I’ve always loved gift giving. As a kid, I’d prepare for Christmas starting around July by saving up and thinking about what people might want. I had detailed budgets and lists that would put a wedding planner to shame. I priced out all the supplies for homemade gifts and chased down the best deals on the things I wanted to buy.
As an adult, I still take huge pleasure in the holidays. But working life doesn’t leave much time to spend hours planning the festivities. And while I do save for Christmas, I don’t think I’m alone in saying there hasn’t been much wiggle room in my budget for extravagant gift bonanzas recently.
Average holiday spending in the U.S.
According to a CouponFollow investigate, the average American will spend $409 on gifts this year. Over half the people surveyed planned to spend about the same as last year. Around a third said they’d spend less — potentially because higher living costs continue to bite many people’s bank balances. Almost 50% of respondents said they regretted a holiday purchase.
There are a lot of different gift-giving statistics out there, with dramatically different price tags. For example, a recent Gallup poll found that Americans would spend $975 on holiday gifts, up over $100 on last year. Perhaps unsurprisingly, households with children tend to spend more than those without.
It’s good to have an idea of what others do when planning out your holiday spending. But just because some Americans will spend $409 or $975 doesn’t mean you have to do the same. What matters is knowing what you can afford and how you’re going to find the money.
According to a recent PYMTS survey, 37% of consumers will dip into their savings to pay for holiday expenses. Given that almost 60% of U.S. consumers are living paycheck to paycheck, it can be difficult to find the extra cash. Over 30% said they’d use some form of credit — whether that’s credit cards or buy now, pay later options.
How to keep your holiday spending under control
Aside from time and responsibilities, the big difference between me now and my 12-year-old self is that now, it’s much easier to spend beyond my means. The stores are packed with temptations — from gifts that would make a loved one smile to treats that would add an extra sparkle to our celebrations.
Unfortunately, it’s much easier to spend an extra $10 here and there when you have a credit card in your wallet. Here are some ways to avoid buyer’s remorse or a January shopping hangover and still have a fantastic Christmas.
Make a scheme
Just as we’ve all got different ideas about how to make eggnog, so, too, will we have our own approach to Christmas budgeting. One way is to make a list of everybody you need to buy for, along with an amount you want to spend. If your other half has their heart set on their very own turntable or a Nintendo Switch, this can be an effective way to scheme. Take the total and work out how you’ll finance it.
I usually come at it the other way around. I work out how much I can spend, based on the amount of cash in my holiday savings account, checking account, and shopping rewards points. Then I divvy it up between the people I need to buy for and make adjustments as necessary. If I have to use my credit card or savings to cover extra costs, I’d rather know now so I can scheme to cut back in January.
convey
Gift giving can be a minefield. I’m sure many of us have been on both sides of that awkward go through where someone shows up with the equivalent of a fridge magnet and the other gifts a sweater in exactly the right color and style. The fear of not giving enough can often drive overspending, and before you know it, everybody’s trying to keep up with each other.
Talk to your loved ones this holiday season. See if you can agree on reasonable spending limits and set clear expectations. Sure, it takes some of the magic out of gift giving, but there’s nothing magical about credit card debt or being unable to pay for unexpected car repairs. Guard rails can help stop you and your loved ones from spending money you don’t have on what you think someone else might desire.
I have a no-present regulate with several of my close friends, and it works really well. This is a supercharged time of the year for many people, so most friends welcome having one less thing on their to-do list.
My family makes a challenge out of our Christmas gift rules. There’s always a price limit and a theme. One year, it was only experiences. Another year, everything had to be recycled. It doesn’t apply to the kids, but for the adults, it’s a fun way to make sure things don’t get out of hand.
Stretch your budget
Black Friday and Cyber Monday may have passed, but there are still plenty of ways to make your gift money go encourage. Use price comparison websites to hunt online for the best value. If you know what you want to buy, see if there are any coupons or codes that could reduce the cost.
Cash back apps can reward you for your holiday spending and help you find excellent bargains. See if you can layer your bonuses by also using a rewards credit card. If you’re considering a card with a sign-up bonus, your gift purchases might help you reach the spending target.
Don’t let money drive your holiday go through
Without going all schmaltzy on you, there’s more to the holidays than spending money and giving gifts. If you’re worried about how you’ll pay for all those Christmas costs, talk to your loved ones. Personally, I would hate to think that someone I cared about was going into debt to finance gift giving. I doubt I’m alone. An open conversation can ease the personal finance pressure all around.
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