10 Ways to Save on Holiday Gifts

For many people, the holidays are the most wonderful time of the year—a special season for family, friends, and festive parties. But there’s another side to the merriment: According to a Consumer Reports survey, in 2008 roughly 12 million Americans were still paying off credit card debt for holiday purchases they’d made the year before.

Think of it as a financial hangover—one that starts before New Year’s Eve and snowballs throughout the year. The number-one culprit in the seasonal debt trap? Gift-giving. While most people may realize that it’s the thought that counts, all too often, they end up spending more than they can afford on presents.

The good news is, you don’t have to be a Scrooge to cut back on gift-giving expenses. This year, follow these 10 tips to give thoughtful holiday gifts—without breaking the bank.

1. Start early. Rather than waiting until the last minute to hunt down gifts, embark on your holiday shopping early. Ideally, you should be on the lookout for bargains all year, but if you haven’t been, start as soon as possible. This way, retailers will still have plenty of desirable items in stock, and you’ll have enough time to find the best prices. An added bonus: You won’t have to brave the cold and the crowds on Black Friday.

2. Set a limit. ’Tis the season for giving, but that doesn’t mean you have to play Santa to everyone you know. Focus on buying presents for close friends and family only, and eliminate acquaintances and coworkers from your list. If you’re worried you might receive gifts from casual friends but have nothing to give in return, ask in advance if they’d be willing to skip the exchange this year. Chances are, they’ll understand—and they may even feel as relieved as you will.

3. Join forces. Another great way to reduce gift-giving expenses is to go in on group gifts. Not only will pooling your money wind up costing you less; it will enable the recipient to enjoy a higher-quality gift than you could’ve afforded alone. Along these lines, also consider creative solutions like an ornament swap, grab bag, or Secret Santa so that everyone in your group can receive a present without breaking anyone’s budget.

4. Write it down. Blame it on the holiday bustle, but people who prepare a shopping list in advance are likely to spend less than those who don’t. When creating your list, look up the prices of the items you intend to buy, and don’t forget to include estimated sales tax, shipping costs, and any other fees. Although you may need to adjust your list as you go, having a guideline for gifts will save you both time and money.

5. Keep track. In addition to a shopping list, it’s important to create an overall holiday budget and keep close track of your spending. Keep in mind that your holiday budget should include not only the cost of gifts, but also any other costs associated with the season, such as decorations, gift wrapping, baking, and entertaining. This way, you’ll have a clear understanding of all your holiday expenses and a better perspective on what you can realistically afford to pay for gifts.

6. Shop around Once you’ve made your shopping list and budget, don’t forget to shop around to compare prices. Be on the lookout for coupons, deals, and savings, and use websites like shopping.com, nextag.com, and pricegrabber.com to see the difference in pricing among retailers. In some cases, you may find that you can get a significant discount by purchasing several items from one store; just be sure to crunch the numbers. Also consider browsing thrift stores, consignment shops, and websites that offer deeply discounted merchandise, such as overstock.com and ebay.com.

7. Avoid impulse buys. Even if you’ve written your list, created a budget, and shopped around for the best prices, you’ll need to beware of impulse buying—a seasonal shopping hazard that could sabotage your finances. Remember, spreading good cheer doesn’t mean buying beyond your means. If you are easily tempted by impulse items, carry a reminder in your wallet, and bring a limited amount of cash with you so you can’t overspend.

8. Do it yourself Being crafty can save you money and yield one-of-a-kind gifts that will be remembered long after the holidays are over. Seek out affordable do-it-yourself projects, like homemade photo collages. If you’re a more experienced crafter, consider making something more ambitious, such as jewelry, a knitted scarf, or clothing. If you like to bake, whip up seasonal treats, such as gingerbread or Christmas cookies; and if you have children, be sure to include them so they can join in on the fun.

9. Give the gift of time. You don’t have to stand in line at the store to give great holiday presents. Sometimes the most meaningful gifts are your own time and services. Consider creating gift certificates for services such as mowing the lawn, dog walking, chauffeuring, or baby-sitting. If you have a special talent, such as cooking, gardening, or giving massages, make a voucher that says, for example, “Redeemable for one free lasagna dinner.”

10. Regift and recycle. Recycling gifts is beneficial for your budget and for the environment. Look around your house for presents you may have received but never used. Perhaps someone gave you a great coffee maker, but you already had one, so it’s still sitting in storage. Or maybe you got a gift card to a boutique, but it’s not somewhere you generally shop. In all cases, bear in mind that the item you’re regifting should be appropriate for the recipient.

For more ways to reduce your holiday spending, check out our guide to Holiday Entertaining on a Budget, and search our Tip Jar for expert ideas and advice. Most importantly, try to focus on the true meaning of the holidays. Remember that while gifts may be considered a token of love, it’s not the amount you spend that matters—it truly is the thought that counts.