With the Holidays looming like the shark from “Jaws,” it might be time to say “we’re gonna need a bigger bank account.” This week, I want to talk about gift giving for the holiday season (or any time).
Do We “Need” Gifts?
The best thing for everyone’s wallets, the environment and the general piles of stuff that most Americans have stacked around their homes is to just not purchase gifts for one another. Some couples and families do this and it works out well for them as there is no expectation and therefore no letdown if the gift isn’t something they want or needed.
However, I know that this is not realistic for most. For example, I tried asking my wife is she would be willing to do this and her response was simple: “No.” I understand the position and appreciated the honesty as to avoid any disappointment when I did not give a gift.
Something in Between No Gifts and Many Gifts
We’ve settled on a nice agreement between the two of us. For most of the year, birthdays, valentine’s, etc.. we do either a very small gift, just a card or a special meal at home together. For our anniversary, we plan a weekend getaway together, usually paid for with credit card points. Then, Christmas is our big holiday. We get each other 4 gifts plus stocking stuffers, which are usually just some small gifts. These are the loose rules we use for our 4 gifts:
- Something you want
- Something you need
- Something to wear
- Something to read
This method has worked very well for us over the past couple of years and I’m sure will continue to do so in the future, but the key to any arrangement you may have is flexibility. We’re not dead set on this plan so if it ever doesn’t work, we’ll adjust.
Another option, especially if you are a member of a large family is to do a Secret Santa with extended family. Doing this avoids having to purchase 20 gifts for all of your first, second, third cousins and their children. Within immediate family, you may want to do something different, but at least minimizing the number of gifts that need to be purchased for extended family can do two things. One, it’s obviously cheaper and two, more energy can be spent on finding your one person a gift that they will really appreciate and use.
Giving “Good” Gifts
Part of the main problem with the holidays I find is that I have a hard time figuring out what to get others and what to tell others to get me in the moment that they ask. I don’t know about you, but I’ve had many, many gifts over the years where I appreciate the thought, but the item is never something I would use, or it needs to be exchanged, etc. Ideally, I would want any gift I give to be something that really makes the person happy and is something they will use.
This year, however, we’ve started keeping track of what we would like through wish lists. We’re currently using the platform Gifthero.com to keep track of the items that we want. This ensures that we will only get things that we want and will actually use. Another plus of this method is that unlike Amazon wish lists, we are able to add items from any website that we want.
Now, I don’t have to try and come up with something on the spot. I can just send my list to someone and they can buy it through the website to then show it as purchased, similar to a registry. So far, we’re pleased with how this has been going and we will let you know how it works out after the holiday season.
Saving and Paying for Gifts
Every year after the holidays, there is a story that comes out about how Americans racked up debt to pay for the festivities. As of last year, that amount was just over $1,000. Now, I know that this is a finance blog, but I’m not going to say that this is an unacceptable amount to spend on the holidays. What you spend needs to be based on what is important to you. If your family loves going all out for the holidays, DO IT!
What I would recommend though is taking the time to figure out what was spent on last year’s (and the year before that if you can get that information) holidays. Then take that number, divide by 12 and save that amount every month in a sinking fund. By next year’s holidays, you will have enough money to spend without the added stress of financially strapping yourself. For example that $1,000 that most go into debt would be about $83/month, which is a much more manageable amount to set aside.
That’s a great strategy for next year and all of the following years, but what about this year? Well, there are still 7 weeks left until the end of the year. The best things to do now would be to spread that spending out over those 7 weeks, set aside some money with every paycheck you get between now and the end of the year and to plan:
- Make a list of everyone to whom you wish to give presents.
- Plan what (generally) you would like to get them.
- Use that list to plan out your spending and hunt for deals on what you would like to get them.
- Set up price alerts on these items.
- Check pricing during Black Friday, Small Business Saturday and Cyber Monday.
- Buy presents gradually to avoid one big hit to your budget.
The giant sales may not be a bad thing. Just like grocery shopping, the only thing is… you need to stick to the list! That’s why you spent the time and energy thinking of what everyone would want in the first place. If you did happen to find something else that they’d like more and it’s approximately the same cost as what you already had listed for them, then okay, but be careful with this as it can easily cause you to ditch the list entirely.
Wrap It Up!
The holidays have been deemed one of the most stressful times of the year. A large portion of this is due to financial stress. If you can take this off of your plate, then you can focus on the fun parts of the holidays, like decorating, making cookies with the family and embarrassing your family by singing off key (that might be just me). As a last thought, I’ll leave you with this:
The point of saving is to relieve financial stress so that you can live your life without always worrying about your budget!
What other gift giving or savings techniques do you have? Let me know in the comments below!