Another year, another internal debate: How much is too much, or too little, to spend on holiday gifts? On average Americans are expected to spend about $638 on presents this year. But considering that more than half of holiday shoppers say they go into debt to cover gifts—holiday borrowers last year owed an average of $1,054—we may not want to base our budgets on what others are spending.
So, how can we set a holiday gift budget that feels right—and we won’t regret come January?
Make a list.
Just like you shouldn’t go food shopping on an empty stomach, hitting a holiday sale without a list is a recipe for overspending. So before hitting the stores, decide who you’ll be shopping for. Treat last year as a starting point: Who did you buy for? Who bought for you? And roughly how much did you spend all together?
Seeing a shopping list in black and white can help us create realistic plans for making it through the holidays without any new debt.
Consider the relationship.
Relationship with the recipient is a key factor in deciding how much to spend on holiday gifts. Etiquette expert Jacqueline Whitmore breaks it down this way:
Acquaintances, coworkers and casual friends: $10-$20
Close friends, siblings or other family members: $30-$75
Significant other: $75+
Take your financial temperature.
Rules of thumb are a good starting point, but the most important consideration when creating a holiday gift budget is our own financial health. If you’re at war with high-interest debt, getting back on your feet from a stint of unemployment or really committed to a particular savings goal, spending hundreds on holiday gifts probably doesn’t make sense. (And your close friends and family should understand—maybe you agree to exchange smaller gifts.)
The ideal scenario is to land on an amount that can be covered with regular income or savings. And if you haven’t started putting money aside yet, it’s not too late. Even $50 per week can add up to $300 by the end of the year.
Time your shopping to score the best deals.
Black Friday’s not the only day—or way—to save on gifts. Look for deals on other shopping holidays like Green Monday (kind of like another Cyber Monday, with retailers offering deep discounts online) and Free Shipping Day, which is, predictably, a chance to score free shipping at participating businesses.
Score even more savings by purchasing discounted gift cards (that you then use to buy presents or use as the present itself), redeeming credit card rewards or stacking store coupons.
Opt for experiences over things.
There's one budget-friendly gift that will likely be more treasured than an expensive present: time. Almost 40 percent of shoppers gave the gift of an experience last holiday season, according to research by The NPD Group. If there’s not much wiggle room in your budget, organizing a picnic in the park or whipping up a friend’s favorite home-cooked meal are ways to show your love that feel just as meaningful as a material gift (maybe more).