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Why We Spend So Much Time and Money on Gift Giving

By Lauren Szeto

Photo by Superkitina on Unsplash

This is Part 15 of the series Money on Your Mind, a blog series created to help you understand the link between your brain and your spending habits in order to make you the best at managing your finances.

Winter is a capitalist’s dream. Holidays pile up and help fuel the joyful gift-giving season. As festive as you may be, your wallet likely cries in anticipation of the money you send off every year. Why do we often spend over this gifting budget and how can we cut down? Let’s find out.

So, why do people give gifts?

1. Gifts for others are gifts for ourselves

Often, we give gifts for special occasions like birthdays, anniversaries, graduations, and more. These events are usually significant or monumental, making us want to give appropriate gifts for each occasion. Since receivers usually associate each gift with the giver, givers are motivated to give exceptional gifts that will make the recipient feel delighted. On the flip side, giving a bad or cheap gift can leave a bad impression and can make the recipient feel as if they aren’t cared for. By giving good gifts, givers boost the positive connection between them and the recipient, pushing givers to spend more on the right gift.

Aside from preserving one’s reputation with the recipient, givers inherently feel good about giving. When receivers enjoy a gift, givers will feel satisfaction knowing that they understood the receiver’s wants and were able to make someone happy. The gift gives an outlet for the giver to exemplify their true appreciation and admiration for the receiver. The growing bond that is made with a good gift that shows care makes givers and receivers feel like they are becoming even closer. Givers will be inclined to “go big” when buying gifts in order to please the recipient as much as they can.

  1. It’s Human Nature

Photo by Coco Tafoya on Unsplash

why do we give gifts

According to Charles Darwin, the scientist credited with the theory of natural selection, fitness is defined as how much an individual contributes to the next generation’s gene pool. In other words, Darwinian fitness is how many healthy children you are able to produce and raise to adulthood. Following this, people tend to spend more when it comes to their families. In order to promote the success of the entire family’s Darwinian fitness, people are more likely to spend on their immediate and close family to support them and promote the spread and success of their genes to future generations.

To break it down even further, people tend to spend the most on gifts for their children, then significant others, followed by siblings, and finally best friends. When it comes down to it, people are often willing to spend more on close friends than more distant relatives. Even though humans will be naturally inclined to help their bloodline, the support one feels from close friends emphasizes the fact that your relationship is mutually beneficial. To encourage this bond, you will likely spend more on their gifts.

3. Gift giving is a cycle

Once someone gives us a gift it can be said that a ‘debt balance’ has been started.This happens because usually gift giving comes hand in hand with reciprocation; we want to match social expectations and communicate to other individuals we care about them and our relationship. Gifts become the physical representations of relationships and not showing reciprocation may communicate disinterest and indifference. In short words, in order to avoid awkwardness gifts must eventually be repaid.

Types of gifts:

Some ideas can include scrapbooks, personalized picture frames, “Open when” cards, and even more. If you’re expected to buy a gift at a higher price point for events like weddings, all you need to do is invest some time into your gift. Self-made gift baskets can be rather affordable because you get to choose exactly what goes into it. Find a nice way to arrange and decorate your present and you are all set. You can choose a theme for your basket to set up a cute date in the future or include more general items like matching mugs, towels, blankets, snacks, soap, bath bombs, and other self-care items. If you’re not looking for an arrangement, try personalizing or decorating items like cutting boards, plates, vases, and more. You can show people in your life that you care about them without splurging!


With both societal expectations and human tendencies working against you, it is definitely harder to save your money rather than spend it on others. Even though gift-giving is often thought to be focused around the recipient, givers benefit just as much. Knowing this, you can make your gifts thoughtful and personalized without dropping a ton of money.

psychology of gift giving

Photo by okeykat on Unsplash

Here is a little gift from us to you: We invite you to try Nova, a fintech app which will make you the best at money management. Connect your bank account and track all your bills. Your personalised AI coach will help you save money and the more money you save the higher you level up! Start your financial journey today!

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