How much can I
Spend on holiday gifts?
The holiday season is a popular time to spend money, especially when you’re buying extra food, decorations, and gifts for all the festivities you have planned. In 2020 alone, Americans spent roughly $188.2 billion online buying gifts. This was a record high for online sales, not counting all of the transactions done in store. It may be no surprise then that the total is expected to grow this year, with a projected $207 billion in online sales.
With all this money exchanging hands, you might be wondering (or worrying) about your own holiday plans and how you’re going to stretch your dollars to make sure nobody is forgotten. We want to help. A common question we get asked this time of year is “How much money should I spend on holiday gifts?” If you create a monthly/weekly/yearly budget already, this will be easier for you to calculate, but don’t worry. Even if you don’t have a budget set up yet, you can still stay on track with your spending this year.
What percentage of my income can I use on gifts?
As you’ve heard time and time again when you’re giving gifts, it’s the thought that counts, not the dollar amount of the object. Your family and friends are important to you, but that doesn’t mean you need to go broke to show them how much you love them. No matter how much money you make, you should plan to spend only 1.5% of your gross yearly income on gifts for everyone on your list. Make sure you’re putting some money aside each month from your paycheck so that you have this amount ready to spend as you shop. Then you won’t have to worry about having enough money for your regular monthly expenses.
How do I decide how much money to spend per person?
Now that you’ve calculated how much money you have to work with and have saved that aside, it’s time to make a list of people you want to buy gifts for. You may feel pressure to get presents for all your neighbors, your kids’ teachers, and maybe even your parents’ dog, but that may not be so great on your wallet. Take a minute to sit down and prioritize those you really do NEED to get a gift for versus those you can skip this year. Once you have the full list, you can divide the money you have saved up by the number of people on your list so that everyone is awarded the same amount. Or you can adjust by importance so that close family members have a higher dollar amount vs an acquaintance, for example. Just make sure you aren’t going over your original budgeted amount as you adjust for each person.
What if someone gets me a gift but I didn’t plan to buy them one?
It is the season of giving, so someone is likely to get you a gift that you weren’t expecting. If you plan ahead, you may have some extra money in your gift budget to cover those unexpected surprises. However, if you are caught completely off guard and don’t have a lot of extra cash to cover that person’s gift, you’ll have to get creative.
Do you have a skill that you can offer to them for free or at a discount? Do you sculpt, paint, sew or bake and have supplies already on hand to make something? If you’re short on time, try involving the whole family so that it’s more sentimental to the receiver and takes some of the pressure off yourself.
If you can’t think of something creative to make or don’t have a skill you can offer, you can also try regifting certain items in your house that you don’t use. Keep in mind, if you do use this tip, don’t regift things to people that they may have originally given you. If you can’t remember who gave it to you, don’t regift it.
How do I stop overspending on gifts?
If you constantly find yourself overwhelmed each holiday season and wait till the last minute to shop, or if you feel pressured to buy top-tier gifts for everyone, it may be time to create a spending plan to avoid hurting your wallet even more.
Once you have your gift list made and have assigned spending limits to each person, it’s time to search for deals. The key to getting good deals is to start shopping early. If you didn’t find what you were looking for during Black Friday or Cyber Monday sales, it’s time to do some good old comparison shopping by looking through ads, stopping in at several different stores, or comparing different online offerings.
Then, every time you make a purchase, track it, either through an app or notes system on your phone or even with a pen and paper. Remember, you don’t have to spend the full amount of money you assigned to each person either. If you’re a few dollars below on one person’s gift, save that money for another holiday activity or another present that ends up costing more than you thought it would.
As you get through the holiday season and plan for next year, remember it’s never a bad idea to open a separate account that holds all your holiday cash throughout the year. This gives you one less thing to worry about during the stress of the holiday season and will keep your finances on track. To open yours, call or stop by your local branch to speak with a qualified banker today!