This is the second in a three-part series called #MerryMoney, about the different strategies I’m using to keep my holiday spending under control. They aren’t rocket science, and honestly, if you’re a spending-and-saving guru, they might seem totally basic! But if you’re looking for ways to get through the season without having to tap into your TFSA to do it, you’re in the right place.
Even though roping everyone else in to your budget festivities is a stellar strategy, and pretty easy to do once you nail that awkward holiday money chat, there are times when it just won’t work. Maybe you’re not ready to do the heavy lifting of convincing people, or maybe the ship has mostly sailed on people’s gift giving strategies for the year.
Maybe, like Taylor from Freedom from Money, you just really love giving gifts! That’s totally legit, and as much as the personal finance world is all
“stop spending always no seriously stop that,”
if gifting is important to you, don’t worry.
You can still have a budget-friendly Christmas.
Those things – other people’s preferences and your own – might not be the easiest to change in a short time-frame. But you know what you can always change?
Your own holiday spending.
You can take control of how much you spend this Christmas by…
Drum roll please…
Taking control of how much you spend this Christmas. (I know, I’m hilarious.)
I read an article in the Financial Post a week or so ago, that made the argument that raiding your TFSA – a tax-advantaged savings account, for all of my American friends – is a great strategy to pay off your holiday spending on your credit cards.
Which, yes, if you’ve gone into debt on a high-interest credit card to fund the holidays, that’s true. That math checks out.
If that’s your situation, by all means, you’re wise to use your TFSA to pay it off because you’re certainly not earning 19.99% on your investments right now.
But – and here’s a radical idea – you could just not go into debt for the holidays in the first place.
I have to admit, I worked backwards on this, but here’s one fool-proof way to keep your holiday spending in check this year.
#1. First, make a list of all the people you want to give gifts to. Easy.
#2. Then, take a good long look at the list. Ask yourself if there’s anyone you can either suggest a budget-friendly Christmas to, or if there’s anyone who doesn’t need to be on this year’s list. Friends who you haven’t seen all year, but feel like you *should* get something for? Maybe you can send them a nice card instead.
#3. Once you’ve got a final list, set a rough budget. It’s easy – just put down an estimate for what you’ll spend on each person. It doesn’t have to be set in stone, but the difference between a $25 gift and a $75 gift is good to note.
#4. Total up that list. Are you happy with the total? If not, go back and adjust the limits per person.
#5. Do a gut check. When you have a total – and this is important – ask yourself if spending this amount will add stress to your life. That includes not being able to pay it upfront, being worried about paying for your other monthly commitments, or just generally not feeling great about parting with that much money right now.
Lastly, this is important: if spending that amount will put you into debt, don’t spend it. Just don’t do it.
Having this kind of clarity into your planned spending for this year can help you stick to your budget in two distinct ways.
Less Likely To Over-Gift
You won’t be tempted to drastically overspend on any one person. Having this kind of clarity into the cost of your total gift list is the perfect antidote to the “Cousin Sally would L-O-V-E this $450 handbag… I can totally make it work this year. It’s PERFECT for her!” reactions.
I’ve had these reactions, you guys. These are not made up reactions. I don’t know anyone named Sally, but otherwise: true story.
Less Likely To Blow Out Your Budget on Extras
All of your other holiday decisions will be informed by your gift budget. Unless you’re sitting here, totally blissed-out and stress-free because you finished your shopping in November, there’s still a lot of month to go between now and Christmas, and it’s a spendy month to boot. I’ve got several holiday parties, open houses and cookie exchanges between now and the 25th, and it’s easy to get the urge to over-indulge.
“Sure, let’s get a hotel room after the Christmas party! We’ll be downtown anyways!”
“Sure, I’ll make the extra-fancy cookies for this exchange! I only have to bake 10 dozen, how much butter will that really take?”
“Sure, let’s buy them the really great bottle of wine as a hostess gift!”
If you can afford these extra expenses, that’s awesome, and you should enjoy yourself guilt-free. But they’re the kind of expenses that are easy to jump on when you don’t have a clear idea of what your total spending is for the month.
When you know how much your gift budget is going to ring in at – even as a rough estimate – you can plug that into whatever you’re using to track your spending. (Also: you should totally track your spending, for a ton of reasons.) That’ll show you the real impact of your gifting over the holiday season, and whether you can afford those holiday extras that are so easy to add on without even thinking about it.
This is just one way to stick to a gifting budget over the holidays, albeit one that has worked for me, and that comes with two pretty hefty benefits – in addition to not raiding your retirement accounts, obviously.
At the end of the day season, every person who is on your gift list should care enough about you to want you to avoid going into debt just to get them a present. If that isn’t true, maybe they shouldn’t be on your gift list to begin with.
The people who are on your gift list – the ones you really care about, and want to acknowledge this holiday season – will be thrilled just to spend time with you, regardless of what’s “in it for them.” And future you? Well, future you will be gosh-darned ecstatic not to be raiding your retirement savings come January to pay off your holiday debt.
As they say (I’m pretty sure they say this you guys) Christmas is like an airplane emergency. Put on your own oxygen mask first, and don’t go into debt trying to buy oxygen masks for everyone else.
It’s something along those lines anyways.
Some other #merrymoney posts for your reading pleasure, if you’re in the holiday-budgeting spirit:
- Claudia at Two Cup House asks – are you a gifter or a giver?
- Jordann at My Alternate Life has a great list of minimalist Christmas decorations
- The first post in the #merrymoney series, about how to have the awkward holiday money chat
Do you guys plan out what you’ll be spending ahead of time? Has winging it ever given you any holiday gift-giving horror stories of the budget variety? Lastly, do you have any #merrymoney advice to share? I’d love to hear it!
Hahahaha, oxygen masks!
So, I feel like I have relatively little to contribute regarding Christmas spending since my family does not really do much/anything to celebrate. HOWEVER, this post reminded me of three Christmases (in 2009-2011) when I was dating someone whose family was really into Christmas, and specifically really into gift-giving — like, to an extent that I had never seen or even heard of. It honestly was incredibly stressful for me — I felt like I needed to buy really thoughtful gifts for every single extended family member, because they were all buying gifts for me (and in many cases, one person would be buying multiple gifts for me). I completely understand that they were trying to make me feel welcome and cared for, but the tacit expectation of reciprocity (even if it only existed in my own mind, which is possible!) was really overwhelming. I had a lot of the “Cousin Sally” moments that you describe above, and I spent waaaaay more than I could reasonably afford.
So yeah. I’m sure in retrospect that I could have done a better job of budgeting. It was just that the emotional piece was such a big part of it — I think I was probably stressed out because I just really wanted them to like me. These days I mostly just send cards to people. And this year I had the bright idea that I could do hand-made cards, so I’m excited about that. 🙂
Another thing I have learned is not to overspend on kids. It is so tempting to buy my niece and nephew ALL THE TOYS. but they are 4 and 1. They have no concept of how much things cost and they are going to get a million presents anyway. So I got them each a new outfit and I got my niece a couple books and a cheap toy that I know she will love.
Otherwise I am just donating to their RESP.
That’s an awesome idea Casey – by the time they actually do understand money, they’ll be SO grateful for those contributions! We’ve got some very young kids on my boyfriend’s side of the family, and their occasion-gifts (birthdays included) are always very practical. We’ve lucked into a family full of frugal parents, so we’re likely to get wishlists full of things like “leggings to wear with skirts” for the 4 year old, which makes gift giving easy!
I almost went nuts this year because some of my cousins who are in their teens are coming to town for the holidays, and I never get to see them, BUT. Then I remembered that when I was a teen, my aunts and uncles were so chill and just gave me a gift card or cash, and I loved them for not trying to buy me awkward clothing or things that totally weren’t to my taste. So. I’m working on the being cool thing, haha. I’m officially the old uncool one in the family (and I am so not complaining, the early bedtimes are so worth it.)
LOL! I totally almost spat my tea out on my laptop when I read that part about the oxygen masks…
This post is perfectly timed! My husband and I just sat down last night and wrote out a list of everyone that we’d like to recognize with a gift or a card this year. We didn’t put a budget on any of them yet… but most are going to be photos from our wedding, some in frames (depending if we have to mail them…), so it shouldn’t be too expensive… I do like the idea of listing the costs and totalling them up so you can get a good picture of what you are going to spend. I haven’t ever done that… and I am notoriously spendy with gifts…
Hahahaha ok this is like the best comment ever because I SO RARELY make good jokes in real life! I’m more of a dad-joke teller, as my boyfriend can attest. Thank you SO much!
I am also the most notoriously spendy when it comes to gifts. I don’t think I’ve ever actually stuck to an agreed upon spending limit for gifts – I’m always the person who’s like “Whoops, but I found something that’s just soooo perfect that I had to get it for you!” This is the year I change that! I’ve been great (so far) about staying within the limit my boyfriend and I agreed on. We also went the photo route for everyone who is out of town, and we printed up a bunch of our silly Christmas photos to send out in cards. I think sending out the wedding photos is a wonderful idea – I’d be more than happy with that from just about anyone in my family!
Oh man going into debt for the holidays….please, oh please no. 🙁 I’ve even heard of strategies to start setting aside money the January after to rev up for the NEXT holiday season to come about. Craziness! Luckily, with our pre-set gift exchanges we also have designated spending amounts which makes it incredibly easy to budget! As far as an exchange between my fiancé & I, we typically choose an experience and not tangible items. The most difficult part is determining a budget for the kiddos in the family (that don’t participate in the gift exchange). You want to give them the magic of Christmas! But then I look and those toys from the year prior are already worn out, or sitting idle. I am trying to reframe my thought process for the young ones this year, but it’s a challenge! I need to write it out & use your strategies. 🙂
Yes! I know Vic from Dad is Cheap does the save-all-year thing, which maybe I’ll have the foresight and planning to do a few months ahead of time this coming year 🙂 2015 was not that kind of year though, especially since I really started getting a handle on things in uh, August, lol.
And yes, kids are some of the toughest little customers to shop for at Christmas! We’re lucky that almost all of the parents in our extended families will send out wishlists for their kids well ahead of time, because I have done the “walk into Toys R Us just to look around” thing and it is terrifying. What if she’d rather the Elsa colouring book, not the Disney princess colouring book?! CHRISTMAS WOULD BE RUINED.
Hahaha clearly this is me giving everything way too much thought, but still: the parents do us a great courtesy by sending those lists, because we know that we can shop from them with our budgets in mind, and that gifts will still be well received! And confession: I’m giving my teenaged cousins cash to spend on their vacation to visit us, because when I look back at my youth, money was never an unwelcome thing to find in a card.
Another helpful post Des, I like the point you make about the people who care enough about you to deserve a gift actually wouldn’t want you going into debt over it. I’m lucky (?) to have a small family, so it’s quite possible to get something for everyone without going overboard and most my friends are in the same boat as me – single income families trying to pay the mortgage, so no pressure there!
Thanks Robyn! And yes, small families are wonderful around the holidays! My “immediate” family has always been just my mom and I, so even though we’re both opting out of the general family gifting this year (as per an agreement she brokered with the other adults, actually!) we always exchange presents. We’re basically the Gilmore Girls, so not exchanging gifts in our tiny fam would just be weird, haha.
It’s wonderful that your friends are all on the same page – I find it’s so much easier when everyone either just innately understands where you’re at, or you’re good enough friends to be really upfront about it.
I LOVE this. I started using this approach three years ago, and it has changed my attitude this time of year completely. I did add one extra step, though. After the first year, I divided the amount by 12 and out that amount in savings each month. Since then, I have never had to worry about Christmas money again. Sure it changed my monthly budget (and i have an account for all of the expenses that are expected but not monthly- car insurance is another example), but I made it work.
You know what else is cool? Use Excel and use the same sheet from year to year. It reminds you what you got them last year, how much you spent, etc. was it worth it? If not, change it this year 🙂
Jillian that is SO WISE OMG. Keeping the sheet for next year?! My Excel-loving heart is in love with this idea. I’m totally going to pull those gift expenses out of my monthly tracking spreadsheet and make a separate document to keep for next year! Thank you SO much for sharing that – I just love it. I could keep gushing, but I mean, I think you get it, haha. I just think that’s such a valuable extra step!
Even though we’re not doing family gifts this year, this is still a super helpful post to think through for friend gifts… plus Mr. ONL doesn’t want to give up on gifts for each other, so there’s that. 🙂 Trying to nail down exactly what he’s expecting, because it’s not entirely clear… see, even people who’ve been at all this PF stuff and talking about money stuff for a while still stumble! But thank you for the great tips, as always!
That’s actually the boat that I’ve found myself in, at least on my side of the family! My mom, the O.G. of frugality and personal finance awesomeness in our family, just sent out a Facebook message this week to all the adults and offered two options:
1. We do a Secret Santa for the adults.
2. We only buy presents for the kids, and no adult presents get exchanged this year.
So yes, while we’re still working up to only second-hand or DIY presents for the kids, in one Facebook message my mom got buy in from all the adults not to exchange gifts this year! But my boyfriend and I are still doing an exchange – we capped it at $50, so that we’ll both be in roughly the same range, and I’m pretty excited at what I’ve managed to figure out within that budget. (I would tell you, but he reads the blog, haha.)
As for friend gifts, you might like my post tomorrow for ideas! It’s my last one before my self-imposed “holiday shutdown” so I’m trying to make it a good / useful one!