With the holidays fast approaching, many people plan on making gifts—monetary and otherwise—to friends, loved ones, and service providers, such as mail carriers, hairstylists, or babysitters. But how do you decide who to get gifts for and how to take care of those you care about without blowing your budget?
First things first: Plan ahead
It’s surprisingly easy to overspend around the holidays, when retailers go into promotional overdrive. Avoid getting caught up in the seasonal chaos and keep spending within reasonable limits by building gift-giving into your annual budget. One way to do this is to take the amount you spent last year, add a small cushion to account for inflation and any new gift recipients, and then divide the total by 12. Set up a recurring transfer to move that amount every month from your checking account to a savings account. At year-end you’ll know exactly how much you have for gifts, and you won’t be paying off heavy December bills in the new year.
Who gets a gift?
Deciding who to give to and who to skip can be one of the hardest parts of the holidays. There’s no hard and fast rule for whether or not to give to service providers, but here’s a simple test: Will you feel guilty if you don’t? If so, make a point of giving something. If the recipient is someone you regularly tip, like your hairstylist, doubling that gratuity is a good rule of thumb (bonus points for including a nice card with a line or two about how much you appreciate his/her skills).
When it comes to the office, remember the cardinal rule: Gifts should flow downward, not upward. There should be no expectation of buying for those above you. If there’s a tradition of gift-giving in your office, consider suggesting an anonymous gift exchange instead so each person buys just a single gift.
Feel uncomfortable handing over cash to recipients such as teachers, mail carriers, or garbage collectors? Gift cards to grocery stores or online retailers can be more appropriate; plus, if you purchase them using a credit card that gives you miles or cash back, you’ll be gifting yourself a little something, too. Or consider making a charitable donation in a giftee’s name, which comes with a silver (financial) lining—you may be able to take a tax deduction.