Why give a family member some useless item that will only take up space until it is donated to charity or regifted? (If you're a regifter be honest.)
I think the closer the relationship, the more appropriate it is to give cash. If you are distant, perhaps a gift certificate to a desirable retailer is less awkward. (Tips for service are another matter.)
If friends have a special need (like mounting bills due to illness), consider being their secret Santa, if you can afford it. That could avoid any embarrassment.
Grandparents often give cash to their grandchildren, and I think it opens up an opportunity to teach kids a few lessons in money management. Have you noticed how much harder it is for kids to part with their own money then it is when you buy stuff for them? It's not uncommon for a child to be more deliberate when spending his own money. Having to consider a budget is good training for later in life.
Toys and gadgets run on batteries, so I like to get them to think about those as part of the expense too. Batteries don't grow on trees either. Somebody has to buy them. As a rule of thumb, try not to add money to the Christmas, Hanukah or birthday sum, so a child can buy a more expensive gift; but if you must, cave on the batteries. You don't want your kid to end up in tears. Keep the lesson fun.
If you're giving cash, you can still take the time to present it cleverly, if you wish. A money box with festive ribbons and bows is a darling idea. Be creative ... without damaging the money.
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