Gift Cards are free money aren’t they? They’re the easy yet thoughtful gift that burns a hole in our wallet until we use it. After all, if we didn’t use it, it would be like flushing money down the toilet. But sometimes Gift Cards aren’t really a gift. Sometimes they become an anchor that encourages us to spend a lot more than we can afford.
Gift Cards Help You Save - Or Not
My friend and I went to a fabulous networking event at a pricey store in Manhattan. We paid a $40 entrance fee and much to our delight, received a $40 Gift Card to spend in the store. However, almost nothing in the store could be purchased for under $100-$200. We calculated. If we didn’t use the Gift Card we would “throw away” $40 in cash. Or we could use the “free money” and spend an unplanned $60-$160 more. Based on pure analytics, it was not wise to use the Gift Card unless we really needed something in the store. But emotionally, we had $40 burning a hole in our wallets.
Fortunately, we both needed something. I needed a wallet because the change was falling out of a hole in my current wallet. The game then, was to try to get what we needed while not blowing the spending plan. Or, walk out the door without buying. Wallets on the main floor were $176 and too expensive. On the 2nd floor, wallets were half price. The deal side of my money brain perked up. I shopped and found a beautiful, well made leather wallet on sale for $88. With my Gift Card of $40, it was $48 before tax. This was an acceptable expense for me.
Is Your Gift Card Truly a Gift?
The Gift Card was truly a gift because:
- I was able to save on something I really needed.
- The final cost of an item was within my spending plan for the year.
Several of the women purchased expensive jewelry with their $40 Gift Card. Was their Gift Card truly a gift or did they just feel rich and compelled to spend money needlessly? Only they can answer that. Next time we buy Gift Cards for someone, it pays to question whether we are truly gifting. Does the recipient need something that can be found in the store, and will the total expenditure be affordable for them?
Or, was it an easy way out for us that will become a money dilemma for the receiver?
Related Topic: Do Items on Sale Help Your Budget? Maybe Not.
Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Behavioral Cents, LLC and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.
Carrie Rattle is Founder of BehavioralCents.com and a veteran executive of financial services. She works with women to build money confidence and change their money behaviors for the better - without deprivation. Instead of simply telling women what to do, she helps them fight the tide of daily temptation to reach their dreams. Women gain control and feel comfortable making their own wise money decisions. Thoughts always welcome: firstname.lastname@example.org.