Like every other category in your life, gifts need to be budgeted for too. Whether it’s those little expenses here and there for office baby showers and kids’ birthday parties or big purchases for birthdays and holidays, gift giving can really throw off your budget if you’re not prepared. If you don’t already have one in place, here’s how to set a gift giving budget for your family.
How to Set a Gift Giving Budget for Your Family
Before we get started with some real steps, sometimes it’s good to work backward when creating a budget. Where is the money for gift giving currently coming from? Do you have room in your budget to allocate to giving gifts, or do you have to get another source of income to pay for them? The actual amount you budget will depend on a lot of things, but you still need money to budget with.
If the money isn’t there, now’s the time to come up with a plan for what to do. Will you earn more money or buy fewer gifts? Once you have a general idea of how much money you have to spare, you can use that as your gift giving budget goal. Now you’re ready to set a gifting budget!
1. Make a list of your annual gift recipients
Who does your family shop for over the course of a year? Make sure to list individual family members (mom, dad, kids, grandparents, etc.) and then general categories like teachers’ gifts, birthday parties, work-related, and so on.
This is also a good time to list all of the times where you’d usually buy gifts. Major holidays are the most common, but some families like to give gifts for other reasons, like good grades, Valentine’s Day, etc.
2. Tally up how much you usually spend on gifts
This can sometimes be an eye-opener, but you have to do it. Please do your best to go through your bank statements or receipts from the past year and organize them into categories based on what you listed in step 1. This is a time to add any more people to your gifting list that you might have forgotten! Then calculate how much money you spent on gifts.
If you don’t have actual information, do your best to guesstimate rough amounts. It’s not as accurate, but it will still help you get a general idea of how to set your budget categories up later.
A note on non-gifts as gifts. Many families, especially parents, will give gifts for holidays that are not really gifts at all. A great example of this are clothes, toiletries, and other personal care items that otherwise would still be necessary. Consider moving these costs to their appropriate household budget category, or at least keep them in mind when setting your gift giving budget.
3. Give your numbers a good, hard look
It might be stressful, but you have to look critically at your spending. Does it line up with the amount of money your budget allows for giving gifts? If it does, you’re doing great, and this is going to be really easy. But for most people, it probably doesn’t align with what you should (or at least think you should) be spending on gifts.
You could also use this as an opportunity to reflect on the value of the gifts you’ve been giving, especially when it comes to your kids. Are the gifts from the past year still regularly in use, or is there a portion that is broken or unloved?
4. Make a Plan
All a budget is, really, is a plan for your money. So that’s what you need to do for your gift giving budget. What does your family want and need to buy? Set specific amounts for each family member and general categories, like gifts for friends.
To determine how much you set in each category, make a list of what you’d normally like to buy for that person on different holidays. For example, if you buy two $10 teacher’s gifts for your kids’ teachers twice a year, budget $40 for teachers’ gifts. If you want to buy your kids a new game console as a combined birthday gift, budget that between your two kids.
Brainstorm any one-off occasions you might need to make a budget for in the coming year. Weddings and baby showers are an excellent example of gift costs that will ebb and flow with your situation in life. Even if you’re looking for wedding gifts on a budget, you’ll need to set aside some money if you can.
5. Adjust as needed
Do you have enough money in your budget to give gifts the way you want? If you’re working with a fixed number, then you’ll have to borrow from different categories to make things work. Can you make a homemade gift for grandparents and move that money to the kids’ budget? Are you able to do an inexpensive family outing instead of an expensive gift for your child’s birthday?
6. Get the whole family on board
Sometimes a large portion of a family’s gift giving budget is taken up by ‘obligatory’ gifts for extended family or friends. If you’re choosing to limit your gift spending in the future, chances are these areas will need some cutting. Now is the time to have these discussions with relatives, rather than closer to the holidays.
You could suggest a family gift exchange where everyone brings only one gift, or only buying for the family’s children. As for your immediate family, if there are going to be major changes, you should talk about that now too. Let kids know in advance so their expectations can be managed, and talk with your partner about creative ways to give each other gifts.
7. Make it happen
Now that you have a gift giving budget set for your family, you have to actually stick to it. You might find it helpful to further break down your budget, so you have it separated between holidays. Planning ahead rather than last-minute shopping will help you take better advantage of sales, but don’t buy things too far ahead for everyone.
Kids, especially, change their mind 100 times about what they want or are interested in. If you buy something for a December birthday in July, they might not even like that thing anymore. Then you’re out money or giving something disappointing.
How to stretch your family’s gift giving budget
Just because you’re on a budget doesn’t mean that you gift giving has to suffer that much. There are ways to stretch a gift giving budget!
Shopping second hand is one of the easiest ways to make your dollars go further. Particularly when shopping for kids’ gifts like toys and clothes. Look at yard sales, thrift stores, and local buy and sells. Consignments stores are also a great place to find a discount on stuff that’s in good condition!
Use rewards programs either on your credit card, through a store rewards card, or a cashback rebate program. Instead of spending that, accumulate the points to buy gifts with.
Try a one in, one out rule on your family’s stuff. Before a major holiday, pick a few items around the house (or belonging to that person) to sell, then use that money to buy gifts.
Choose one great gift over a bunch of smaller ones. Rather than spending $100 on things they won’t love, opt for the single expensive gift they really want. This only saves money if it costs less than you’d normally spend, though.
Give experiences instead of things to your kids. A membership to somewhere you can repeatedly visit, for example, will save you money in the long run if you replace costly outings with it. Even better if it’s something you were planning to buy anyway!
Consider group gifts for family members. This is the same concept as giving a more expensive gift instead of a bunch of small ones; only you go in it together. Ask grandma to contribute to a big gift for the kids’ birthdays, or go in with siblings to buy something for your parents’ anniversary. This way you can give more while spending less money.
Again, the actual amount you allocate doesn’t matter as long as it fits within your budget, lifestyle, and values. But, if you’re budgeting as a way to lower your spending, then it’s really important to set a gift giving budget for your family and stick to it.