Buying holiday gifts is a highly personal decision. You may want to splurge on an especially important person in your life or purchase smaller things for a variety of other people.
Limit the amount you spend to what you can afford, however. That doesn’t mean you won’t go through the motions of wondering if it’s enough. Maybe someone spent a lot on you last year or did you a major favor and you want to show how much it meant to you.
Before shopping, though, consider how much you’re comfortable spending on gifts for the people in your life — and stick to that amount.
Spouse or Partner
“The advantage of buying for your spouse or partner when you pool your money is that it is perfectly OK to get on the same page about what you are willing to spend on gifts,” says Sally Herigstad, personal finance expert and author of “Help! I Can’t Pay My Bills,” who’s based in Enumclaw, Washington. “Prepare to have a conversation about what it will be.”
[Related:How to Talk About Money With Family — and Why It’s Important]
What you spent on last year’s gifts is irrelevant because finances change over time. Maybe you already spent a large amount on home renovations or a vacation this year — or one of you is now unemployed.
Discuss your current economic reality and make a mutual decision about the gift price threshold. This clarity can also reduce resentment. “You don’t want to give a thousand dollar bicycle but get back a box of candy,” Herigstad says.
Children
Babies and toddlers will be perfectly fine playing with wrapping paper, but have grade-school age children provide you with a wish list.
“From that list, have them mark what they most want,” Herigstad says.”It’s fun for them and helps them learn to prioritize. They should know that not everything they want will be under the tree. Just don’t burden them with your financial troubles, if you have them.”
Kids ages 13 and up should be able to understand the basics of your financial parameters. If you’re prepared to spend no more than $60 per child, and one wants something that costs $300, it’s time for a frank talk.
[READ: Ways to Teach Kids About Money.]
Ask them to come up with something that will also make them happy but costs much less. If the item they want is really that meaningful, you may want to approach other relatives who normally give presents to pool funds instead. If you have five people on board, each contributing $60, you can buy that special thing and remain on budget.
As far as adult kids go, if they have their own children, consider an agreement in which there is no gift exchange. This can be a huge relief for them as they’re trying to figure out how to manage gifts for their own little ones.
Other Family Members
Setting a figure for how much you want to spend on relatives like parents, siblings, cousins, aunts and uncles, and nieces and nephews can be particularly tough. Maybe you’ve set a precedent by being very generous in the past or it’s been a long-standing family tradition to indulge during this time of year.
This is when you’ll have to be disciplined. Do not let guilt or habit guide you. If money is tight, decide which of them will receive a gift at all, then land on the actual figure. Perhaps you have three nieces and can afford to spend $40 on each. If so, tell everyone what your intentions are — and feel good about it.
If you have $100 to spend on all of your adult relatives and everyone else can afford the same, introduce the one-gift idea. Each of you can randomly select a family member and shop for that person. It’s easy and everyone can buy and receive something impressive.
Also, pay attention to the people you’ll be celebrating with when there is an in-person gift exchange.
“You don’t want some people to go empty handed,” says Andrea Woroch, a consumer savings expert from Bakersfield, California. “Consider a $5 gift card and something small to go with it. Just try to make it meaningful, like to a store they like. Or get them a nice bottle of wine or a box of chocolates.”
People at Work
You are under no obligation to get your co-workers anything. If you want to send or distribute holiday cards, that’s usually more than enough. Bringing treats into the office or the job site can be a nice gesture, too, and it’s affordable.
“If there is someone you’re close to, though, something like movie tickets can be perfect,” Woroch says. “Or, go to a warehouse store (like Costco) and get a multipack of gift cards at a discount. You can give a nice gift for under $10 this way. If you have credit card rewards accumulated, you can usually redeem cash or points for gift cards and won’t spend any money.”
Friends
Consider arranging drinks or a meal out at an affordable restaurant and make that your group gift to each other. This way, you can celebrate the holiday season but not spend an overly large sum of money.
Be very careful to identify places to eat and drink that are within your budget, though. The cost of dining out is rising. You may be comfortable spending a maximum of $40, so find the place where you can escape for no more than that figure.
[Related:The Cost of Dining and Drinking Out Is Rising: How to Manage the Tab]
“A white elephant exchange can also be fun,” Woroch says. “You don’t even have to spend any money, but instead have everyone bring an item from their home that they already own.”
Valued Professionals
When you want to show how much you appreciate someone who has gone the extra mile for you and your family, you may want to give a present, even when you don’t know that person well. The good news is that carefully chosen tokens are enough to convey your feelings.
“One of my healthcare providers gave me a little bottle of essential oil and a stone to put a drop on,” Herigstad says. “I’m sure it didn’t cost much, but I loved it. If you will give, make it inexpensive so they don’t feel any pressure to reciprocate.”
The Bottom Line on Setting Gift Spending Limits
In the end, spending time with loved ones or demonstrating that you care in intangible ways will be remembered. Honor your gift-giving budget, no matter the size. When you do, you can concentrate on activities like baking, watching movies and doing outdoor activities, which are free and can be more than enough to get everyone in the holiday spirit.
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How Much Do You Really Need to Spend on That Holiday Gift? originally appeared on usnews.com
Update 11/20/23: This story was previously published at an earlier date and has been updated with new information.
