Gifts can be a clear and present danger

Published on Saturday 30 October 2004 00:22

THE ways I use and manage my own money have been significantly affected by my work in personal finance. Listening to other people’s money stories (good and bad), selecting the people who will appear on my television shows, and doing research for books have brought about some changes that a friend and I recently discussed after she asked me what I wanted for Christmas.

I told her that I had opened a "registry" (like a bride and groom’s wedding list) at a shop on Madison Avenue and would appreciate her choosing something from that list. She raised her eyebrows - in admiration or disgust, I could not quite tell.

I am now much more specific about the things I want people to get as gifts for me. They must be items I will use. This comes from seeing the amount of stuff many people have that they "just had to have" but now sits in a closet or a cabinet rarely used. Do what I’ve done on my show: make a list of what you own - gifts, things you’ve bought for yourself - that you have not used or worn, especially during the past year, and total the cost of these things. Could this money have been used for or spent on something better than a dust-gatherer?

Being given or acquiring what I really want actually stops me from spending more money. The day-to-day satisfaction significantly reduces the need for a new retail thrill. For me, it is like being in a really good relationship; I don’t have the desire to play the field.

I was once one of those people who would buy something and keep it in a drawer for weeks or months before letting myself enjoy it. Now I immediately use what I get. While on my book tour, I decided to give myself a little present in celebration of the wonderful reception I received in Edinburgh, Glasgow, and Dundee. At Hamilton & Inches, a jewellery store in Edinburgh, I found an entrancing set of green enamel and silver cufflinks. After waiting 24 hours to make sure they were something I would really use (not just something I wanted), I bought them. I have been wearing them constantly ever since - even sleeping in them in the plane on the way back to New York. I find myself looking at them and thinking they are just so distinct and beautiful that I can’t imagine wanting to buy another pair, at least for another year or two.

I am also simplifying more and more parts of my life. Recently, I went through my entire apartment and, somewhat cold-bloodedly, decided what I would keep and what I would either give away or sell. This has been satisfying and liberating. I will readily admit that I’m enjoying accumulating the money that comes in from the sales, turning some dust-gatherer into interest gatherers. But the most satisfying moments have been when I’ve given a friend something that he or she has long admired in my house or wardrobe. I’ve had the pleasure of the item for many years, now it is time to let someone else enjoy it as much as I have.

The same clearer focus and simplification that I’ve applied to the stuff in my life is also being applied to my own money. I am saving more. Seeing the amount of comfort some people take in things has sometimes been like holding a mirror up to some of the emotions in my life. I decided to find more of my comfort in continuing to create the financial security that I desire. Knowing I can take care of myself and give myself options if I need them has not only brought me more peace of mind, but opened my life up to opportunities I may have missed before.

I’m becoming a bit more conservative in the ways I handle my own money, perhaps even more determinedly so after having so many people ask me about easy-money ideas like spread betting, building a property portfolio using 0 per cent credit card offers, and the many highly-leveraged buy-to-let schemes. I wonder if the people who ask me about the viability of their "plan" understand they are often gambling with clearly limited financial resources. They are trying to be too clever, trying to figure out a way to make "the money system" work faster for them without having a real understanding of the risk they are taking. I worry for them. I teach about the investment markets and I would not take the risks that they have all-too-confidently embraced. It may sound a bit out-dated and conservative, but I still like earning, holding on to, and making my money grow in the old-fashioned, time-tested ways. They seem to have worked for most people who have accumulated amounts of money appropriate to their needs and desires as well as their peace of mind.