How Do I Navigate Holiday Gift Giving on a Budget?
The holidays are the best of times, but they can also be the worst of times if your budget and wallet are unprepared!
How do we fix this? At Prosperity, we don’t promote one size fits all approaches to personal finance, but we do have some ideas that may speak to a broad audience.
We’ve definitely said this before, it’s about the five P’s: Proper Planning Prevents Poor Performance. So, how to we properly plan? We see a few options here. We think it’s profoundly important to have a conversation with those who you may exchange gifts with to establish ground rules for gifts. “Can we all agree this year to spend no more than X dollars on holiday gifts?” is something you may be able to say to a family member or loved one. If you’re uncomfortable talking about your financial situation, you can simply say “I’d like to prevent holiday spending from getting out of control. What do you say we agree on spending X on presents this year?” If setting boundaries is difficult for you, consider strategizing with your therapist and preparing for this conversation in advance.
Beyond setting boundaries on amount spent, we can save up a fixed amount as part of a sinking fund. As you may recall from prior posts, a sinking fund is for known expenses such as travel, car maintenance and repair or really anything you know about in advance. If you save $25 each paycheck from January to November and you get paid bi-weekly (meaning every other week), you’ll have saved up $600 as a holiday budget. Not too bad! Alternately, if you’d like to reach $600 and start in September, you’d need to put away $100 a paycheck. We all knew that math though, didn’t we?
For those who have the capacity in their budgets, Prosperity often recommends having a standing budget item for gifts. Typically this is not as big of a number year round as it may need to be during the holiday season, but for folks who enjoy giving gifts it is nice to have this as an ongoing item.
For those who have neither capacity to save for the holidays nor room in their budgets for a standing line item, we recommend a few approaches to gift giving. First, if a physical gift is important to give, we suggest DIY gifts. Whether that’s a hand knitted scarf or a decorated picture frame, that’s up to you but DIY can be effective in lowering costs as well as creating a nice way to pass the time on nights and weekends. Be careful about cost creep and think about what you have at home or easily accessible before making a $200 run to the craft store!
Second, if it’s more about the act of giving than giving a material possession we have some ideas for low cost gifts. For the most part, they are from the category of “acts of service” if you’re familiar with the five love languages. Think about ways you can give your time instead of your money. A coupon book filled with favors may be a good gift for a close friend or family member. I have personally gifted friends with kids free nights of babysitting in the past- costs me nothing and gets me quality time with kids I like while my friends get a much deserved break. If you’re adept at cleaning you can gift a house cleaning, but we’d recommend being sensitive with this one. The hoarder relative in your family may not appreciate this gift, use your best judgement on gifting this wisely! Some other acts of service you can gift are homecooked meals, teaching or sharing a skill you have (we all know something!), yardwork services or taking care of the dog while someone’s on vacation are all gifts that could land well with the right friend or family member.
Remember, the holiday season is about spreading and increasing joy. Gift giving should be a positive experience, not a negative one!
