Diana Clement: Give them a parcel of shares this year

Tis the season to spend money frivolously. That's never good for your long-term wealth. So I thought I'd look at some of the silly things that otherwise sensible people do with their money at Christmas.

The typical Kiwi intends to spend $930 on Christmas this year, says the MasterCard Christmas Survey 2009.

Intention and reality are two different things - especially as most people forget to factor in everything from new dresses for Christmas parties, to incidental spending at the supermarket into the total cost of the festive season - so $1000 a head in Christmas spending isn't out of the ordinary.

Plug $1000 a year into one of the many compound-interest calculators on the internet and after 20 years it's worth $28,780, assuming an investment return of 5 per cent a year and a marginal tax rate of 33c in the dollar.

Few people would want to spend nothing at Christmas. Even so, a calculation like this highlights the impact of gratuitous spending on an individual's finances if they would otherwise be saving the money.

Christmas is about a whole lot more than spending money to boost our economy. Even if you're not religious, Christmas should be for enjoying time together.

I really like the Buy Nothing Christmas campaign, which this year urges people to "be a rebel this Christmas and don't get pegged as a mindless consumer".

The best way to spend less at Christmas is to plan. Write a list of what you still need to buy (if anything), who you need to buy for, and what your spending limit is for each person.

Make sure you stick to it and ensure it includes the food bill. A staggering one-third of food bought for Christmas allegedly ends up being chucked out. The moral to that is to trim the trimmings.

One modern Christmas tradition that readers should rebel against, in my humble opinion, is feeling the need to give expensive gifts, or match such gifts. It's just forcing you to spend more than you might want to, to get a gift in return that you might not want.

Where's the logic in that? Have some guts, for goodness sake, and either agree a price limit with friends or relatives who feel the need to give expensive gifts, or agree not to give gifts.

An idea I see repeated every Christmas that really is worth taking on board if you're a serious saver is to give gifts of time. In our cash-rich, time-poor society, gifts of your time can be greatly appreciated.

Instead of buying presents, write a card and offer to do jobs around the house, provide your professional services if you have skills to offer, or simply a night or two of babysitting (I hope my friends are reading this).

Some of the worst Yuletide excesses are aimed at children. In my household Santa frequents the $2 shop and Takapuna Market for a good proportion of the gifts. Even so, Santa's a trifle misguided.

One Christmas my mother commented that her grandchildren had just received more toys than she had owned in her entire childhood.

Although I try to give gifts such as board games that encourage family time together, a good chunk of the presents received that day made their way to the school garage sale a few months later.

What a waste of money and the world's resources. Even worse, what is it teaching our children about consumer goods and spending?

It really does make sense to give children investments. They're gifts that keep on giving, some say. A small parcel of shares isn't going to make them rich. But the knowledge they glean may.

Children as young as 5 can begin to understand how investment markets work if you talk to them about it. It's a good idea to give shares in companies that they can understand, such as Pumpkin Patch, Air New Zealand, Sky TV or Contact Energy.

Some people would prefer to pay a chunk of money into their KiwiSaver, but this may not have the educational impact of a direct investment.

Another great lesson that can be incorporated into Christmas for children is charitable giving. Oxfam Unwrapped's Give a Goat for Christmas campaign, for example, captures people's imaginations - Kiwis gave 16,481 such gifts last year.

The three most popular gifts, I'm told, were ducks, chickens and goats.

How it works is that you buy a gift such as a goat, safe water for five people, or even a sewing machine on the Oxfam Unwrapped website for delivery to a needy person overseas.

You then receive a gift card, explaining the present, to wrap up as a present. The discussions such a present can lead to with children are priceless. Plenty of other charities such as WorldVision offer similar "gifts of hope".

One social inhibition we all ought to get over is returning gifts that we don't want. Such gifts are usually convenience buys.

It's embarrassing to exchange a gift, but it's better than simply putting the gift on a shelf. You can either come clean with the person who gave it to you and say that there's another item at the shop that you've got your heart set on.

Or you can simply swap it without saying anything. If you think how you would feel if the boot was on the other foot, then you can probably lessen your guilt.

It's unlikely, even with a receipt, that you'll get cash back. If you can't see an item of your liking then and there, you might want to take a gift certificate.

I should add that shops aren't obliged by law to replace an item simply because it's "unsuitable". But the reality is that most are happy to exchange - especially straight after Christmas.

Another alternative is to put the gift in question in your present box and pass it on to someone else who might like it more than you - thus saving yourself the cost of a present.

On the subject of unwanted gifts, joke gifts and ill thought-out ones really irk me. They don't get used and cost money. So why give them?

If you received one last year and you can think of someone who would really use it, then why not wrap it up again and "re-gift" it. In fact, you should do this for any gift that is unopened and unused from last year - providing you're not simply cluttering up some other person's house by doing so.

Or you could, if it's brand new, drop it in one of the containers provided by the City Mission at Postshops around Auckland or to the Mission at 140 Hobson St, Auckland Central.

If there's one thing worse than wasteful spending at Christmas, it's being scammed and getting nothing at all for your money.

A wave of bogus online shopping emails has hit my inbox in recent weeks. The latest one came from a friend whose computer had been hijacked when he clicked on a similar email.

The email, which purported to be from my friend, said: "I found a good website last week" and gave a link to the website. It went on to explain in poor English what the site sold. Had I clicked on the link to check it out my computer would have been hijacked in the same way. Even worse, what the people behind the email really wanted me to do is click on the site, buy something and enter my credit card details so they could use it fraudulently.

The number one scam this Christmas, according to software publisher McAfee's 12 Scams of Christmas, involves phishing emails claiming to be from legitimate charities.

You're encouraged to click on the link and donate. If you want to give money, telephone the charity in question, or at least type the URL in a browser yourself rather than click on a link in an email, which can redirect you to a look-a-like website where your credit card details are compromised.