The holidays are here! It’s that special time of year when people get together with friends and family to celebrate, enjoy each other’s company and exchange gifts.
For many people, it’s their favorite time of year and for good reason. Who doesn’t enjoy taking a little time off from work and spending time with your favorite people? Receiving a couple of gifts is nice too.
Maybe some good food or drink will be involved? Just don’t overindulge, or you may regret it later. When was the last time you had a hangover? It’s no fun.
And, I’m not talking about an alcohol induced hangover – those go away in a few hours. I’m talking about the financial kind that can stick with you for months or even years. If you do get carried away this gift giving season, you won’t be alone.
According to a holiday debt survey from 2015, the average American who takes on debt during the holidays will wrack up almost $1,000 on their credit cards. If they make minimum payments on their credit cards, it can take years to pay back.
How do you avoid becoming a statistic? Like most financial matters, the answer lies in developing a plan and sticking to it. Here’s how.
Whittle Down Your List
The first step in getting your holiday spending under control is in making a list of everyone you plan to purchase gifts for. Make sure to include everyone, even the mailman, piano teacher or your kids’ teachers if you go that route. Once you write them all down, you may be surprised how many are on there.
Now prioritize the list and ask yourself if they really need to be on that list anymore. Still giving your nieces and nephews gifts even though they are in their late twenties and out on their own? Maybe that’s excessive. I’m not asking you to be a grinch, but you shouldn’t be gifting out of habit. Make sure your gifting still makes sense.
What about adult siblings or parents? If you have a big family, this can really add up. Not only is gifting expensive, but it can be stressful as well. What do you buy an adult who can afford any reasonably priced item that you might otherwise gift them? It’s kind of a hassle and might be taking the joy out of the holidays trying to come up with something.
Several years ago, my wife and I agreed with our adult siblings and parents that we weren’t going to get each other gifts anymore over the holidays. This was after several of us already had kids and there was already so much gifting going on with them, it was just getting to be too much.
We were nervous about broaching the subject, but we were pleasantly surprised that they all agreed and were relieved as well – so much less stress! We do a silly white elephant gift exchange game sometimes instead, which is so much more fun…and less expensive.
Create an Initial Budget
Now that you have a more reasonable list of people to buy gifts for, put them in priority order. For example, your kids are probably a higher priority than the postman, etc… Once you have a prioritized list, assign a maximum dollar value for each person that you do not want to exceed.
You’ll probably find that you are putting the highest dollar value to your highest priority people. If you are not, then you should re-think if your priorities are right.
Add up the value of gifts on your list and you now have your budget. A little high for your taste? Well, you’re not done yet. You don’t need to spend that much money on everyone.
Save Your Cash
Just by setting and sticking to a budget you will be setting yourself up for success. But if you want to save big, then start thinking about the real reason behind giving gifts. It’s to show appreciation and thoughtfulness. Why not do that with some fresh-baked cookies instead of a $30 “as seen on TV” gizmo?
Giving your kids a plate of brownies for Christmas is probably not going to fly, but it might be just the right thing for their elementary school teacher. Be creative about where you could make something to gift versus purchasing something.
Not only will you save some cash, but if done properly, the gifts may even be more appreciated! Not many people take the time for homemade gifts anymore.
Create a Final Budget
Now that you’ve prioritized your list and swapped out some homemade gifts for purchased ones, finalize your budget. Do you have that much money to spend? Don’t feel obligated to spend if it’s too much.
You can always increase the number of people receiving cookies this year if you have to. Or, what about writing a truly heart felt card to someone instead of getting them a token gift?
Once your budget is finalized it’s time to shop. My best advice here is to shop with plenty of time. Look for sales and make sure to shop around for the best price on items that you are going to purchase.
Also, if you get something for 50% off, don’t feel like you need to spend up to the budget you set for that person. A $50 item purchased at 50% off is still a $50 gift in my book!
Track Your Spending
As you go through the season and purchase gifts, keep track of what you are spending. Not only will this help you to make sure you are not going over budget, but this will be a good starting point for next year.
Don’t remember how much you spent on little nephew Steven last year? Just check your list!
Enjoy the Holidays
Remember, the point of the holidays is to enjoy time with friends and family, while giving and receiving some gifts as well. It is NOT supposed to put you thousands of dollars in debt and stress you out over picking just the perfect present!
So, this year, make a plan, stick to it and enjoy the holidays with one less thing to worry about. You may still end up hungover at the end of it all, but at least it won’t be a financial hangover and you’ll get over it quickly!