Note: This is a post from Joan Otto, Man Vs. Debt community manager. Read more about Joan.
Shh… don’t tell.
My teenage daughter is getting, essentially, one Christmas present this year – an iPod Touch. My mom and my husband are also each getting one specific, useful gift. (But, unlike my teenager, they sometimes read MvD, so I’m not telling!!)
I was super-excited to find a way to get this iPod for Sarah and stay well within our gift budget for her.
But then I sat down to look at our Christmas budget, and while we’re still all right, we’re not doing as well as I thought, and we’ll have to be extra-careful as we finish up our last-minute shopping.
I’d spent MUCH less than expected on this major gift… so how did this happen?
It took me a minute to figure out what went wrong…
Set a total and per-person giving budget
We started out with a good plan: A list of people to buy for, a dollar amount set for ALL gifts, a dollar amount for charitable giving, and, of those numbers, breakdowns per person and family and organization.
Because I am weird, I keep this info in a spreadsheet. I do not necessarily recommend this – don’t overcomplicate things! A simple piece of paper with notes on it is more than fine, as long as you make sure anyone involved in your gift-buying has access to all the information, and you’ve committed to an amount in writing!
In our case, there are a high number of people we’ve chosen NOT to buy gifts for. Courtney tackled this last year on MvD in Holiday Politics :Who’s On Your Shopping List. In our family, our gifting is limited to our household, kids in our immediate family (young nieces and nephews, etc.) and a few particular close friends, plus gifts specifically from Sarah for certain other family members.
Why it’s important: It’s so easy, while out shopping, to see something and think, “Oh, Aunt Susie would love that, and it’s only $10!” That’s cool… until you get home and realize that you’re having dinner with Aunt Susie AND four of your other aunts, so what are you going to do about gifts for them? Well, that’s $40 more…
That’s why a set overall budget, a list of people to buy for, and a budget per person are so important! It might sound more “businesslike” than many of us like to be about giving, but it helps ensure that you stay within budget AND get the nicest gifts possible for the people who matter most. Wouldn’t you hate to be without a gift for your best friend because you guilted yourself into a $20 gift for your second cousin 47 times removed?
Start with bigger items
This was the part we did WELL in our Christmas budgeting: We started out by taking our total budget and per-person budget and subtracting out a maximum amount for big-ticket items, like the iPod.
My recommendation here is to set a maximum spend and budget at that dollar amount. Here’s where it’s important to do your research: If you’re sold on getting an item, and you think you can get it for a discount price (Hello, Black Friday shoppers!), that’s fine. But what if you can’t? Is the item important? Then you need to build it into your budget at the MOST you’d be willing to pay.
That said, I didn’t budget $350 (the approximate cost without discounts of the most top-of-the-line iPod Touch available) for Sarah’s gift. In the case of electronics, the nice thing is that there are options – so I could budget lower and know that IF I hit a great sale, I might be able to get a particularly high-end model, but if not, I could easily get an older model or one with less memory.
That’s harder with some items than others, obviously, but it shows the value of having a fixed dollar amount in mind for a particular large item. It would have been easy, in the store, to see a “much nicer” model for “only” $30 more, and walk out with it. But that’s $30 that then has to come out of the rest of our gift budget, and is it really a “much nicer” model?
Why it’s important: Big items are often the way we go, but it is easy when looking at a large purchase to see a “drift” in the cost. And with a tight budget to begin with, those errors upward in big items can leave us with VERY little wiggle room quickly.
Conversely, it’s easy to buy a handful of small items with the intention of finishing up with a larger gift, but suddenly find yourself a few – or more than a few – dollars short. Buying the large items early and sticking to a set per-item budget is key to staying on track.
Focus on quality – and what’s really important
While we’ve never given a huge number of Christmas gifts, we’ve been overt in talking with Sarah this year that, as she gets older, there won’t be as many different things to unwrap under the tree.
Meanwhile, for several years, we’ve used a particular philosophy about giving throughout the year and especially around Christmas that serves us well: We aim to match our “gift-giving” spending dollar for dollar with donations and charitable giving. (If you’re looking to make a difference through giving this holiday season, I can definitely recommend Courtney’s 6 Tips to Help You Choose Your Cause Wisely, which factors heavily into our own decisions!)
But whether it’s through contributions, fewer gifts, more meaningful presents, or some combination of all of them, I highly encourage you to focus on quality and what’s truly important as you give.
For too many years, I fell into the trap of wanting to give Sarah a “lot” of presents. We were on a super-tight budget when she was younger – but I mistakenly thought 20 dollar-store items would be better than one nice $20 toy. There’s a huge value in focusing on quality – one we’ve seen in action through things we invested a little more into, and which have lasted into Sarah’s teenage years.
Why it’s important: You guys don’t really need a lecture on the value of giving from the heart or anything cheesy like that, right? The fact is, I think we all understand the value of giving special gifts and giving OF ourselves. Sometimes we forget, ESPECIALLY when we’re trying to deal with a tight budget, a packed schedule and the rest of the “business” of the holiday season.
When you’re trying to make every dollar count, make sure every gift counts. It takes more time, more planning and more awareness, but it’s worth it.
Keep track of everything, even the odds and ends
Wait, did you realize that I still haven’t explained why I’m close to toeing the line on the Christmas budget? I was almost derailed by some “little items” I didn’t include anywhere in my budget.
I’d accounted for large gifts – like Sarah’s iPod Touch. I accounted for a handful of smaller gifts – think a couple clothing items and books. I’d even been tracking these gifts in our giving spreadsheet, so I knew what I had.
But what I hadn’t accounted for were the related purchased tied in with the large gift. As part of buying this iPod, I also got Sarah screen protectors, a case, earbuds, and some new songs. I’d planned that all along – but hadn’t budgeted for those items either as “separate” purchases or as part of the overall cost I was allowing for the iPod itself!
What a rookie mistake! (And one I won’t soon repeat!) These weren’t pricey purchases individually, but $5 here and $10 there added up quickly when it wasn’t accounted for.
Why it’s important: First of all, I highly recommend keeping track of what you’ve purchased – and spent – on holiday gifts as you go. It’s too easy to be out shopping and be unable to recall if you bought something – or “enough” – for a particular person, or to think you have no stocking-stuffers, or to buy something and tuck it away, only to find it again next July!
As my dumb mistake shows, it’s also incredibly valuable to make a thorough list and stick to it. Incidentals happen with any kind of purchase – from batteries for kids’ toys to extra cords to hook up that new game system to screen protectors for that tablet to a basket to put those gift cards in for your best friend’s family. Don’t forget to keep track of and account for the small stuff!
How’s your holiday shopping going? Any budgeting tips to share – or success stories? (Stories of budgeting follies or near-misses like mine are also welcome; I’m not too proud to admit it’ll make me feel better about myself to hear about your slip-ups too!)
We’d love to hear your stories in the comments!