This year, consumers say they will spend an average of $1,007.24 during the holiday season, with $647.67 of that allocated toward gifts, according to the National Retail Federation.
But not all of that money is wisely spent, according to Kevin O'Leary, star of ABC's "Shark Tank." He says there's one thing in particular that is a waste of money when it comes to gifting.
"You know the biggest waste on holidays? Is buying people clothes. Because they always open the box and say, 'Oh I love this!' They never wear it," O'Leary tells CNBC Make It.
Indeed: A 2017 survey from YouGov found that 47 percent of people who received a gift that didn't fit, such as a sweater or boots, exchanged it; 32 percent of people just put it away and left it to collect dust and 19 percent simply threw it in the garbage.
"Unless you really know the style and the desire of the person you're gifting clothes to, don't do it. Because it just ends up being returned," he says.
That's not a very good return on investment. "You went to the trouble to go buy it, you went and searched it out, you went to the store. You spent all that time doing it," O'Leary says. "And the next thing they do ... is go return it? What a drag."
O'Leary tells CNBC Make It that his go-to gift for the holidays is cold hard cash. He also likes giving watches. ("You don't have to go nuts; there's all kinds of different models out there, whether it's electronic or classic, but very often they're well appreciated," he says.)
"Think about practical gifts," O'Leary adds. "Don't buy them another sweater."
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Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."