Hard Times Warrant a Second Look At Holiday Budget
First, determine how much of your disposable income is available. (There’s no law that says you have to spend it all!)
Next, write down the name of every person on your shopping list, and parcel out your available dollars among them.
“Write down a list of everyone you need to buy for and how much you can spend on each of them—and stick to it,” says Carbonaro, noting consumers should avoid the temptation to overspend just because they stumble upon a pricey gift that their loved one would enjoy. “If you have a budget ahead of time you‘re less likely to go crazy.”
Don’t forget to include in your holiday budget money for travel to visit family, holiday cards and postage, food, and any decorations you plan to buy.
“Include everything, not just the gifts,” says McKinley. “Food can get really expensive if you’re hosting a holiday event.”
Indeed. The National Retail Federation reports the average consumer will spend $95 on candy and food—as well as $51 on decorations, $32 on greeting cards and postage, and $23 on flowers this season.
Children are often a gift giver’s undoing.
After all, it’s fun to buy toys. And we all strive to deliver that one special present that fills the heart with joy.
Before you let your credit card get the better of you, though, keep in mind that kids enjoy the element of surprise—the unwrapping of each unexpected treat—as much as the gift itself.
“Use common sense with your kids,” says Richard. “If your children are used to big Christmases [and you’re on a tighter budget] give lots of smaller inexpensive gifts which are just as much fun to open.”
Porter adds you don’t necessarily need to spend the same amount on every child—as long as they’ve got an equal number of packages. (It’s only natural that older children graduate into more expensive gifts.)
Finally, she says, resist the urge to keep up with the Joneses.
If your child’s best friend gets an iPod and an American Girl doll it may be time to explain that some families have more money than others—paving the way for a healthy conversation about the non-monetary things that make the season special.
Family And Friends
When it comes to buying for the adults in your life, either friends, family or business associates, it’s entirely your call.
Porter says you should allocate your expenditures based on the size of your immediate family and circle of friends.
If money is tight, it’s entirely appropriate to celebrate the season with a pay-your-own-way dinner out with your closest friends.
You can also draw names so each person gives and receives a single gift or skip the exchange altogether this year if one or more of your friends is struggling financially.
“It works best if the person with the most resources makes that suggestion,” says Porter. “It’s really hard for the person struggling to have that conversation and as a result they usually go further into debt to keep up the status quo.”
Here again, McKinley says you should avoid the high stakes game of one-upsmanship.
Just because your neighbor gave you a $100 bottle of wine doesn’t mean you should blow your budget to reciprocate.
Stick with your plan and give the gift you can afford.
“If someone wants to be incredibly generous that doesn’t mean they expect to get that kind of gift back,” says Carbonaro.
There’s no magic number that will tell you how much to spend on holiday gifts this year.
It all depends on your income, job security and the number of people on your shopping list.
In today’s uncertain economy, however, keep in mind that gifts from the heart (a framed photo for Grandma, homemade cookies for your friends) can be far more meaningful and budget-friendly.
“No one wants a gift that someone else had to go into debt to get,” says Richard.