One area of our budget that has a tendency to get out of hand is our gift budget category.
In the past, I have not been very good at anticipating all of the social events that will require a gift purchase. In turn, this usually means that we end up spending too much on a gift or just not budgeting properly for the month.
There is also the pressure of being invited to a birthday party (especially a kid’s party!) last minute and needing to get a gift but knowing it is not in the budget or someone purchasing a gift for you and knowing that you were not planning on including them in your gift-giving for that event.
What you need to realize is that it is okay to set boundaries and plan ahead.
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It is okay to set a budget for gifts. It truly is the THOUGHT that counts and you should be able to manage your money how you want when it comes to gifts just like any other expense.
The pressure of gift-giving can be overwhelming and seriously blow your budget if you are not careful.
Don’t let what others appear to be spending on gifts sway you and your goals. They may be in a completely different place financially, or not.
The only thing that matters is that you stick to what you know you can afford and still meet your financial goals.
How We Set a Gift Budget
This year, as part of our planning ahead with our calendar, we went through each month at the beginning of the year and wrote down every birthday, wedding, baby shower, and special occasion that we could think of.
Once we did that, we assigned a budget amount for each event type.
This made it extremely easy for us to come up with a base amount for what we plan to spend on gifts this year.
In the end, we did add a little extra cushion, because as with anything else in life, there will be unexpected events that come up throughout the year.
Plus, the gift budget category is an easy place to blow your budget.
So, what is a reasonable amount to expect to spend on a gift?
First, it depends on your income and how much money you realistically have in your budget to spend on a gift.
Following the exercise outlined above will give you a good idea to start with.
If you only have $300 for the year to spend on gifts, then it comes down to the number of events you anticipate purchasing gifts for.
On one end of the spectrum, if you only have 3 events this year to buy gifts for, then spending $100 on each gift might not seem outrageous. On the other end of the spectrum, if you have a large family and have 12 birthday parties alone to attend, then you will easily spend $300 on just birthdays with a $25 per gift budget.
If you don’t really have a set amount you want to spend for the year, but just want to curb your spending on gifts overall, I suggest deciding how much you want to allocate to each type of event and then sticking to that rule as close as possible.
One of our financial goals for the year was just to reduce spending on gifts overall, we did not have an exact number in mind.
Here are the gift-giving event categories we came up with and how much we allocated for each in our gift budget:
- Birthdays: $25 each
- Baby Showers: $50 each
- Bridal Showers: $25 each
- Weddings: $50 each
- Valentine’s Day: $50*
- Our Anniversary: $50*
- Our Kids’ Birthdays: $100 each*
- Mother’s/Father’s Day: $40 total
- Our Birthdays: $200 total*
- Christmas: $1000*
*For these events, this amount indicates the amount spent on the TOTAL celebration. This includes going out to dinner, buying food or decor supplies, and all expenses related to Christmas.
These amounts are what we felt were fair and reasonable for our current financial situation.
You may feel differently based on the person you are giving to, etc. I really do feel it is better to keep it as uniform as possible to avoid worrying about spending more on one person over another.
In 2016, we spent $2360 on gifts NOT including Christmas and a little over $1200 on Christmas (our goal was $1000 as we had spent close to $2000 the year before!).
If we follow our budgeted amounts for each gift type, based on the number of events we anticipate this year, we should spend about $1000 – $1200 on gifts, not including Christmas!
Be Creative and Plan Ahead!
Gift-giving can be very personal and also very expensive.
Many times, people spend more on gifts based on how much they have spent on that person in the past, how much that person has spent on them, or as a last minute impulse purchase due to lack of planning.
Ways to save money on gift-giving include making something yourself, spending time with the person instead of giving them an actual gift, or splitting the cost of a nicer gift with one or more other people.
Splitting the cost of a gift works great if you and your siblings are buying for each other or for a parent, or if you are attending a birthday party (especially for a kid!) and you have multiple people that are willing to go in on a more expensive gift.
I met a bunch of moms with babies around the same age as my daughter soon after giving birth. Once the first birthdays started to roll around and everyone was planning birthday parties, we realized that it was going to get expensive pretty quick to buy a present for each child.
Instead, we each chipped in $10 (or how much you could afford) to contribute to a larger and more expensive gift. It became a tradition of sorts and was appreciated by the parents as the amount of “stuff” given to the kids was reduced.
Not only should you plan ahead your budget for a gift, but you should also spend time planning ahead what you are going to buy or make for each gift.
This reduces the last minute rush and stress of trying to find the “perfect” gift under budget.
It also allows you to take advantage of sales and being creative in staying under budget.
Planning ahead, being realistic with your budget, and getting creative with your gift-giving are all keys to success in not falling victim to the pressures of the gift-giving culture.
Do you have a gift budget?
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