Ask yourself: do I actually know what I most enjoy spending money on?

Late last year, I participated in #NOlayawayvember. I learned about this concept from another financial advisor, Tyrone Ross. He reminded our community that many people each year put toys on layaway at stores like Walmart. They’ll assume almost any financial risk to ensure they have at least one present that will make their kids smile during the holidays. Some even use their EBT cards (i.e., government food benefits) to complete the transaction.

The Relationship Between Spending and Value

These families understand the relationship between personal values and spending money. The many other families who stretch to save for gifts also can relate. The parents know they would benefit from allocating their money to other financial priorities. Yet, they also know how much joy this less “optimal” use of their money will bring to them and their loved ones.

We all can see each December the outsize status that consumerism has in our society. The issues associated with this aspect of our culture are real. Yet, we prematurely label some people as materialistic without knowing what they value spending money on. We don’t see the common purchases that people choose not to make in order to spend lavishly on certain items. We assume we’re witnessing undisciplined, frivolous spending.

Spending Values Aren’t Always What They Appear

In reality, “value” looks different across different personalities and financial circumstances. This year, the most generous gift that my kids received received was a pair of headphones. For almost any family, these headphones are a notable gift due to their price tag. In our case, they received them from a family member for whom that amount requires particular sacrifice. She found them on sale during Black Friday shopping, which enabled her to make the purchase. The values expressed with this gift were immediately clear to me, as she:

• Kept them in mind on the craziest shopping day of the year
• Thought of a gift from which they would benefit (instead of quickly wearing out another set of cheap headphones)
• Decided to spend a little bit more than she likely preferred
• Gave up the opportunity to buy a similarly priced item for herself

Spending Offers its Own Financial Lessons

As a young parent, I most struggle to accept spending values when grandparents give gifts. Grandparents (with enough resources) have a bit of a reputation for giving way too many treats and gifts. On these occasions, parents inevitably spend their time trying to manage their child’s extreme behavior. In my recent experience, this ranges from rude disinterest to Halloween-candy levels of energy.

The kids, as passive participants in the gift-giving dynamic, are pretty blameless. They only have their hearts set on receiving one or two toys for the holidays. And once they’ve opened those items, they just want to play. Left alone, they might not even bother opening the remaining presents.

The excess toys are there for a good reason, though. The grandparents aren’t trying to introduce extra chaos into the house during the holidays. They’re even aware of the early financial lessons — gratitude, needs vs. wants, the concept of “enough” — that parents work to instill throughout the year. Rather, they just really value spending their money on this occasion. There’s not much more they want to use their money for than seeing a child’s eager expression as she unwraps a gift.

Cash Is the Best Gift, Except for When It’s Not

Research has shown that, in theory, cash is the best gift to give. Viviana Zelizer is a Princeton sociology professor and the author of “Economic Lives: How Culture Shapes the Economy.” She once noted that “many economists see cash as the most efficient gift, because it allows recipients to choose exactly what they want.” I’ve reached an age at which I embrace this argument. Still, I can’t begrudge anyone who rejects the logic. From my perspective as a financial advisor and parent, the theory fails to address the gift-giver’s value calculations.

What Are Your Spending Values?

Most of the couples I work with express an interest in budgeting their spending better. They often seek to pull extra savings from their tight monthly cash flow. The question that I usually ask first sounds simplistic: do you know what you most enjoy spending money on? Once they do, the key to progress depends on demoting any other expense that doesn’t qualify as a necessity.

This exercise makes the most of the money that they have. It also increases the odds that they will feel positively about the financial decisions they’ve made. Many of my clients make regretful purchases when they’re tired or stressed. Ironically, they could learn a lesson from people who intentionally spend abundantly — whether that’s one gift or 20 gifts — during the holidays.

The Millennial Grandparent Dilemma

I’m eager to see how I’ll handle this decision if I have grandkids at some point. As a parent today, I think we would benefit from more visits from family members than more material items. After all, we’re Millennials, and our preference for “experiences” over “stuff” is well documented. I suspect, though, that I won’t feel the same way if I’m a Millennial grandparent. When grandchildren factor into how I value holiday spending, I imagine I’ll be happy to reduce any number of other budget items as well.

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Kevin Mahoney, CFP® is the founder & CEO of Illumint, an independent firm in Washington, DC that offers financial planning for Millennial parents. He specializes in navigating the new financial decisions that arise during our 30s and early 40s, such as repaying student loans, buying a house, saving for college, & investing for the future. In addition, Kevin also leads a financial wellness benefits program for Millennial employees around the country, including group speaking engagements.