Financial Literacy for Everyone

Tips for Saving on Holiday Gifts

ĎTis the season to give Ö and save. As many of us hit the stores to shop for loved ones this month, worries about finances are in the back of our minds. Between gifts, entertaining and decorations, the holiday season can pack a real financial punch.

The good news is that many of us are beginning to realize that holiday overspending isnít worth the financial strain. According to recent a survey by Visa Inc., 42 percent of respondents plan to arrange a gift exchange among a group of friends, family or co-workers to only buy one gift per person. Thatís one of many ways to cut back costs. Try these tips for giving fun, impactful gifts without breaking the bank.

1. Create a holiday budget. And stick to it. Itís a good idea to spend no more than 1.5 percent of your annual household income on holiday gifts and entertainment. Mapping out what you can afford to spend up front will help protect you against last-minute splurges. To help build your budget, use this free Holiday Budgeting calculator.

2. Make a gift list. List the names of the people you plan to buy presents for, what you plan to get them, and how much you expect each item to cost. Remember that a thoughtful or meaningful gift that costs $10 can be even more appreciated than a $100 present. Use this Gift Log online to help plan your purchases.

3. Do your research. Before hitting the stores, look online to see which retailers are offering the items you want at the lowest prices. Finding coupons for items you plan to purchase is another way to save.

4. Get crafty. Giving someone a scarf, painting or other handmade item is as thoughtful as it is cost-conscious. If you donít knit, draw, bake or do other crafts, itís not too late to try. Visit your local crafts store to get ideas for easy-to-make gifts people will love. Many craft stores have significant holiday sales if you watch for them.

5. Shop sales and outlets. Watch for upcoming sales and for additional bargains at discount or outlet stores. Both of these options are likely to yield major savings on brand-name purchases you would pay significantly more for in department stores.

6. Make it meaningful. If you have a friend who loves to garden, consider giving him gardening gloves and some seeds. A music buff may like a special CD to add to her collection. Other meaningful gifts that almost anyone would enjoy are: framed childrenís artwork, a journal with an inscription, a photo album with personalized details or homemade cookies with the recipe attached.

7. Get free gift wrapping. Many stores offer complimentary gift wrapping, so take them up on it when available since wrapping paper tends to be expensive. Wrapping gifts with decorated brown paper bags or newspaper comics are a few ways to get creative with wrapping. When you do buy gift wrap, look for deals to avoid paying full price.

8. Watch shipping charges. The additional costs to ship gifts can really add up when youíre making online holiday gift purchases. Many online retailers are offering free shipping this season; if the product you want is a bit more expensive at one retailer but that company offers free shipping, it could end up being the best deal.

9. Suggest a price limit. If your friends and family have a gift exchange, suggest a price cap so you donít go over budget. You may worry about breaking tradition, but a gift maximum is likely to be just as relieving to your friends and relatives as it is to you.

10. Get a head start on next year. Check out end-of-the-season sales this year for items you know will still be wanted or needed next year. Steer clear of items like electronics and new-release movies or movies, as they are likely to be outdated by next year. Instead, stick with staples and classic items: dolls, books, jewelry, bedding, artwork and other household items.

For many people, shopping, giving and opening gifts is a very important part of the holiday season. But the stress and consequences of spending more than you can afford isnít in line with the holiday spirit either. Instead of falling into the trap of overspending, plan out purchases carefully and put a little more focus on the thought behind the gift. For more ideas for saving this season, visit our Holiday Budgeting Center.

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