Budgeting, comparison shopping and gift cards can keep holiday spending manageable
Paul Welitzkin, The Petoskey News-Review
6 min read
In 2023, consumers plan to spend approximately $620 on gifts during the winter holidays.
GAYLORD — Holiday shopping is the one time of year when just about everyone, regardless of their economic status, decides to participate in the economy and spend money on gifts for family and friends.
Holiday shopping can be fun, exciting and even stressful, especially when it comes to paying for everything. Economic observers from academics and banking suggest consumers develop a budget, do comparison shopping and don't overlook the role that gift cards can play.
Those celebrating the winter holidays expect to spend $875 on average on gifts, decorations, food and other key seasonal items, according to the National Retail Federation’s latest consumer survey conducted by Prosper Insights & Analytics.
Angela Zondervan, a finance professor at Grand Valley State University, said a great way to prepare and to reduce stress is to create a holiday spending budget.
"There are a few ways to do this, but every budget should include a list of the names of individuals or organizations receiving gifts, as well as the estimated amounts to spend for each. The estimated amounts can be totaled to determine your budget. After shopping is finished, actual expenses can be compared to the estimates," said Zondervan.
Tyler Watts, an economics professor at Ferris State University, recommends setting up a budget before buying anything.
"What has worked well for my family is making a list of all giftees, and putting down a target spending amount for each person. We do this in a spreadsheet so it’s easy to do the math and make adjustments. Then we add up the total and see if we’re comfortable with that amount. If it’s too high, we simply ratchet down spending amounts, person-by-person, until we’re happy with the total," Watts said.
Casey Chlebina, the branch manager for Horizon Bank in Gaylord, said establishing a budget is generally a wise approach for consumers during the holiday season.
"It helps individuals manage their spending, avoid overspending and prioritize their expenses. By setting a realistic budget, people can plan for gifts, decorations and other holiday-related expenses without putting themselves at financial risk," she said.
While holiday shopping can be fun and exciting, it can also be stressful, especially when it comes to paying for everything. Economic observers from academics and finance suggest developing a budget, comparison shopping and don't overlook the important role that gift cards can play when determining how much to spend.
Chlebina also urges consumers to pre-shop for gifts.
"Pre-shopping both online and in stores can be a helpful strategy to get a good idea of how much you might spend during the holiday season. This allows you to browse and compare prices, identify potential discounts or sales and plan your purchases more effectively. By doing so, you can create a more accurate budget and make informed decisions about where to allocate your funds. Additionally, pre-shopping gives you the opportunity to take advantage of early sales and promotions, spreading your expenses over time and potentially saving money," said Chlebina.
Watts added that "shopping online is a must."
"It’s never been easier to comparison shop for the best prices," said Watts. "An example: I work on old cars, so I’m constantly buying parts. I usually check RockAuto, NAPA, O’Reilly, eBay, Autozone, etc. and sometimes the price differences are substantial. Spending five to 10 minutes checking multiple vendors’ websites will usually be worth your time."
One problem that confronts many holiday shoppers is what to do if you find that your original gift idea for someone is too expensive. If you want to show someone you care, but don’t have the funds for an extravagant gift, try making or doing something for that person, suggested Watts.
Tyler Watts
"My wife has excellent culinary skills, so she’ll often gift homemade bread, jelly or pasta sauce. My daughter is an amazing artist, so she’ll often make drawings or pottery, which is so much more meaningful than even a very expensive store-bought gift. I’m a handyman, so I’ve gifted people my labor for simple household repairs or even fairly large remodeling projects," he said.
Zondervan said a simple family experiment showed the lasting impact of experiences over items.
"A few years ago, within my own family, I did an experiment to ask some of my family what I had given them for Christmas the previous year (and) no one remembered. Next, I asked them some of the things we had done and experiences we had in celebrating the holidays (and) they very quickly recalled decorating cookies, ice skating, concerts and driving around to look at lights. Though anecdotal, this experience showed me that overspending is quite simply not worth it," said Zondervan.
Casey Chlebina
Chlebina said people should determine a reasonable budget for the replacement gift.
"Look for alternative products or versions of the original gift that are more affordable. Sometimes, similar items or different brands can provide a comparable experience at a lower cost. Keep an eye out for sales, discounts or promotions. Timing your purchase to coincide with holiday sales or special promotions can help you get a better deal on a replacement gift. If the original gift was too expensive for you alone, consider organizing a group gift with friends or family members," she said.
Even though some consider gift cards a generic gift choice, Chlebina said don't overlook their usefulness.
"When you purchase gift cards, you are essentially setting a predetermined spending limit. This can help you stick to your budget and avoid overspending. You can buy them in advance or during sales, taking advantage of discounts and promotions while still controlling your overall spending. Using gift cards can make it easier to track your holiday spending. You have a clear record of the amount you've allocated for each recipient," she said.
Angela Zondervan
Zondervan said gift cards are a great alternative to tangible gift giving.
"They allow the recipient to have more control over what they purchase and allow the giver to stay within their budget. Gift cards are often offered with incentives and sometimes discounts near the holidays. For example: buy a $50 gift card for $45, which can help givers stay on budget while adding more value to their gift," she added.
Watts added that "Gift cards are a gifting lifesaver."
"Especially for acquaintances or relatives you maybe don’t know that well or who live far away," Watts said. "You can still put some thought into a gift card, though — if you know the person loves coffee, a $20 Starbucks card will say more than a $25 Walmart card. And of course, gift cards make it very easy to hit the gift budget exactly on target."
Those celebrating the winter holidays expect to spend $875 on average on gifts, decorations, food and other key seasonal items, according to the National Retail Federation’s latest consumer survey conducted by Prosper Insights & Analytics. The amount is $42 more than consumers planned to spend in 2022 and is in line with the average holiday budget over the last five years.
Of the $875 consumers plan to spend, approximately $620 will be spent on gifts. Consumers are also budgeting another $255 for seasonal items like decorations, candy or food.
