Here’s a quick thought for those of you who approach Christmas gifting with no discernible plan: even Santa — a magical, nigh-immortal being who is literally omniscient — has a physical list of everyone he needs to get presents for. Santa probably also has a budget, otherwise his whole operation would have gone out of business years ago (not to mention he has to provide benefits for the elves and time off and reindeer food, plus a gift for Mrs. Claus). Point is, there’s a lot on the man’s plate, so he most certainly has a rigorous system for gift-giving, and therefore, so should you. Before you spend yourself into the gutter this holiday season, then, here’s a guide on figuring out what to spend on everyone on your Christmas list.
Develop a Budget
A lot of people just buy shit on the fly and wait for the Christmas spirit to guide them to the right gifts; others do it in a mad dash just to get it over with. But both of these ways will get you into trouble when it’s time to pay your bills in January. Instead, you’re better off developing some sort of a budget when it comes to Christmas shopping. If you’ve already started shopping — which you definitely should have — you’ll want to retroactively include those already-purchased items in your budget.
You may be tempted to develop your list of people first, then make your budget, but that’s doing it backwards. Financial advisor Adam Ditsky, of Ditsky Strategic, says that too many people go into Christmas shopping with the mentality of, “This is what I need to spend.” Instead, he advises that you say to yourself, “This is what I can afford,” and go from there.
The ideal way to do this would have been to start months ago: Had you done that, you would have been able to take a bit of money from your monthly disposable income and put it aside for Christmas. But, assuming you’re doing this now, Ditsky says to make a holiday budget, first you have to figure out what your expenses for the month are — rent, utilities, even things like your subscriptions and how much you eat out, all of it. Add that up and subtract it from your income for the month. You can also figure out ways to save money during the month, like not eating out and making your morning coffee at home. All of that stuff is going to help with your Christmas crunch, so try to find as many ways as possible to save.
When it comes to credit cards, Ditsky says that he’s not totally against someone using them for Christmas shopping, depending upon what you can afford. You just want to be aware of your budget and your balances and how long it will take to pay off whatever you’re buying (including interest). The bottom line here is that credit cards aren’t totally the devil, if you can afford them and if you include them in your budget. The advantage — of course — is that you can spread out your Christmas spending over a couple of months, which is going to be helpful if you didn’t plan ahead.
The ultimate goal is to come up with a number. Everyone’s number is going to be different, so there’s no real way to make this universal, but let’s say you do all that stuff above and you get $500 as your amount available for Christmas. Does that mean you’re ready? Nope! That’s your holiday budget, not your gift budget, so then you have to figure out excess holiday expenses, like if you’re making food for parties, if you’re traveling and anything else that’s a holiday expense without being a gift.
So now that hypothetical number is down to $400. Let’s get started.
Make a List and Check it Twice (Shut Up, I Love Christmas)
The next step is to figure out everyone that you’re going to buy presents for. While this may sound a little cold-hearted, you essentially have to rank your loved ones into three tiers: The first tier is your partner and your children; the second tier is close family members and close friends; and the third tier is everyone else, which includes other family members, friends, coworkers, neighbors and the various Christmas tips that you might give to your mailman and barber and others like that.
Tier 1: The Wife and Kids. About half of your budget is going to go here. If you’ve got a wife and one kid and your budget’s $400, the math is easy — $100 for the wife, $100 for the kid and then you’ve got $200 left for everyone else. If you have no kids, you can likely splurge a bit on your partner while still having some left over for the other tiers, so it may not be quite 50 percent for childless couples.
If you’ve got multiple kids, things get a little trickier. Back when I spoke to Ditsky for a piece called “How Much Should ‘Santa’ Spend on My Kids?” he advised, “Recommendations that I’ve seen for middle-income families on a budget would be something like $50 for kids 0 to 3, $75 for kids from 4 to 10, $100 for 10 to 15 and over $100 for 16 and up.” You can also increase the budget for your kids if you and your spouse agree to spend less on each other.
Don’t forget, though, that unless you have older kids with a job and/or an allowance, you’re likely buying a gift from your kid to your spouse. You’ll be getting no credit for that gift, but it still comes out of your top-tier budget.
Money Saving Tip: Because it’s all part of the same budget, if you save money in one area you can spend it in another. Your immediate family is getting the bulk of your cash regardless, but personalized and custom-made gifts — especially for your partner from the kids — go over really big, so maybe include one of those to bulk up what’s under the tree. As an example, if you’re artistic yourself, you can get yourself a set of blank Russian nesting dolls and paint one like each member of the family (pets included) and give that to your spouse. (Seriously, I did this myself last year and it went over big).
Tier 2: Parents, Other Close Relatives and Close Friends. Your parents likely fit into this category, as do siblings and close friends (that is, if you’re into getting gifts for your bros). This tier is the trickiest because you want to get something nice for everyone, but without breaking the bank.
This tier should probably get about 25 percent of your overall budget and — if possible — the gifts should be about half of what you spent on the top tier of people, if not a little less. If you get a $50 gift for your sibling and a $50 gift for your parents to share, that’s perfect, but your math likely won’t be that clean. If your parents are divorced, they obviously can’t share a gift, and if you’ve got several siblings, you probably have to spend less on them, but it probably won’t be enough to just get them each a $20 gift. As already stated, this is the tier that might be the hardest to get a handle on, so try to plan it out with care, and if you’re not super-tight with someone, knock them down to tier 3.
Money Saving Tip: Again, go personalized. For the grandparents, stuff made from the grandkid is awesome. They love that shit, so don’t worry that it’s cheap — stuff like this gets treasured way longer than anything else your mom’s going to get.
For close friends, customization will likely help you find a cheaper gift, too. Ditsky says, “There are so many options to get personalized gifts on Etsy nowadays and that’s a great way to get something personal but not break the bank with it.” For example, Ditsky shares that he and his wife have gotten a few friends custom ornaments modeled after their friend’s dogs, and the friends love them.
Tier 3: Everybody Else. Nieces, nephews, aunts, uncles, cousins, coworkers and other friends all belong in this category. Just about everyone here is going to get a $10 to $20 gift simply because it’s really hard to find anything for less than that amount. This amount also tends to be what the limit is for gifts at office Christmas parties.
For this tier, it’s all about the gesture of gift-giving, so don’t feel the need to overspend on someone you’re not super close to. Gift expert Aileen Avery, author of Gift Rap: The History and Art of Gift Giving, adds that if you got someone an amazing gift last year, don’t try to outdo yourself this year. Getting someone a smaller gift this year — even someone who may belong in the second tier — might be okay. The one-upmanship that so many people feel during the holidays can be toxic, so don’t give in to it.
Also in this price range will be anyone to whom you’re giving a Christmas tip. According to USA Today, school bus drivers and baristas get about $10 to $20, while hair stylists and personal trainers tend to get as a tip the same amount as they would for one visit — double pay, basically. Mailmen can’t accept cash, but a gift of a $10 value is nice. Supers and housekeepers tend to get a bit more — an average of $50 — but if you’re on a tight budget like the hypothetical one of $400, a gesture of $10 to $20 is certainly better than forgetting someone like that.
Money Saving Tip: “I’m a big fan of regifting,” says Avery, though there are some guidelines with this. The first is that you can’t regift an item to the person who gave it to you or anyone connected to that person because if they get wind that you recycled their gift, it will likely result in hurt feelings. Also, you can’t regift anything personalized or anything that’s completely useless (unless it’s for Secret Santa). “If it’s something that they would truly get use out of and you think that they would really like it and it fits their style and personality, then, by all means, that’s a wonderful way to make your budget go further,” says Avery.
A Jolly Reminder
Obviously, the amounts pointed out here won’t be so clean and easy to calculate. There will be overspending and there will be people you forgot to include in your budget. Just remember that the whole point of the season is to express the joy of gift-giving to the people you love, and if you’re so stressed out by what you’ve spent, then you probably won’t enjoy Christmas all that much — lest you have an abundance of eggnog to drown away your money woes, which is hardly a long-term solution.