There’s no trying to hide it: buying gifts for birthdays and Christmas is expensive.
If you don’t plan money for birthdays then there’s less money for the rest of week. And then there’s the time when it seems everyone has a birthday on the same month! What about the milestone birthdays and events that require a more substantial gift?
As well as birthdays, each year there’s Christmas presents to buy. If you’ve got a large family like us, it means a lot of gifts. Perhaps you have a group of close friends; do you buy something for them as well?
Arranging a Christmas lay-by is one way people manage, but you still end up with a big expense during a short period of time.
Using vultures like After Pay is a bad idea, as is whacking it all on the credit card as you have the potential to pay very high interest rates for products you couldn’t afford in the first place.
That’s why it’s a great idea to set yourself a gift budget. You’ll never be short of money for gifts again, nor will you get charged excessively high interest rates on borrowed money.
Figure Out How Much You Spend On Birthdays
Start by making a list of everyone that you would usually buy a birthday gift. Include as needed: family, friends, neighbours, work colleagues, the pet dog etc.
Next, divide those people into groups based on the amount of money needed for a gift for that occasion. For example: for my adults kids we budget $50 each for their birthday; the younger kids get $100; and, milestone birthdays get $200.
Here’s our 2020 birthday gift budget – we write people’s actual names in this list, but for this exercise we are showing the relation for ease of understanding. Remember to include anyone else you’d like to purchase a birthday gift for such as friends and colleagues.
|Sister||Parent||Younger child||Milestone birthday (21st)|
|Brother’s partner||Adult child|
|New baby||Adult child|
|6 x $30 =$180||8 x $50 = $400||2 x $100 = $200||1 x $200 = $200|
After you have completed the table, add up the the amount of people in each column and multiply that by the allocated gift money.
We have 6 people in the $30 column.
6 x $30 = $180
Do the maths for each column, then add up all the totals.
Our totals look like this: $180 + $400 + $200 + $200 = $980.
Just for the birthdays, we need $980.
Now For Christmas Gifts
As you did for birthdays, do the same for Christmas.
Our Christmas gift budget has been more affordable since we started doing Kris Kringle for the adults on one side of the family.
We randomly assign each adult one other adult family member to buy a Christmas present. It’s great because it means that instead of purchasing one gift for every adult in the immediate family, we buy just one present for one adult with a minimum $50 spend.
Here’s our Christmas Budget
|New baby||Granddaughter||Kris Kringle gift|
|Brother||Grandson||Kris Kringle gift|
|Work Kris Kringle|
|8 x $30 = $240||5 x $50 = $250||4 x $100 = $400|
Christmas totals: $240 + $250 + $400 = $890
It’s Time To Budget
Add up the total amount for birthday and Christmas gifts.
Our example: $980 + $890 = $1,870 for the year.
I must admit that the first time we did our gift budget, I was shocked at the amount of money! You may spend more or less than us on gifts and that’s okay. You do you.
Once you have your yearly gift budget total, break it down into payday frequencies.
Mr Hack gets paid weekly so our yearly gift budget of $1,870 is divided by 52 weeks = $35.96 per week.
1,870 ÷ 52 = $35.96.
Each week $35.96 is put aside for birthday and Christmas gifts. If you are worried you may accidentally spend the gift money, put it in a separate bank account. Another hint is to set up an automatic transfer of your gift money into that account.
When you have a gift budget, you won’t experience money stress again around birthdays and Christmas. You’ll have a new confidence about being able to afford presents no matter what time of year it is.
Whether your gifts are an item or a voucher, it’s always a good idea to wrap them in an eco-friendly way. Try to avoid glossy gift wrapping paper as it isn’t recyclable, and also plastic curling ribbon and rosettas which are a source of pollution.
Aim for plain paper or tissue paper, Furoshiki fabric gift wrapping, reusable paper gift bags, natural twine and organic decorations such as plant leaves for your presents.
When you combine a gift budget with eco-friendly choices, everything from your finances to the environment becomes so much more sustainable.