7 smart ways to keep family gift-giving within your budget

Christmas comes but once a year – which is just as well because nobody could afford it twice.

Even budgeting for the one big festive splurge a year can catch many households out.

“Money is really tight right now for a lot of families and underestimating the total cost of Christmas can be a major financial risk,” says Dan Wills, financial advisor at smart money app Plum.

“It’s really tempting to get carried away because you want to make family and friends happy, but unplanned discretionary spending on gifts can end up on high interest credit cards and can get people into debt.”

Wills reminds us of the real meaning of Christmas.

“There’s no obligation on you to spend money at Christmas. But if you get organised and stick to your budget, you’ll have more time to enjoy those special family traditions with loved ones,” says Wills.

Here are 7 smart ways to keep family gift-giving within your budget…

1. Start early

“The guy in the garage forecourt on Christmas Eve not knowing what to get is a bit of a cliché, but last-minute rush purchases are stressful, expensive and wasteful,” says Wills. “A better approach would be to start working out roughly what Christmas is going to cost in January, dividing it by 12, and then putting that money aside each month to save towards Christmas.”

2. Write a strict Santa’s list

“Set your total amount, then note down the list of names of everyone you’re buying for, allocate an amount next to that name, and tally it up to see if it’s within budget,” advises Wills.

“If not, see if you can reduce it by being open and honest with the family – well ahead of time – by agreeing spending limits, clubbing together for one larger gift rather than lots of small ones, sharing wish lists to reduce unwanted gifts, and perhaps suggesting a Secret Santa, especially among the grown-ups.”

He adds, “And don’t forget to budget for all the extras that add up – like wrapping paper, cards, postage, batteries.”

3. Start a four-gift rule tradition

“I’m a parent myself, so I know the pressure that comes with this time of year,” says Wills. “But when I think back to my childhood, I remember the walks on Christmas Eve to see the lights or decorating the tree, it wasn’t just about the presents.”

He suggests opting for the four-gift rule to stop that present pile from getting bigger.

“A good way for families to manage children’s expectations is to use the ‘four present rule’ – something they want, something they need, something to wear, and something to read,” he explains.

4. Be thoughtful with pre-loved

“It’s the thought that counts with gifts – not how much money you’ve spent,” says Wills. “Look around at home to see what unwanted and unused items you already have, like candles or books, and regift them.”

Make the most of your local charity shops.

“Buy second hand toys, books and games for children from charity shops on the high street, or from eBay and Vinted online rather than brand new,” recommends Wills.

“When kids open their presents, they’re not going to go, ‘Oh my gosh, this is amazing! You save 30%, right?’ They’re going to accept it on its own merit.”

And he adds, “Pre-loved is good for budgets – and the environment.”

5. Handcrafted wins hearts 

“Affordable homemade gifts such as baked goods or personalised items like a framed photo or a babysitting voucher are always well received compared to a generic gift because they have added sentimental value,” explains Wills.

He adds, “There’s more value in getting something that someone’s put their love and time into as a gift versus something they’ve just spent a lot of money on.”

6. Remember that Black Friday deals aren’t always a bargain

“If you’re strategic about using Black Friday sales and have a shopping list in mind, then it’s a good way to save money,” says Wills.

“However, a saving isn’t a saving if it’s not on that list. If it’s an impulse purchase because you get caught up in the hype and think, “Oh my gosh, it’s 50% off,’ but you weren’t going to spend that money anyway, then it’s not a saving.”

Wills adds, “Also remember that some businesses hike prices up shortly before Black Friday, so you need to track the prices from now up until the day to be sure it’s a genuine deal.”

7. Don’t let debt snowball

“We should always try not to spend what we can’t afford,” says Wills. “It doesn’t help that money has become less tangible. Making a payment by using your face or double clicking on Apple Pay, means you’re not actually handling cash, so it can feel less real.”

He highlights that relying on Buy Now, Pay Later services can come with risks.

“Using Buy Now, Pay Later can be OK in theory as long as you’ve got a plan in place and know that you’re going to be able to make the payments. But it’s a risk so make sure you’re not doing too many so you avoid multiple payments hitting your bank account at once,” advises Wills.