Gift giving should be fun and exciting. But when money is tight and causing you stress, having to give gifts can quickly add to that stress. However, there are still many ways to give gifts without breaking your budget. With some planning and by budgeting for gifts, you can minimize that stress.
Because gifts are given for special occasions, they are typically left off of budgets, or captured under the “miscellaneous” category. But what people often don’t realize is that special occasions aren’t necessarily rare. They are likely more common than you think.
When you add up birthdays, holidays, anniversaries, weddings, baby showers, and all the other gift-giving occasions, the list gets long quickly! If you are only looking at each occasion by itself, it doesn’t seem like a big expense. But the long list of events end up cluttering your calendar and your budget, adding that stress we are trying to avoid.
3 Reasons to Make Gifts a Category in your Budget
Keep Track of your Spending and Calendar
By adding gifts as a separate item on your budget, you can keep better track of your spending. Having upcoming gifts on your budget also helps to keep the upcoming events at the front of your mind. No more forgotten birthdays or last-minute panic shopping for an anniversary present, because you are planning ahead!
Manage Overall Spending in Every Budget Category
Incorporating gifts as a separate and important category of your budget will help you manage your other spending categories to accommodate for the upcoming expense. If you know you have significant expense coming up for gifts, you may need to proactively decrease your discretionary spending in other areas. The more detailed your budget, the more likely you will be able to stick to it and hit your goals!
Limit Overspending by Budgeting by Occasion
Budgeting for gifts helps you keep track of how much you spend for each occasion, limiting overspending. I recommend having a budget per occasion and relationship. For example, your budget could be the same for each of your kids’ birthday gifts. This practice help to make things consistent, fair and easier to remember. No more trying to remember how much you spent on so-and-so’s. It also helps you to budget based on set values and focus on gift options within a specific budget.
How to Start Budgeting for Gifts
This section assumes you already have a budget in place. If you don’t, don’t worry! There are a ton of great resources available online, such as the Federal Trade Commission’s Making a Budget resources or Ramsey Solution’s How to Make a Budget blog post. Having a budget is recommended by nearly every financial expert and can really help you in your financial wellness journey. So, take a time out here, check out those additional resources, and start your own budget today. Once you have a budget created, come back here for the step-by-step guide on how to include gifts in your budget!
Step 1: Plan Out the Occasions
The first step is to take stock of all the different events you have going on this year. Once you have every occasion identified and forecasted out throughout the year, then you can start to plan for the expense. I call this the “Gifting Calendar” and for a step-by-step guide on how to make your very own Gifting Calendar, check out my How to Build a Gifting Calendar for Organization post!
Step 2: Create Guidelines for Each Occasion
Next, set up the guidelines you want to follow for each kind of event or occasion. Think about how much you normally try to spend on birthdays, anniversaries, holidays, etc. Start with these values as a first pass for your gift budget. Assign each of the occasions identified in Step 1 a corresponding budget line item for the month the occasion falls in.
Step 3: Make Adjustments Based on your Budget’s Needs
Once you have gifts as a separate line item, double check your monthly expenses and income. This will help you to determine where you might have to make adjustments in your budget. For example, if your gift budget means you won’t be able to make your housing or car payment, then you are budgeting too high for gifts and need to adjust your occasion guidance. Check to see if there are other categories you can adjust to make space for your gift budget. Adjust your budget accordingly based on your priorities.
Step 4: Save Up for Big Gifts and Special Occasion Expenses
Are there some occasions that are more expensive than others? Maybe you are planning to go all out for a loved one’s birthday. Or maybe you get overwhelmed when Christmas spending hits. There are some occasions and holidays that are more expensive than others. Most likely, they might not fit into your regular monthly budget. In these cases, start saving early! Once you know how much you want to spend, divide that value up to determine your saving goal each month. By the time the event rolls around, you should have enough saved to make the occasion magical without breaking your bank or going into debt!
Once you’ve completed these steps, you are on the right track to getting control over your gift spending, and budgeting for the big holidays and events. Establishing a budget makes it easier for you to plan for events ahead of time, and keeps you more organized with all of the special occasions cluttering your calendar.
Ultimately, having a budget in general helps you to keep track of your spending and plan for your expenses. Gifts typically get forgotten as an expense within our budgets, but realistically, they are a consistent expense throughout the year that you should consider and plan for. Especially in today’s economy where everything is more expensive, having a budget is a key tool to keeping you and your family financially healthy. Gifts should be given out of love and joy and when money is tight, that joy can quickly go away if you aren’t planning accordingly. So, don’t wait! Create your gifting budget today.