Della and Jim enjoy a close, loving relationship as husband and wife. What they lack in money, they more than make up for in love. With Christmas coming up, they want to express their love in time-honored fashion through the exchange of gifts. Unfortunately, because Della and Jim are so poor, they have to resort to desperate measures to buy each other Christmas presents. Della sells some of her beautiful locks of hair to a fancy salon to buy Jim a gold watch-chain. For his part, Jim sells his gold pocket-watch to buy Della a set of fancy combs that she has so long admired.
Although both Jim and Della have effectively ended up with useless gifts, the love they share remains stronger than ever. They realize that this love is so much more important than any gift, or anything else that money can buy. And that's what makes them wise, just like the Magi, or three wise men, who made their way to Bethlehem to bestow gifts upon the baby Jesus.