Published on December 18, 2018 12:46 am, by Pete Lalor
For most of us our spend on Gifts and Donations is a relatively small proportion of our overall household budget. But there are lots of ways you can save money in this spending category and still bring happiness to the people your are giving to and enjoy the gift of giving yourself. Here are our tips for spending less on Gifts and Donations.
There are lots of ways you can look to spend less on gifts. You should be able to use one or more of these tips in different circumstances. Like most things, the better planned and prepared you are the better the results.
Think ahead and plan
Most gifts are predictable – birthdays, anniversaries and Christmas. They are the same time every year and we are generally buying for the same people each time. So start a plan for each person you buy gifts for, a year in advance. Keep your plan handy and when ideas pop into your head during the year quickly put them into your plan. You’ll end up buying more thoughtful and considered gifts. If you start early you’ll also have more and better opportunities to make your purchases when things are discounted or on sale.
According to the Sydney Morning Herald Australians spent about $400 million on 10 million unwanted gifts last Christmas. We think there would be a similar story for birthdays and other celebrations.
This makes putting a bit of thought into who you want to buy for, and what you want to buy for them pretty important. Who wants to spend money on something to add to the landfill or be stuck in the cupboard to regift at a later date. Use our planning tip to minimise the risk of unwanted gifts. If you can, ask someone close to your gift recipient for things they want or need. Although it spoils the surprise, if you want to be very practical and avoid the risk of unwanted gifts altogether you could always ask your gift recipient for suggestions.
Don’t spend anything
There are always some gifts that don’t need money. Think about things like:
Don’t give gifts
People sometimes feel pressured to buy gifts as a reciprocal thing, where a conversation may be all it takes to agree to not buy gifts, instead to do something together to celebrate an occasion or sometimes put a spending limit or condition on what is bought.
Time your purchases
It’s very practical and it might detract from the occasion – but we all know that sales come after Christmas and the discounts can be enormous. So why buy all your gifts before Christmas? Why not put off some of them until the sales? Maybe turn it into a day out shopping. You can probably use some of the money you save in the sales to buy lunch! You could also take advantage of Black Friday and Cyber Monday sales in the lead up to Christmas.
If you really want to give something on the day of the occasion consider a card and a home made voucher or even a pre-paid debit card to the value of the gift (see our tips below for the best value pre-paid debit cards – they can be expensive). Generally, we’d advise against giving vouchers or specific store cards because so many of them go unused. In fact, some estimates suggest that we waste almost $100m a year in unused gift cards. Gift cards are a little bit better now that ACCC has shone a light on business practices in this area and insisted that cards are honoured for atleast 3 years and clearly display the expiry date.
Use any discounts you can
When you’ve figured out what gifts you want to buy and where you want to buy them you can use one of our most reliable spending hacks and use discounted gift cards to make your purchase. This is almost guaranteed to save you around 5% of your purchase cost. Read this article for more details on how this works.
Don’t get stung using gift cards
It’s tempting to use gift cards as an alternative to buying real gifts. They make things much easier for you and they allow the recipient to buy something they really want. But unfortunately there are a few traps with gift cards. The ACCC estimates that Australian Consumers waste about $100m a year in unused gift cards. The key things to be aware of are:
We think if you are in a position to donate money or time to help those less fortunate than you, then that’s great. We suggest like all other categories, that you include any money you will give in your budget so you can track it as part of your finances.
The key things to think about in making donations to charities are:
Do your own research on the charity to make sure you understand what your donations will be used for. One of the easiest ways to do this is through the Australian Charities and Not For Profits Commission (https://www.acnc.gov.au/). The ACNC regulates the activities of charities in Australia. They also compile a register of charities and compile information and statistics about charities in Australia.
If you can claim a tax deduction for your donation it makes it much more cost effective. In simple terms, it reduces the ‘after tax cost’ of your donation by the amount of the donation multiplied by your marginal tax rate. Of course, to get this benefit you have to remember to claim the deduction in your tax return and in most cases you need to retain documentation about the donation. The good news is you can use the Tax Deduction feature in MoneyBrilliant to do this for you.
Whether you can claim a tax deduction or not depends on whether the charity is a Tax Deductible Gift Recipient registered with the Australian Taxation Office. You can check this the Australian Governments ABN Lookup service https://abr.business.gov.au/
Church Donations and Tithe
Lots of people who attend church or participate in some other form of religious activity donate money to the cause. How much you donate is sometimes formalised (as in tithe which is 10% of your income) but is often completely discretionary. If it’s discretionary then you can reduce your spending in this category by simply reducing the amount you donate. If that doesn’t sit comfortably with you you might be able to make your donations more affordable by claiming a tax deduction for them.
Whilst most religious organisations are probably registered as charities they also need to be registered as Deductible Gift Recipients for you to be able to claim a tax deduction for your donation. You can check this the Australian Governments ABN Lookup service https://abr.business.gov.au/ To claim a tax deduction you will also need to satisfy the ATO’s record keeping obligations. You can read more about these here.
Peter is the CEO of MoneyBrilliant. He has over 20 years experience in banking, insurance and accounting. Peter has three sons, ranging in age from 16 to 3, is a sport and fitness fanatic and a volunteer firefighter. He is passionate about improving people's lives through making financial services more accessible.