The search for the perfect gift may get you thinking green this year - not in an environmental sense, but rather a monetary one. Financial gifts can be generous contributions to friends and family, or even a generous contribution to your own retirement. Each has potential benefits and drawbacks that you should be considering before you start stuffing those gift-money envelopes.

Gifts for Friends and Family
Despite the finger shaking of etiquette experts, most folks are happy to accept a gift of money. When you give funds, however, it's critical to know your limits so you avoid penalties for your largesse.

Cold, Hard Cash
You can give cash to anyone - children, relatives, or friends - but for those who are not your spouse (to whom you can give every dime and then some) you must limit your generosity. In 2007, you can give up to $12,000 per year per person - and married couples can combine forces and double the lucky recipient's gift.

Get too generous and you'll be subject to the so-called gift tax, which taxes you, the donor, for giving away your money. A direct contribution loophole, however, lets you pay for another's education or medical care. This means that you can pay tuition for your niece in art school as long as you pay the institution directly.

Securities in the Digital Age
Giving stocks or bonds demands a somewhat intimate relationship with your recipient: you'll need the person's Social Security number so that the security can be legally held in the recipient's name. Securities are considered property, so the same gift tax that applies to cash can apply here as well. (For related reading, see Holiday Gifts For Financial Geeks.)

A few online sites let you buy one share of stock and send the stock as a framed certificate. Oneshare.com and Singleshare.com work like your standard online retailer, offering menus for choosing the right stock for your coffee-loving mom or your cartoon-crazy nephew. You essentially pay above the market value for the stock - but your recipient gets a framed certificate with a personalized engraving.

A conservative securities option is to buy U.S. savings bonds, which you can buy directly from the Treasury at no fee. Savings Bonds pose less risk because they have a guaranteed repayment amount and they gain interest for up to 30 years. The annual limit for buying bonds is $5,000 per Social Security number, per bond type. That is, you can buy $5,000 worth of electronic and paper bonds of each series, Series EE and Series I, or a total of $20,000. To buy bonds electronically, you and your recipient must have TreasuryDirect accounts. You can buy paper bonds at any financial institution - but it may take up to three weeks to receive them. (To learn more, read The Lowdown On Savings Bonds.)