photo credit: Mark Sebastian

The wedding we attended this weekend presented an interesting opportunity for a wedding gift: Visa money gift card or a personal check to help fund a savings account. My wife’s cousin is a missionary in Africa and they didn’t have the traditional wedding registry with appliances, dishes, and bedding. They requested cash so that they could buy local items in Africa and save space while flying home. Typically my wife and I would go online and view a friend’s wedding registry for gift ideas. Should we treat this wedding any differently? Would you give them a Visa money gift card or a check?

What is your wedding gift budget? Do you have a set spending limit when purchasing gifts for a wedding? We typically spend $100, and I believe we spent $50 when we were first married. We budget a bit lower for baby showers and spend around $50. This might seem high, but we typically attend a wedding every two years. Our budget for this wedding was $100 and we couldn’t decide what was better: Visa money gift card or cash?

The Visa money gift card has some major drawbacks as a wedding present.

The Visa gift card charges a $4.50 sales charge to fund the card. That’s a 4.5% sales charge! That $100 would cost us $104.50.

The Visa money gift card has an expiration date and must be used before this date. An expiration date on money is not fair for consumers. How can you give a cash gift with this restriction? I have had 3 cash gift cards that have gone unused and expired worthless. I realize it was my own fault, but I actually forgot I had them. They sat in my wallet, and expired. Lesson learned, spend them immediately on groceries, gas, and necessities first. I would hate to give a Visa money gift card and have it expire worthless for them.

The Visa money gift card has a fee if the card is lost or stolen. You must register your card first, and then charged a replacement fee for the lost card. This Visa gift card had a $5.00 replacement fee.

Why should we give them the gift of cash?

They could deposit the check in a savings account or any investment account. It is 100% liquid and has no fees or expiration dates. Better yet, they could start an emergency account and set aside funds for unexpected expenses. This could be a great start to a young marrieds family budget. Save up that first $1,000 and then move on to establish a short-term savings account. Would you buy a Visa money gift card or a cash gift for a wedding present? Have you ever written a personal note in your wedding gift card encouraging them to utilize the funds for a savings account?

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I recently talked to a friend about an unexpected car repair he was facing for $900, and he was going to tap his savings account or home equity line of credit for the bill. My friend is a great saver and does live a very frugal lifestyle, but life happens, and this car repair caught him by surprise. Many great finance and budget coaches talk about an emergency savings account that is used for unexpected expenses. A flat tire, cracked radiator, broken dishwasher or temporary loss of job, are all examples where an emergency savings account would be helpful. If you are one of the few who have a savings account in the U.S. or even an emergency savings account, you are way ahead of the curve. Most Americans carry over $9,000 in debt and have very little in savings. I would think that if you dug a little into the data, you would find the $9,000 in debt paid for many emergency repairs.

My wife and I had no savings for the first few years of our marriage; and spent every dime on debt repayment and living expenses. I had always read that the goal for each person, should be 3-6 months of living expenses in an emergency account. That’s a ton of money for the average family. If you make $40,000 a year, you should have saved between $10,000 and $20,000 in emergency savings. Who can do this? Well, if you are like many Americans, you can’t yet.

Many experts recommend that you start somewhere. My wife and I started putting aside $50-$100 a month until we reached $5,000 for an emergency account. We were living in an apartment in San Francisco and only had one car. Not a lot of emergency expenses then. Now, we have many. With a house, two kids, two dogs, and two vehicles, comes a lot of emergency expenses. Start with a few dollars and build something, anything. If you can’t save $50-$100 a month, cut something out of your budget. This may take some work, but you can do it. I’ve cut out lot’s of things from our families budget in the past. Starbucks, dry cleaning, movies, dvd rentals, and hair cuts. Have your wife cut your hair, and you could save $200-$300 a year.

If you are just starting out, set a goal of $1,000 for your emergency savings account. You will be excited the next time you can use your cash, rather than a credit card for life’s emergencies.

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