As you wander around the festively decorated stores with your eggnog latte in hand, it’s easy to get carried away by the season. Before you know it, your shopping cart is filled with gifts. But wait: Are all of these things within your holiday budget? Do you even have a budget for gifts?
Here are a few ways to make sure you don’t end the year with gift-related credit card debt:
Know your number. Before you set foot in the stores or start searching online, know how much you’re comfortable spending on gifts this year. (Ideally, you’ve been saving a little each month toward gifts—but if not, that’s OK, too.)
Once you arrive at that overall dollar figure, make a list of everyone for whom you plan to buy a gift and assign a maximum amount you can spend on each person. When you add up everyone’s individual gift amounts, are you still within your overall budget? If not, go back and tweak until you are.
Use gifts cards a new way. Instead of giving them as lackluster gifts, buy the cards yourself at a discount using a site like GiftCardGranny.com or through your credit card company’s rewards program. Then use these discounted cards to buy physical gifts for folks on your list.
Limit kids’ gifts. Many years, our family has used a three-gift rule to help us avoid buying lots of knick-knacks that the kids will quickly forget. Having a gift limit forces us to focus instead on a few bigger gifts our girls will really enjoy. A good rule of thumb: One thing they need, one thing they really want, and something consumable (some of their favorite candy treats or bath and body potions, for example).
Pick names—with a twist. If you have an extended family, you may already be picking names instead of giving gifts to all 20 of your nieces and nephews. To make the swap more fun, pick a gift theme each year, such as outdoorsy gifts, locally made goods, or food and beverages. Be clear about price limits for exchanged gifts, too, so no one spends more than necessary.
Simplify teacher gifts. If you have grade-school-aged kids, give yourself a break here: Most teachers say they don’t need or want elaborate gifts from families. Instead, see if your classroom parent is willing to collect money for a group gift, like a gift card to a favorite coffee shop or office supply store.
Even simpler: Have your child create a hand-written or personally drawn card to be given as a gift.
Replace gifts with gatherings. Skip the bottles of wine or gift baskets for coworkers, friends, and neighbors. Instead, agree to go to lunch, a holiday concert, or out caroling. Most people appreciate your presence even more than your presents.
Hold a post-holiday holiday. This may seriously rock your family’s boat, but try it at least once: Give kids their gifts on the actual holiday you celebrate, but have the grownups exchange gifts in January so you can make your purchases during the post-holiday sales. You could plan your gift-fest for Jan. 6— traditionally the 12th day of Christmas—or later in the month if you want more time to shop for great deals.
And for next year, give yourself the gift of a plan. Decide now what you can afford to spend on next year’s holiday gifts, decorations, activities, and travel, and start saving on the first day of the year. If you have $100 a month—just $25 a week—automatically deposited into a separate savings account, you’ll painlessly save $1,200 over the course of the year.
Some online banks let you set up multiple subaccounts and give them nicknames like “Vacation” and “Holidays.” (Psychologically, it’s much tougher to filch money from those named accounts for other purposes.) By the time the holiday season rolls around, you’ll be as ready as Santa himself.