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Budget for gifts or pay the consequences

  By May 14, 2014

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For many years, my husband Joe and I never budgeted for gifts. Then, every gift-giving occasion caught us by surprise. This seems like a small issue, but it caused assorted problems for us. For example:

  • It messed up our budget. This wasn’t a big deal if we just needed to grab a bottle of wine or a gift card for a casual friend’s birthday party. It was a bigger deal if we had to give multiple gifts in the same month, or a pricier gift, such as a wedding present for a close friend or relative.
  • It caused stress. It doesn’t matter whether it’s flowers or an oil change: When you fail to budget for something, weird things can happen psychologically. In my case, I’d put off making a decision about the gift since it wasn’t budgeted. The whole thing became more complicated: How much should I spend? What category should the money come from?
  • It caused resentment. Failing to plan for gifts annoyed me and made gift-giving more of an obligation than a joy.

But last year, Joe and I sat down and tried to eliminate vagueness in our budget — for example, we had been shoving things we didn’t plan for into random categories after we spent the money. We did this with gifts.

Now, we keep a “gifts” line item on the spreadsheet we use for our monthly budget. We plan the budget at the beginning of each month, and that line item forces us to think about upcoming presents. If there are none, we put down $0, leaving the category as a reminder for the next month.

Recently, when it was time for me to PayPal my sister $50 for my half of our traditional Mother’s Day gift of fresh morel mushrooms (our mom hunts morels, but doesn’t always find them), I didn’t stress. We had the money budgeted.

I think we also buy better gifts because we have time to plan — after all, thoughtfulness counts for a lot. Think of the best gifts you’ve ever gotten: The thought that went into them made you feel understood and loved.

Do you have wedding, graduation or birthday gifts to give this season? Here are three tips from personal finance experts on how to fit those presents into your budget:

  1. Make sure you budget enough. If you’re giving cash, it’s easy to know how much to budget. But if you’re giving a tangible gift, you might want to budget a little extra, according to Miriam Caldwell, blogger for the Money in Your 20s section on About.com. And, if you’re mailing the item, add in postage costs.
  2. Don’t forget the office. If you work in an office, you’ve probably experienced the surprise of getting hit with a birthday pool request. It’s smart to plan for these occasions so you’re not short of cash, Caldwell recommends.
  3. Be kind to your budget. Just because you hear about someone else giving a $100 or $200 gift every time someone gets a degree or ties the knot, doesn’t mean you have to, too. Broke Girl’s Guide offers a list of nice but budget-friendly wedding gifts, and The Dollar Stretcher offers ideas for frugal graduation gifts.

Just the act of budgeting will allow you more creativity with gifts — and I can tell you from experience that last-minute gifts tend to cost a lot more than ones you have time to plan.


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