The hidden cost of gifts

By JOHN KARIUKI

Some gifts often come with a hidden cost to both the giver and receiver before their full value is realised. But many people rarely ever recognise the dent that these gestures of kindness and goodwill can do to their finances.

But as consumers get smarter and keep track of their spending to attain financial freedom, it is important to know what gift giving or receiving means in financial terms.

Stanislaus Owino, a civil servant, says he was among the first among his friends to own a personal computer when the gadgets were still novel in the early 90s. The computer was a gift from a friend who lives abroad.

He rearranged his living room to create space for the computer, then hidden costs began counting.

The most immediate expense was buying a computer table for Sh15,000, that was at that time only available in leading supermarket outlets. "I enrolled for computer classes an exorbitant fee at that time,"he says.

Owino realised that the computer had to be reformatted and hired a technician, who charged him Sh5,000. "To install speakers, a printer and an antivirus programme cost another Sh30,000 bringing the total to Sh35,000," says Owino.

Owino now realises that had he resisted the computer gift or dumped it in his house without much thought , he would have acquired a computer cheaply years later. He would also have learnt how to use it free of charge thanks to skills upgrading programmes at his workplace.

wear off

Wiser from this lesson, Owino advises people not to rush for gifts that are too new, but rather give them some time for their novelty and hidden cost to wear off.

"I have over the years declined to accept a gift of a rare model of an American car on account of what it would have done to my finances," he says.

He checked the Internet and found out the factory that used to manufacture the car had long closed down.

Kate Kamau, an accountant, budgets her personal expenses to the last coin. But a few years ago she noticed a small dent in her monthly expenditure. Alarmed, she decided to strictly monitor her expenditure.

The anomaly in her spending coincided from the time she had bought her parents a mobile phone.

"It quickly dawned on me that I had been spending at least Sh2,000 extra in buying airtime so that my parents could enjoy the convenience of the gift," she says.

This is the hidden cost of the gift of the phone that she has since managed to factor in her monthly expenses.

Kamau has now learnt that it is imperative of gift givers to seriously consider footing the hidden and consequential costs of their presents if the recipients are not in a position to do so. "Otherwise some gifts would be of no meaning to recipients," she says.

Noel Wachuka, a beauty therapist, concurs with Kamau. Wachuka bought her ageing father a a suit worth Sh5,000. But the hidden cost of wearing it was another Sh5,000.

"My dad pointed out that the suit would require a new shirt and shoes to complement it," she says.

Later, it emerged that the suit needed to be accessorised with a hat, a briefcase and a walking stick. All these expenses were loaded on her.

During the World Cup, Wachuka wanted to buy her brother a TV set worth about Sh20,000 to watch the matches.

But on second thoughts she shelved the idea. "There is no electricity at our rural home and the gadget would have required a battery to power it," she says.

Realising that the cost of the battery and its installation would cost Sh8,000 she shelved the idea. "I have now learnt my lesson and I am in no rush to give gifts whose continued usage and real value I cannot guarantee,"she says.

wall unit

Harris Wachira, a financial planner, wanted to surprise his fiancÈe with a new wall unit he had bought for Sh20,000 at an auction.

He had even hired a van and given the crew directions on where to deliver the gift when a sudden thought descended on him.

"The previous month I had given my fiancÈe an evening dress worth Sh9,000, but she ended up spending Sh10,000 to buy new handbags, shoes, scarves and other accessories.

"So, before the van left, I realised that the new wall unit might mean her changing the interior decoration of her living room with new colour schemes and possibly buying new curtains to match this piece of furniture," he says.

This would have been costly and she was saving for her higher education. And since Wachira was saving to buy a car, he could not foot the hidden cost of the wall unit. He redirected the crew to deliver the wall unit at his house.

Wachira advises people to think twice about the gifts they give or receive and see if they are better of without the present as the hidden cost can easily lead to unplanned debt.

 

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