Smart Gifting: Balance Generosity and Finances This Holiday

The holidays are a time for giving, and there’s nothing quite like the joy of surprising loved ones with thoughtful holiday gifts. However, the spirit of generosity can sometimes lead us to overspend, causing financial stress well into the new year. A 2021 survey from the first Affirm Consumer Spend Report found that 7 in 10 Americans overspend during the holiday season. With inflation and rising living costs, it’s more important than ever to strike a balance between showing appreciation and maintaining your financial health.

Fortunately, there are ways to give meaningful gifts without straining your budget. By making intentional decisions, you can stay true to your financial goals while still celebrating the season of giving. In this article, we’ll explore creative, budget-friendly gift ideas and tips for keeping your holiday spending in check. This will help you plan your 2024 holidays with both generosity and financial responsibility in mind.

1. Create a Realistic Holiday Budget

   Holiday spending can be sneaky. The first step is creating a holiday budget before you even think about what gifts to buy. Set a specific dollar amount you’re comfortable spending overall, and break it down into categories like gifts, travel, entertainment, and charitable donations. Setting these boundaries allows you to manage your expenses while still enjoying the holidays.

   “It’s important to remember that your budget should align with your long-term financial goals. Look at your current savings and ensure that holiday spending won’t derail plans like retirement or paying off debt. Sticking to a budget makes your shopping easier and helps you avoid the dreaded post-holiday financial hangover,” advises Daniel Lerner, Executive Vice President, Investment Services at David Lerner Associates, Inc.

2. Focus on Thoughtful, Meaningful Gifts

   The best gifts aren’t always the most expensive. Many of the most appreciated presents are personal, thoughtful, and from the heart. When brainstorming gift ideas, think about what your loved ones value most. Are there hobbies they enjoy? Is there something that would make their daily life easier or more enjoyable?

   Homemade or personalized gifts can often mean more than store-bought items. Consider crafting a scrapbook, making a playlist of meaningful songs, or even baking their favorite cookies. These gifts show you’ve put time and thought into what the person enjoys, making them far more memorable than a costly item.

3. Creative Gift Ideas for Every Budget

   Finding budget-friendly gift options doesn’t mean sacrificing quality. There are countless ways to give meaningful gifts that won’t break the bank. Here are some ideas:

   • Local Artisan Products: Support small businesses or local artisans by purchasing handmade or one-of-a-kind items that carry special significance. These items often have a story and can be far more meaningful than mass-produced products.
   • DIY Experiences: Instead of buying material items, offer the gift of time or experiences. Plan a movie night, cook a special dinner, or organize a day trip to enjoy together.
   • Group Gifting: If you’re buying for family members or close friends, consider pooling resources with others to give a group gift. This can allow you to purchase something more substantial without overspending individually.
4. Practice the “One-In-One-Out” Rule

   To avoid the cycle of accumulating too many things, consider gifting with the “one-in-one-out” rule in mind. This practice encourages recipients (and even yourself) to donate or discard one item for each new one received. It helps declutter homes, ensures gifts are practical and appreciated, and aligns with a mindset of mindful consumption.

   Additionally, this rule can work well for budgeting too. When making your shopping list, aim to balance any gift purchase by finding ways to offset the cost. For example, if you’re spending $500 on gifts, consider cutting back in other areas such as dining out or entertainment. This simple approach helps you manage your spending without feeling deprived.

5. Align Your Gifting with Long-Term Financial Goals

   While it’s easy to get swept up in holiday sales and discounts, keeping your long-term financial goals front and center is essential. Smart gifting means ensuring your holiday generosity doesn’t come at the expense of your financial stability. For example, it may be tempting to put purchases on a credit card and pay them off later, but that could lead to debt that impacts your financial future.

   Instead, consider setting up a holiday savings account earlier in the year. Contribute a small amount each month so that you have a designated fund for gifts and celebrations by the time the holidays arrive. This way, you’re not tapping into emergency savings or future retirement funds to cover holiday costs.

   The 2024 holiday season can be a time to celebrate and stay financially responsible. By setting a budget, focusing on meaningful gifts, and making thoughtful financial decisions, you can enjoy the holidays without the burden of overspending.

As you prepare for the holidays, don’t forget to think long-term. Need help balancing your financial goals with the holiday season? Reach out to the experts at David Lerner Associates for guidance on managing your finances and building a secure financial future. Our team is here to help you make smart decisions today that will benefit you and your loved ones for years. Contact us to learn more!

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.