How to Give Money as a Holiday Gift

Have you finished all your holiday shopping yet? If not, perhaps you’re considering giving the gift of money to those who remain on your list, either because it’s convenient or because you don’t know what else to give them.

Sure, cash may be an easy gift to give. After all, you don’t have to fight the traffic at the mall or stand in line to get the gift. But is it truly the right way to go?

“You want to really think about why you’re choosing to give money and whether the other person is going to be receptive of it,” said Lizzie Post, etiquette expert and co-host of the Awesome Etiquette podcast. “You want it to come across as ‘I know this what you really wanted because I know you’re saving for something.’ It’s important to recognize that so it doesn’t come across as ‘oh here’s cash’ and that you didn’t put any thought into the gift.”

If you feel money is the best way to go, there are some other considerations you may want to make.

How Much to Give

Post said a good rule of thumb for giving cash is the amount you plan to give. If it’s something you’d likely lose in your own coat pocket, perhaps shopping for a small gift might be a better alternative. However, she added, that is in no way set in stone and it’s more important to make sure you can afford the gift.

“I really want to stress that the person giving it — it’s their budget that designates how much to give,” Post said.

It’s a good idea to budget out how much you can truly afford for holiday gifts ahead of time and stick to that budget. After all, you don’t want to finish the holiday season just to find yourself in debt. (You can see how your holiday spending is affecting your credit by viewing two of your credit scores for free on Credit.com.)

Who Money May Be an Appropriate Gift For

“The nature of your relationship is what’s really dependent if you should give that cash or not,” Post said. Would you feel uncomfortable receiving cash from this person? Do you know them well enough to know that they’re saving for something and that’s why money is the gift you’re thinking would be best? Consider these things before picking up some crisp money at the bank.

She also noted that if you do opt to give someone cash, it’s a good idea to put it in a card where you write a nice note to accompany the money, as this helps make your gift a bit more personal.

If someone gives you a gift and you don’t have anything for them, grabbing some cash from your wallet probably isn’t the answer.

“Gifts don’t have to be reciprocal,” Post said. “Don’t focus on your lack of gift, focus on the gift you received. Put that person’s generosity on the forefront of your mind instead of feeling guilty and trying to remedy that guilt.”

Consider Alternative Ways to Give Money

Yes, cash is often the easiest and quickest way to give someone money as a gift. But there are other options to think about.

“A check ensures the recipient has received your gift,” Post said. “If you go that route, make sure you track it in your budget because you don’t want it to cause you to get an overdraft fee because the recipient took too long to cash it.”

Post said gift cards are also a great option, as it shows you put a bit more thought into the gift than simply putting cash in an envelope.

“Gift cards can help to make it a little more personal and that gives the giver a sense that they are customizing what they’re giving,” Post said.

If you’re looking for this to be an investment for the recipient, or to make sure this is something they can really benefit from, you may consider setting up a 529 college savings account.

“Children get sick of toys, grow out of clothes, but giving money toward their college education will be a gift that they remember for a lifetime,” Tony Liddle, financial adviser and CEO of Proper Wealth Management in Wausau, Wisconsin, said. “Many states have their own 529 college saving plans that you can start fairly easily. Otherwise, many investment advisers can sign you up with an account.”

What to Do If You Receive Money as a Gift

What if you are the one on the receiving end of some money? As most people know, thanking someone when receiving a gift is important, especially if they hand it to you in person. If you receive the gift in the mail, Post recommends writing a thank you note. But, there’s one more element to showing the giver you appreciate the money they gave you, no matter if that’s a gift card or cash.

“Because you haven’t actually purchased the physical item yet, it’s important to give the person a thank you once you use [the money],” Post said. “Then write a thank you note once you get whatever you buy, even if it’s months later. Thank them by letting them know what you got and how much you appreciate it. This will really go a long way.”

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