I had a question from a reader, Jordan, about how I handle my holiday spending. By an odd twist of fate I had several of my old Christmas budget files still on my hard drive, so I in the position of being able to analyze how much I’ve spent in the last four years.
First let me explain how I handle my Christmas shopping. I plan really far in advance. We normally set our total budget amount a year in advance. That way I start saving in January for the following Christmas. Then in October I sit down with my wife and we check out our list of people we bought for last year and updated as required. We also set limits for each person at this time. Typically limits are $50 for an adult, $40 for older kids and $20 for babies.
So over the last few years our total budget has been between $1150 to $1500 for 22 to 24 people. After we buy a present we enter it into a budget spreadsheet. This allows us to track each year how under budget we are doing, since we have yet to ever break our total budget. Our actual spending has ranged from $900 to $1350 total or $40 to $56 per person including shipping.
If we go over budget on a individual present, we then reduce our spending on someone else. This way the overall budget stays below its limit regardless of what we spent on a single person.
This entire system works well for us partly because we have set limits on our spending that we don’t go over as a whole. To help you reduce your holiday bill I suggest the following:
- Don’t buy gifts for people you barely have a relationship with. In my mind presents for teachers, mail carriers, babysitters and office co-works is insane.
- If you insist on doing something for your office bring in something that everyone will like such as a sample tray of your Christmas baking.
- Setup a gift exchange to reduce costs. A few years back my siblings got together and setup a gift exchange between our spouses and us. The idea was to let everyone focus more on the kids. It’s worked great so far.
- Homemade is fine as a present. Actually when we first got married, my wife and I made gift baskets, which featured mostly homemade items such as candles, hot chocolate mix, cookies and then some assorted dollar store items like mugs. They went over very well because everyone realized the effort we put into them (not to mention our hot chocolate mix is better than any store bought one I’ve ever had).
- Start shopping early. This allows you a stress free week before Christmas and also allows you time to find most of your presents on a good sale. Just because a present looks like it cost $50, doesn’t mean you have to actually spend anywhere near that amount.
So that’s my method and ideas around Christmas shopping. If you have an idea that has worked for you please share.
This post is part of the Canadian Tour of Personal Finance, check out the other blog posts here.