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Don’t Let the Little Things Blow Your Holiday Gift Budget

in Family, Give Back, Joan's Posts, Rants

ipod-touch

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!

{ 7 comments… read them below or add one }

Donna Reynolds December 9, 2013 at 3:10 PM

How about giving up this rediculous gift giving altogether? This is just one more thing we are made to feel we have to do. It is redicuous. Spending money we don’t have, making kids feel they are intitled, giving into the commercialism. We need to get past this. We are sending the wrong message to kids. Bake some cookies and give them to your friends and family. Your time and effort should be worth more to them than some store bought toy. In a few years, they won’t expect gifts anymore and believe me, you will be happier. I sure am. The hard part is getting people to stop giving me gifts.

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Den December 10, 2013 at 10:08 AM

Bah humbug Donna! To each his own though – if you don’t want to give gifts, that’s ok….but for those of us that love to give gifts this time of year and want to do it frugally I say we just need to have some strategies in place – here are mine:

Joan – I’ve made all those mistakes and more:)

One thing that has given me some peace the last few years – after I’ve made my list of gifts to buy and a budget for each person, I then add 10% to the final budget. This helps me pay for those extra little things that do add up…..I tried to not buy the little extras, but it made me sad and grumpy so now I just include them in the budget and am happy and less stressed.

I also make sure to include in the main budget – batteries, tissue paper, wrapping paper, bows, Christmas cards, Christmas tree, stocking candy, extra money for groceries, and extra money for gas (running around eats up our gas budget).

I used to just pretend that we could afford all those little extras out of our regular budget, but that wasn’t realistic…so once I started putting it in the Christmas budget my stress level went way down!

We don’t spend extravagently, but we do enjoy blessing our family and friends….and with a smart budget we enjoy it so much more!

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dojo December 11, 2013 at 12:14 PM

It’s a good plan for someone who wants to give gifts and not break the ‘bank’. We’re choosing to be more frugal this year, but it does help all the readers who want to still gift and save.

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Kathy December 12, 2013 at 1:25 AM

What I do starting in Nov every month is to put an x amount of money in my yearly savings account. So when next Nov comes around I have the money that I need for gift giving. And in the last few years since our kids are adults now we tend to spend more on familys in need of a little Christmas joy then ourselves. That too me is the true meaning of Christmas and the greatest gift to me from my kids is that they understand this too. I also make alot of cookies for Christmas to give away to family and friends. They look forward to their Christmas treats because no one really takes the time to bake anymore so they really enjoy the true taste of a home baked cookie. Merry Christmas and Happy New Year!

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OC Budget December 12, 2013 at 12:02 PM

This may be shocking but since my entire family is going to be off on vacation most of this month and the next, except for me and my s.o., we’re going to skip gifts this year! We’d probably celebrate with a nice dinner since our birthdays fall in december. It’s pretty uneventful for us with no children around the holidays.

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Eva Sierra December 13, 2013 at 3:10 AM

Got so much inspiration from you Joan. I am also thinking of spending a frugal Christmas this year and mostly depend upon DIY gifts for my family. They will save me some money and also shows much more affection than an out of budget action figure for my son which will be used only for a few days and then locked up at the back of the closet!

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Mike Goodman December 14, 2013 at 6:40 AM

A very good way to make sure that you don’t go overboard on Holiday spending. Keeping a checklist and making sure you don’t go beyond your budget is something almost all of us do at eh start of the Holidays. But of course very few can stick to it.

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