This quick guide will teach you how to save money on this year's gifts.
1. Set your budget
Trust me, I know how hard it is to set a budget when it comes to buying fun gifts for people you love. But it must be done—this is your only safeguard against ending up in holiday gift debt.
These budgeting tools can help:
- Know what other people spend: Sometimes it can help to know what others spend. Gallup polls report we are trimming spending nationwide—the average adult will spend around $700 in gifts this year. So this is your benchmark. Can you afford $700—yes or no? If no, what can you afford? (Read on to figure out the answer.)
- Set a percentage of annual income: Practical Money Skills recommends setting aside no more than 1.5% of your annual income for holiday gifts and expenses. So if you make $50,000 per year, your holiday gift spending budget (maximum) would be $750.
- Look at your bank balance, debt and savings: Ultimately, what you can spend comes down to what you can afford to spend without causing financial harm to yourself. For some of us, that will be $0.00, so we give love and hugs. That’s okay! (The Beatles will back you up—remember, "All You Need is Love"!)
- Set a holiday gift budget per person: Experts call this a "micro budget." If you find a gift for less than you have budgeted for one person on your list, you can either spend the extra on someone else or save that money towards next year’s holiday budget.
2. Build your gift list—pronto!
If you have already done this—bravo! If you need to do this, do it now so you can research the lowest prices for items and gift cards. (Did you know you can buy gift cards at a discount and give them as gifts?)
Some great websites to score discounted gift cards:
Note 1: Read this great KCL post to learn about five other ways to buy gift cards at a discount.
Note 2: You can also use those gift cards you bought at a discount to buy gifts from your list and save even more!
3. Choose and use a price compare tool
You will need your list from #2 for this. Once you have your list, you can compare prices on each item before you buy. Whether you prefer to price-compare before you head out to stores, price-compare in-store, or price-compare while shopping online, there’s a tool for you.
Some great price compare tools:
Note: This great KCL post reviews 9 price-compare apps.
4. Give IOU's
If you’re planning to get someone on your list a gift that always goes on sale right after the holidays, don't buy it now. Instead, give them an IOU and let them know their gift will come after the holidays.
Examples of gifts that tend to go on sale after the holidays:
- Winter wear (jackets, hats, boots, etc.)
- Video games
- Snow sports gear
- Clothing and suits
A real-life gift savings example:
Mom's holiday gift from Williams Sonoma
Here’s one example of how I saved on my mom's holiday gift. Mom loves Williams Sonoma. I combined several money-saving strategies to save $156.44 on her awesome gift!
- Get a coupon by joining the mailing list: I signed up for the mailing list, which scored me a 10% off coupon plus free shipping.
- Redeem credit card rewards points: I have a Pottery Barn credit card (Pottery Barn and Williams Sonoma are owned by the same company) and when I use it, I accrue rewards points (10% off any transaction over $250). 250 points = $25 which can be spent like cash.
- Buy a discounted gift card: I used my $25 in rewards points to buy a Williams Sonoma gift card (also sold at Pottery Barn and vice versa) to give to my mom.
- Shop the pre-holiday sales: Then I visited Williams Sonoma online and noticed stainless steel cookware is on sale (Mom owns most of the line, but wants a fry pan). I scored a 12-inch fry pan on sale for $103.96 (it’s $225 at full price so I saved $121.04. I then applied my 10% discount so the price was $93.56, and shipping was free. I saved a total of $25 + $121.04 + $10.40 = $156.44 on Mom's gift!
- Sock away the savings on my micro budget for Mom: My budget for Mom this year is $200. I now have $43.56 to spend or save.