1. dimes says:

    :-) I hate cash gifts. Usually when we get one we stick it in our checking account and forget about it. There’s no requirement that on a thankyou note you itemize where the gift went, as it’s really not the giver’s business. Probably for you the hardest part of the whole thing will be agreeing with your wife what you want to do with it. I like the idea of saving for a trip when your kid(s) are older, and plan on encouraging the grandparents not to buy stuff for our kids, putting money into 529s or something instead.

  2. MoneyFwd says:

    I’ve been thinking about this also since we currently have a tight budget and no need for more material things. I think taking at least a portion of it and saving it is the best way to go, unless you’ve been eyeing something that you really want/need. For us, it’s all going into savings so we can afford all of our necessary bills (i.e. tuition and books) next year.

  3. PiFreak says:

    I enjoy cash gifts, because I’m saving for college. However, I do this soooo often that I rarely have “real gifts”, so my uncle gave me $30, and told me to go out and spend it on something immediately. I did, and it was one of the best experiences. I would suggest saying that a tenth of your gift you should spend, and then invest the rest. That way, even if you only get a candy bar, it’s guilt-free, because you didn’t spend any money in a way, and then the majority can go to a big ticket item.

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