The holidays are great for spending time with family and friends, and when we welcome new additions into the family, we feel a sense of fullness and love. Unfortunately, our wallets do not. These new relatives mean more names on the holiday shopping list and more spending. And so, instead of embracing this happy season, we begin to dread the costs and the long-term impact it will have on our finances. But this doesn't have to be the case. Below are a few tips on how to manage your spending on gifts and create a plan that works for your family and your bank account.
*Create a Holiday Budget
The holidays can cause a lot of frivolous spending. With door-buster sales on Black Friday and throughout December, it's almost impossible not to get caught up in the hype. When we don't have a plan, it's easy to spend more than we would like to. According to Lydia Saad from Gallup, Americans estimated spending an average of $830 for gifts during the 2015 holiday season. And the pressure to purchase more gifts only grows with each new family member.
That's why creating a budget for yourself is crucial. Evaluate how much you can comfortably spend on gifts. Write down a list of those friends and family members that you plan to purchase gifts for. Then indicate how much you plan to spend on each gift, and check that the estimated costs fit into your overall financial goal.
*Discuss It With Your Family
It can be difficult to talk about the financial burden of the holiday season with family members. However, it is an important topic if you are beginning to feel the economic strain of buying gifts for everyone. Speaking with your family members early on (between September and October is a great time) about how to alleviate costs gives everyone the opportunity to hear about changes for this year and what to expect this holiday season. Many times, these changes usher in a new tradition, one that everyone can benefit from.
*A New Holiday Tradition: Gift Exchanges
Gift exchanges are a great way to decrease costs and ensure that everyone truly gets what they asked for. Those participating in the exchange will only be responsible for purchasing one gift. It is best to set a spending cap on the gift. Many families set limits in the $30-$50 range.
Gift assignments are determined by a drawing. The best way to do this is to write down the names of everyone who would like to participate in the exchange on a piece of paper. Fold the paper in halves and put it in either a hat or basket for everyone to pick from. I recommend doing this on Thanksgiving if possible, when the majority of family members have gathered together.
Once people have picked names, there are two methods to choose from: secretive (a "secret Santa") or non-secretive. The advantage of going the non-secretive route is that those participating in the exchange can directly speak to the person they have chosen so that they can learn about what is on his or her wish list.
On the other hand, the "secret Santa" format is fun because you do not know who your gift-giver is until the day of. However, this requires a dedicated family member to coordinate the exchange. This family member in charge of coordinating must inform people individually of whom they picked. Additionally, it's helpful if he or she asks everyone individually for the three top gifts on their wish list. The coordinator can distribute this information to each person privately. This maintains the air of mystery: You never know which of your three wishes you might get!
This type of new tradition in your family can help you to manage your holiday spending. So instead of dreading the holiday season, enjoy the act of giving, and savor your time with family!