Bad news: When your partner, friend, or sister says “You really shouldn’t have” on opening that expensive gift – they mean it.

You could have shopped smarter and saved your money instead.

Academics at the Stanford Graduate School of Business1 showed that:

• Most gift givers assume an expensive present is better appreciated…

• …but in reality, gift receivers don’t appreciate expensive presents much more

It seems it really is the thought that counts.

Hey big spender!

Years ago, when I was the first of my siblings to get a higher income, I spent far too much money on Christmas presents.

Nothing that would turn the head of a Kardashian, mind.

Maybe a multi-piece Le Creuset set for the kitchen for my mum whereas before I’d have bought her a cookery book, or some fancy Bosch power tools instead of a Spear & Jackson spade for my dad.

But now I’m back on the good – cheaper – stuff.

That might sound like I’m simply older and meaner.

But the issue wasn’t just that my more expensive presents weren’t really any better appreciated, or that I was miffed when I got a novelty t-shirt back. (Although, shamed, I’ll concede I was miffed).

The trouble was I bought bad presents just because they had more bling.

I was hiding my 20-something insecurities behind a price tag.

Worst of all, my sister told me she felt my gifts made all her presents seem cheap.

Which wasn’t exactly the gift I was trying to give!

Or even if it was (subconsciously, because, again, I was young and silly) it shouldn’t have been.

What matters when you give a present?

Happily we all grow up, and if we pay attention along the way we might even learn something.

Eventually I saw what really mattered to my family was whether we felt like we’d been thought of – and understood – when the gift was chosen.

One of my sisters also went through an ‘expensive presents with a new job’ phase. But now we’ve settled down to giving smaller, more personal presents, which we can all afford, and that we’re usually pretty happy to receive.

Not before time, too, after nephews and nieces entered the gift-buying equation. (Although honestly, I’d much rather invest for them than contribute more plastic tat to landfill.)

Anyway, my family’s experience mirrors what academic researchers long ago discovered. More money spent generally does not equal more happiness.

How convenient!

1: Expensive engagement rings aren’t worth it

In one study, Stanford researchers looked at engagement rings – a one-off big ticket item where you might expect extra expenditure to pay dividends.

But the academics found:

• Men consistently thought their rings were more appreciated by their fiancées the more expensive they were.

• Fiancées did not rate themselves as any more appreciative if the rings were more costly.

This doesn’t really surprise me.

While there’s a lot of marketing pressure on young romantics to prove their love at the jewelry store, the fact you’re asking someone to marry you is about as big a statement you can make.

2: More expensive birthday gifts aren’t more appreciated

In the second study, the Stanford researchers asked participants to think about a recent birthday gift:

Participants described a variety of gifts, including T-shirts, jewelry, wine, books, and home decor items.

Again, those who were givers expected that more expensive gifts would make the recipients feel significantly higher levels of appreciation.

In contrast, the recipients said they did not feel greater appreciation levels for gifts that had cost more.

Fact: It’s just not worth spending that extra chunk of cash. Researchers found givers would spend $100 on gifts that receivers would only pay $80 for. The excess $20 is a ‘deadweight loss’ in economic terms.

Now you know why those Christmas hampers are so overpriced.

If you see something someone would love that costs a little bit more and you can easily afford it, then by all means buy it.

Otherwise, this study is a green-light to cut 20% off your gift budget.

3. Straight-up more expensive gifts aren’t necessarily more appreciated

The research behind this article is a few years old now, as shown by the final strand of the Stanford study:

In the third study, participants were asked to think about giving or receiving either a CD or an iPod as a graduation present.

Once again, those who were randomly assigned to be ‘givers’ thought by giving the more expensive iPod their present would be appreciated more in contrast to the CD.

The ‘receivers’ rated no difference in appreciation levels, regardless of which item they were told to think about getting.

I doubt anyone would much appreciate getting a CD in 2020! Even an iPod is a bit passé in the iPhone era.

Also, this study was based on people imagining how they’d feel. Most of us would like to think we’re virtuous souls and not particularly materialistic. Reality may vary!

But if you are going to bring imagination into your giving, then one tip is for you to imagine the long-term future usage of the gift.

A 2016 study concluded that:

Given the widespread nature of giver-recipient mismatches, how can givers choose better gifts?

The obvious answer is that givers should choose gifts based on how valuable they will be to the recipient throughout his or her ownership of the gift, rather than how good a gift will seem when the recipient opens it.

Now for the obligatory TED lecture

The good news is that giving is good for you, however much you spend, as this video from TED explains:

This makes me think maybe I should have created one of those Donate to Monevator buttons that people have asked about for years…

I could have made some of you happy, and done ourselves a favour along the way!

Save money buying gifts

The message from academia is clear. Money doesn’t count for much when giving gifts, but thought and motivation matters.

Some suggestions:

• Don’t feel guilty about setting a gift budget. You have to live within your means.

• Put more time into choosing a gift the recipient will really like.

• If you believe you haven’t got enough time to shop for something special and so instead you’re reaching for a thermonuclear price tag to get you off the hook, think about how long it’d take you to earn the money you’re about to spend. This process you should ‘buy’ you several hours at least, and a cheaper and more appreciated present.

• Try to make something happen – an experience or a one-off event – if you really want your gift to be remembered.

Finally, if any of my friends or family are reading and thinking “poppycock!”, then please know you’re welcome to stick to buying more expensive gifts – and that I’ve been lusting over this copper-finished Hotel Chocolat Velvetiser hot chocolate machine all year!

Happy giving.

1. Research findings from: Money Can’t Buy Love: Asymmetric Beliefs about Gift Price and Feelings of Appreciation – Francis J. Flynn and Gabrielle S. Adams, Journal of Experimental Social Psychology. [↩]

Where can you go for quality, free financial advice when you, a relative, or friend needs help with a big decision?

Money worries blight all of our lives at times, but it can be difficult to know where to turn when you have to deal with an unfamiliar financial challenge or emergency.

You might be an investing whizz but have very little practical experience in dealing with long-term care issues for a close family member, for example.

• Who can you trust?
• Where do you go for reliable information so that, even if you can pay for some help, you know that you’re receiving good advice?
• How do you avoid being scammed, fobbed off, or taken for a ride?

Below are sources of financial advice that I’ve found to be genuinely useful over the years, or else are widely considered to be a go-to frontline service for money-related problems.

Where can I find free financial advice?

The Money Helper Service (it used to be called Money Advice) is a national treasure when it comes to straightforward, free advice on most aspects of financial life. Go there for a 101 on pensions, long-term care, debt, redundancy, self-employment, housing, benefits, illness, disability, death, and divorce.

The Money Helper Service is a government-backed initiative.

I supplement and corroborate the Money Helper Service by also checking Citizens Advice and GOV.UK.

Inevitably you get a better handle on the issues by cross-checking multiple sources. This is also a good way of discovering wrinkles you’ll need to think about – or ask for more advice on – as you trim your decision tree.

It’s generally a good sign, too, when government, charities, professional bodies, and journalistic sources are all in agreement about the basic facts.

Free independent financial advice

Sooner or later many people need the help of a financial advisor to help them deal with complicated issues such as tax planning, estate planning, equity release, or defined benefit pension transfer.

Some financial advisors offer a free initial consultation. Obviously that’s no guarantee of quality – and it’s offered as a prelude to paid engagement – but at least it enables you to size up a few firms.

A number of unions have partnered with financial advisors to offer a free consultation. You’ll find some advisors make that available to anyone, regardless of affiliation. A Google search will reveal more.

Financial advisor comparison sites

More generally, there are free financial advisor match-making services.

Unbiased.co.uk pairs you with financial advisors, accountants, and mortgage brokers. It says its database will match you with an advisor who is independent, regulated, and qualified.

Vouchedfor.co.uk hooks you up with financial advisors, accountants, solicitors, and mortgage brokers. Vouched For includes reviews but you’ll need to check your advisor is independent. The site checks for qualifications and regulation.

Financial planner professional bodies

The Chartered Institute for Securities & Investment (CISI) administers qualifications for UK independent financial advisors (IFAs). Use its tool to search for advisors by postcode.

The Personal Finance Society (PFS) also enables you to search their membership for an advisor near you. Its tool includes a specialism function. The PFS is part of the Chartered Insurance Institute Group.

Later life specialists

The Society Of Later Life Advisors (SOLLA) enables you to search for a financial advisor who specialises in the domains of retirement planning, equity release, long-term care, inheritance tax planning, wills, and probate.

The Money Helper Service maintains a retirement advisor directory. These cover much the same specialisms as SOLLA and are regulated, but are not necessarily independent.

Note: no matter who you deal with, always check whether your financial advisor is independent. If they are restricted, check they’re restricted by their specialism, not because they are tied to particular product providers. And make sure you understand how much your IFA charges.

The Financial Services Register

Before you do business with any financial firm, check its bona fides on the Financial Services Register. This is your first port-of-call to ensure that you’re working with someone who is authorised to offer the services they’re advertising in the UK, and who is regulated by the Financial Conduct Authority or the Prudential Regulation Authority.

The regulators also maintain a list of black hats you may not wish to work with.

If you hope to be covered by the Financial Services Compensation Scheme (FSCS) then it’s essential you check your provider is UK regulated and also authorised to provide a service covered by the scheme.

There are FSCS loopholes that are likely to affect many Monevator readers.

Free financial dispute resolution

The Financial Ombudsman Service (FOS) offers free financial dispute resolution that enables you to seek redress against financial firms without going to court. The FOS handles consumer complaints involving bank, insurance, mortgage, financial advice, pensions, loan, and credit products.

You must be in dispute with a regulated firm to bring the FOS into play. You must have exhausted the firm’s internal complaints procedure first.

Happily, the FOS is independent, its rulings are legally enforceable, and it doesn’t preclude you going to court if you’re still dissatisfied.

There is also a Pensions Ombudsman, even though the FOS does handle some pension disputes.

Free pensions advice

If you have a defined contribution pension then you are entitled to a free appointment to talk through your options with a specialist from Pension Wise. You qualify for this service if you’re over 50-years old.

Pension Wise is also a good source of straightforward articles that guide you through the maze of pension complexity.

The Pensions Advisory Service offers general pension advice. You can contact it directly by phone and web chat to talk through your pension questions – although it does not provide financial advice.

Pension Wise and The Pensions Advisory Service fall under the auspices of The Money and Pensions Service (MaPS), which is sponsored by the Department for Work and Pensions. The MaPS also runs The Money Advice Service.

Free tax help

Ever found the tax system baffling? The Low Incomes Tax Reform Group (LITRG) is a wonderful resource featuring tax guides that won’t give you a banging headache.

The LITRG resources have been put together with genuine care by the Chartered Institute of Taxation (CIOT) – a trade body for UK tax professionals.

If you want help finding a paid tax professional then use CIOT’s1 find a member tool. You can search by tax specialism and location.

TaxAid have compiled some tips on choosing a tax advisor to make things a little easier.

Free tax help for those on lower incomes

TaxAid is a charity that helps people understand the tax system, pay the right amount of tax, and appeal unfair tax demands. Call its helpline if you need tax assistance and you earn less than £20,000 per year.

TaxAid is run and staffed by tax professionals.

Tax Help for Older People is similar to TaxAid but is specifically geared towards assisting the over-60s who earn less than £20,000 per year.

You can get tax advice from volunteer tax professionals including retired HMRC staff. Find out how they can help you or call them on 01308 488066.

Free debt advice

Thankfully there are a number of organisations dedicated to helping anyone worried about debt or bankruptcy.

The National Debtline provides free advice and resources for anyone in England, Wales and Scotland. It’s run by the Money Advice Trust.

Business Debtline is a sister service aimed at the self-employed and small businesses.

Go to AdviceNI for debt advice tailored for people living in Northern Ireland. (AdviceNI also helps with benefits and tax credits.)

You can find more online, telephone, and face-to-face debt help via the Money Helper Service resources page.

Debt advice, but also free guidance on other social issues

The following organisations can help you with debt, but they also cover many other life challenges including benefits, tax credits, council tax, social care, employment and redundancy, housing, and homelessness:

• Citizens Advice
• Step Change
• Advice Local provides links to organisations that are tailored to your location. It’s run by the Rightsnet charity.
• Age UK is a charity that specialises in later life advice on topics such as debt, money, legal, health, work, care, and support.

Free housing advice

Shelter is the leading charity for advice on housing issues including eviction, repossession, renting, deposits, benefits, and homelessness, if you live in Scotland, Wales, or England.

Go to Housing Advice NI if you live in Northern Ireland.

Free consumer rights advice

Most people will be familiar with these sources but I think that Which,2 Money Saving Expert and Citizens Advice are hard to beat when it comes to your consumer rights.

Free investing ideas

You could do a lot worse than browsing the articles at Monevator’s Passive Investing HQ. (Though it makes us blush to say it.)

Finally, the best two pieces of financial advice I ever got were:

• Kill all bad debt.
• Build an emergency fund to buffer you against bad financial luck.

You can have those for free!

Please let us know your favourite sources of free financial advice in the comments below. That way we’ll build up this resource using the wisdom of the Monevator crowd.

Take it steady,

The Accumulator

1. The Association of Taxation Technicians are in on the tool, too. [↩]
2. Obviously Which isn’t entirely free but it has lots of quality information outside its paywall. Moreover, good organisations need to make a living to maintain their service. [↩]

What caught my eye this week.

Being nothing if not a business nerd, I spent Friday evening enjoying a new report from Waitrose on consumer trends in 2021.

Don’t judge me! It’s not like the pubs were open. Or maybe they were? But I live alone. So I can’t go to them. Or maybe I can go? And sit on my own with a hearty meal? I’ve lost track.

Anyway, there was lots of food for thought in the Waitrose report, served up alongside all that ready-baked pun potential.

A few morsels:

• Waitrose dubs preparing dinner ‘the new commute’, with three-quarters of home workers using cooking to mark a divide between work and play.

• Some 69% of Waitrose shoppers think they’ll continue with online grocery shopping when normality returns.

• There’s been a 222% rise in interest in pickling.

• Rosé sales were up 57% year-over-year in Autumn, as the seasons went by in a blur.

• With coffee shops closed, sales of bean-to-cup machines rose 64%. (Here’s one I prepared earlier.)

• Cash transactions at Waitrose have fallen from 22% pre-pandemic to just 10% now.

• 58% of customers say they’ve secretly enjoyed the lack of pressure to go out.

As an active investor and stock picker, I’ve spent this year trying to divine what has changed and what has not in the wake of the virus.

I’m instinctively a skeptic of overnight societal shifts:

Nah. People love cities. Society is roughly never changed by one-off events. Americans I think particularly struggle with this. Europe saw major cities reduced to 2-foot of rubble in a WW2 and life return to normal. If (/when) technology changes things, it won’t be due to Covid.

— Monevator (@Monevator) November 23, 2020

I certainly don’t believe all those people who bought bean-to-cup coffee machines won’t soon be back in the cafes as much as before.

And I have to believe that the 58% of us who’ve enjoyed the freedom to lounge at home reading business reports on a Friday night will eventually feel the pressure to get back into the fray.

Cost conscious

What was most striking to me from the report though was what was not in it.

2020 was a year of economic turmoil, but you’d never have known it.

I’ve had a very good 2020, financially speaking, which is kind of depressing given what a rotten year it’s been. I kept my head in March and picked up bargains. This year to forget looks like being one to remember, seen through the heartless lens of returns.

It could have all gone differently, of course.

When The Accumulator wrote his seminal Do Not Sell post during the crash, he wasn’t thinking the market would bounce back within months. I guess it’s conceivable too that the vaccines wouldn’t have proven effective in trials, though that always seemed unlikely to me. There remains a risk we can’t vaccinate ahead of mutations, I suppose.

But one thing I would never have expected in March was that a supermarket could review this year without talk of shoppers cost-cutting, downshifting in brands, and buying in bulk to save money.

We now know it’s been a K-shaped recovery – the richer who shop at Waitrose have been far less affected by the economic tumult than those down the road at Tesco. But I’d still have expected financial hardship to at least feature, given the scale of the economic drawdown.

In many ways this is a clear positive. I posted in March that readers should prepare for a recession. We saw one, but for Waitrose shoppers – and I suspect most Monevator – readers it hardly felt like it.

However for me this gives a hint at the hard-to-fathom borrowings the country has taken on to soften the impact of Covid and its related disruptions.

The UK economy saw a record slump earlier this year. But unemployment didn’t soar and while there have been some bankruptcies, it seems small beans for anyone who was around in the 1980s, or even the early ’90s.

We rightly decided to offset the pain of this one-off and unforeseen external shock from the coronavirus. We can debate whether this or that anti-viral mandate was heavy-handed and made it worse, but it’s very hard to argue we shouldn’t have borrowed hard to keep the economy afloat.

The chancellor kicked tax rises down the road in his Spending Review. With the economy still shaky and bonkers Brexit imminent, that made sense.

But we will have to pay for all this one day. Something to think about when you’re next clicking for pickles at Waitrose.

Note: I expect we’ll discuss the economy in this week’s comments. Please keep it civil and on-topic. Virus-specific comment should go on our dedicated Covid thread. I get there’s a huge crossover but let’s try to keep this discussion finance and investment-related please, for wider reader enjoyment.

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