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5 Ways to Save Money on Holiday Gifts for Your Friends & Family

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Budgets and diets have one thing in common: We tend to break both during the holidays. Even people who’ve been careful with their money all year long tend to go a little crazy once the holiday decorations go up.

According to the National Retail Foundation (NRF), in 2019, the average American expected to spend $1,048  during the holiday season. That figure includes food, decorations, holiday treats, and — of course — gifts. NRF survey respondents said they planned to spend $659 on gifts for family, friends, and co-workers — roughly 63% of their total holiday spending.

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Unfortunately, just like a holiday cookie binge, all this spending leaves a lot of guilt behind when the new year arrives. A 2020 report from CompareCards found that 70% of shoppers said they had at least one regret about their holiday shopping, and 17% believed they had spent too much on gifts.

One way to reduce post-holiday stress is to cut back — not just on cookies, but on spending as well. And since Christmas presents are the most significant expense for most Americans, it makes sense to look first at your gift budget when you’re searching for ways to cut holiday spending. A few sensible steps — like setting spending limits, giving secondhand or homemade gifts, shopping during sales, and saving on shipping — can help keep your expenses in line. So even if you gain a few pounds over the holidays, at least you won’t be weighed down by bills.

Ways to Save Money on Holiday Gifts

1. Set Limits

Holiday overspending often starts innocently enough. You see a gorgeous sweater that would be a perfect present for your sister, and though it’s a bit pricey, you decide it’s worth a splurge. After all, it’s only one present.

The problem is that once you’ve spent $80 on your sister’s gift, it seems only fair to spend the same amount on your brother. You don’t want to play favorites. And so it continues, through gifts for your cousins, in-laws, kids, and spouse. And the longer your list is the worse the total looks at the end.

One big present won’t usually wreck your budget, but a big present for everyone on your list will. So to keep your spending under control, you have two choices. You can either limit the amount you spend on each gift or limit the number of people you buy gifts for.

Set a Dollar Limit

Start by setting a total budget for your holiday gift-giving. Then divide that total by the number of people on your list, giving you a price limit for each person. As long as you keep each person’s gifts under this limit, you can’t go over budget.

Of course, you don’t have to split up your budget equally. You can give bigger gifts to your closest family members and distribute small token gifts to people who are less close, such as neighbors and distant friends. Or you can set a higher limit for a friend who has luxurious tastes and spend less on one with simpler tastes.

The point is just to have a number in mind for each gift before you start shopping. That way, you’ll know that sweater isn’t really the perfect present for your sister unless it also has the perfect price tag.

When your gift-giving budget is small, dividing it up into even tinier pieces for each person can feel limiting. But looked at another way, a small budget can help unleash your creativity. When your budget is unlimited, it’s easy to substitute money for real thought. If you don’t have any ideas, you can just plunk down a wad of cash for a gift card.

When you have only $15 to work with, you have to think outside the box. You have to ask yourself what this person really likes to form an idea that fits your budget. For instance, instead of grabbing that fancy sweater, you might remember your sister loves science fiction and pick out a best-selling sci-fi novel.

Shrink Your Gift List

Even if you spend only $15 on each present, that still adds up to $750 if there are 50 people on your gift list. So to rein in your holiday budget, you need to pare that list down to a more reasonable size.

Giving gifts to fewer people saves you time and money — the fewer people you have to shop for, the less time you have to spend fighting holiday crowds at the mall and wrapping presents.

The problem with shrinking your gift list is that it may lead to hurt feelings. If people accustomed to receiving a present from you every year don’t get one this year, their first thought might be that you’re angry with them for some reason. Even if you tell them you’re just cutting back on gifts to save money, they could still be offended they were the ones cut from the list.

But there are ways to trim your gift list without damaging relationships:

  • Talk It Over. Let your loved ones know about your wish to buy fewer gifts this year. It’s possible some of them are also fretting over holiday spending and will welcome the opportunity to cut back. Together, you can work out a plan to reduce gift-giving in a way that works for everyone. For instance, you can all agree to give large presents only to the kids in the family, while the grown-ups get only stocking stuffers.
  • Give a Family Gift. Try buying a present for a whole family instead of one for each person. For example, instead of getting separate gifts for your brother, his wife, and one for each of their three kids, you can give them all a board game they can play together. Another option is a gift card or gift certificate for a family meal at their favorite restaurant. You could also buy one gift for all the kids to share and one for the grown-ups.
  • Cut the Extra Gifts. Some people give holiday presents to people they aren’t really that close to, such as gifts for their neighbors or gifts for their kids’ teachers. If you have many of these “extra” people on your list, try skipping their presents this year. Instead, just send a greeting card or a letter to show them you’re thinking of them. They’ll probably enjoy that just as much as a random gift from a near-stranger.

Do a Gift Exchange

If you have 15 people in your family and each one buys a gift for each of the other 14, that gives you more than 200 presents piled under the tree. Unwrapping them all one by one ends up taking most of the day. In the rush to get through the pile, no one has time to focus on any one present or thank the giver properly. By the time you finish, you’ve littered the floor with paper and everyone is too worn out to enjoy their new gifts.

You can reduce the chaos of this scene by agreeing to a family gift exchange. This type of swap is also known as a round-robin or secret Santa. And it’s relatively straightforward to implement.

  1. Gather the family together and put all your names into a hat. Thanksgiving is a good time to do it. If you can’t get the whole family together, you can do your drawing online through a free site like SecretSanta.com or Elfster.
  2. Take turns drawing names out of the hat. The person whose name you pick is the one person you need to shop for. If you draw your own name, choose again.
  3. To make choosing gifts more manageable, you can all put a few hints on your slip along with your names. For example, you can name authors whose books you like or colors or sizes you prefer in clothing.
  4. Buy your gift, wrap it, and bring it to your holiday get-together. You can add to the fun by leaving your own names off the packages so people have to guess who gave each present.

A gift exchange has several advantages. Because you have just one gift to shop for, you can spend more time on it. Instead of working your way through a long list, you can focus on finding just one perfect gift for one person.

You also have only one present to open, so you can take the time to appreciate it. That’s much more satisfying than tearing your way through a mountain of gifts without really noticing any of them. And no one ends up feeling hurt because their present got tossed aside in the shuffle with barely a word of acknowledgment.


2. Shop Secondhand

Setting a maximum price limit on gifts is easy. But finding great gifts that stay within your budget can be more difficult.

One way to stretch your shopping dollar is to shop secondhand. Many common gifts — including clothes, jewelry, and books— are quite a bit cheaper when you buy them used. And because they’re reused to reduce waste, secondhand gifts are green gifts as well.

When Secondhand Gifts Are OK

Secondhand gifts make some people uncomfortable. To them, any gift they didn’t buy new looks cheap. However, not everyone feels that way. A columnist for the Los Angeles Times reports that when he asked two colleagues how they felt about used gifts, one thought they were fine, while the other said they were “really tacky.”

So if you’re thinking of giving a preowned gift, ask yourself how the recipient will feel about it. If it’s your Aunt Louise, who gets half her wardrobe from thrift stores, then it’s probably fine. But for your cousin who wouldn’t be caught dead in a thrift shop, you should probably plan to buy new.

What kind of gift it is can also make a difference. For example, some people hate the idea of wearing used clothes but have no problem with used books. Other good gifts to buy used are collectibles and anything you could describe as vintage or antique.

But even an antique won’t be welcome if it’s falling apart. So when you buy used gifts, make sure they’re in good shape. A good rule of thumb is that if you wouldn’t be willing to purchase a similar item for yourself, you shouldn’t give it as a gift.

Also, though it may seem obvious, it’s a big no-no to wrap one of your own belongings and give it as a present. Anyone who’s seen it in your house will know it’s just your old junk you’re giving away. If you want to offer your cousin an old sweater that no longer fits you, fine — but don’t treat it as a gift.

Where to Find Secondhand Gifts

Some of the most successful gifts I’ve ever given were the ones I bought used.

There are two keys to finding good gifts secondhand. First, you have to know where to look. Second, you have to know how to sniff out the quality merchandise.

Some of the best places to look include:

  • Thrift Stores. Your local thrift shop is an excellent place to look for clothes and household items. Some thrift shops also sell books, CDs, and games. My husband and I once found a copy of a $36 board game for $4 on a thrift store shelf — still new in its original shrink wrap. Before purchasing a gift from a thrift shop, check its condition carefully. Make sure there are no dents, rips, stains, or missing buttons lurking in hard-to-spot places.
  • Used Bookstores. Used bookstores are a source for serious bargains for the book lover on your list. Secondhand books are often just as good as new — or even better. For instance, these stores sometimes sell sturdy hardcover books for less than the paperback versions would cost brand new. Some used bookstores also carry CDs and DVDs. Just remember to check discs for severe scratches and flip through books to ensure they’re not badly damaged or marked.
  • Garage Sales. At garage sales, you can find items for kids, such as clothes, books, toys, and games. We’ve even found craft items that were still new in their original boxes.
  • eBay. The world’s largest online auction site is one of the best places to shop for the collector on your list. Its listings include all sorts of old and rare items you can’t just pick up in a store.
  • Amazon. Before you add a pricey new garment or gadget to your cart on Amazon, check to see if there’s a link below the main listing that says something like, “Used and new from $16.” If there is, it means other sellers are offering the same product, potentially at a lower price. You can nearly always find used copies of small gifts like books and games for less than the retail price.
  • Freecycle. Believe it or not, you can often find nifty holiday gifts on Freecycle for no money at all. If this seems tacky, just remember a gift isn’t valuable because you spent money on it — what matters is how much the recipient enjoys it.

As always, when shopping secondhand, inspect your purchases for quality.

  • Check puzzles and games for missing pieces.
  • Ensure used books don’t contain notes and scribbles and have all their pages.
  • Always check online listings of used goods for the condition, such as “like new,” “good,” or “acceptable” (for a gift, you probably shouldn’t settle for anything less than “like new” or “very good.”

Always ask sellers for more details if you are unsure of what you’re about to purchase.


3. Make Your Own

Another way to find presents that fit a small budget is to make your own. However, just like secondhand gifts, DIY presents are sometimes welcome and sometimes not. The trick is to choose gifts that look thoughtful rather than just plain cheap.

When to Give Homemade Gifts

When you give a handmade present, you’re spending time on it instead of money. So to be a success, the gift should look like you put some time into it.

In many cases, it comes down to quality. A beautiful hand-sewn quilt you spent weeks making is a lovely gift that means far more than anything you could buy at a store. But a lumpy potholder you obviously stitched together out of scraps at the last minute just looks shoddy.

Of course, there are exceptions to this rule. A gift from a child, for example, doesn’t have to look perfect to be a thoughtful gift. Even if the carved wooden dog looks nothing like a dog, the effort that went into it makes it a touching gesture.

But when the giver is an adult, people expect a little more. So if you’re a novice knitter, you probably shouldn’t give a friend the uneven scarf you knitted as your first project. Wait until you have a little more skill and can give away scarves and hats that show how much effort went into creating them.

Types of Homemade Gifts

If you have a particular skill (such as knitting, woodworking, or photography), you can use that to make high-quality gifts. But even if you don’t, you can find lots of ideas online for gifts that anyone can make.

  • Toys. There are all kinds of children’s toys you can make with simple tools. For example, it’s relatively easy to cut a wooden two-by-four into blocks of different shapes, sand them, and paint them in bright colors. If you have a jigsaw, you can use it to make your own wooden puzzles. Paste a colorful picture to a board — or paint one if you have the skill — and then carve it up into pieces. These gifts are cheap and require only a few hours of your time.
  • Jewelry. You can make one-of-a-kind jewelry by selecting and stringing beads of different shapes and colors. Purchasing beads at craft stores can be pricey, but you can buy a whole pound of assorted beads for $20 or less if you order online. You can even make your own beads from colored paper, as shown on Instructables.
  • Food. Edible gifts are perfect for the person who has everything. Even if they don’t need clothing, books, or household products, everyone needs to eat. Cookies and candy are classic holiday food gifts that cost only a few dollars to make. Healthier choices include homemade salsa or apple butter. If you can make these recipes with your own homegrown produce, that gives your gift an extra personal touch.
  • Bath and Beauty Products. For someone who loves to be pampered, a luxurious body butter or scented facial scrub makes a welcome gift. Products like these can sell for $20 or more at high-end retailers — but with a quick search, you can find recipes online for versions that cost little to make. Besides being cheaper, these homemade versions are often healthier because they contain no harmful chemicals.
  • Services. Many articles on homemade gifts suggest giving gift coupons for a service, such as a free night of babysitting or a home-cooked meal. However, there’s one problem with this kind of gift. All too often, the recipient never uses the coupons. In some cases, they just forget about them. In others, the recipient tries to ask for free babysitting on a night when the giver already has plans. To avoid this problem, try giving this kind of gift along with a copy of your calendar for the next few months. That way, you and the recipient can set up an appointment to make sure they redeem the coupon.

4. Shop Sales

A final way to save money on holiday gifts is to buy them on sale. However, sale shopping has its pitfalls. For one thing, not all holiday “deals” are really bargains. Worse still, all those glittering displays and tempting price tags can easily lure you into impulse buys that derail your budget.

Store Shopping vs. Online Shopping

To shop sales wisely, first, decide which sales to hit. According to DealNews, Thanksgiving weekend is the best time to find bargains. In 2019, the number of available deals was split about equally between Black Friday, Cyber Monday, and Thanksgiving Day itself.

However, for 2020, many retailers are opting to stay closed on Thanksgiving. There will still be lots of deals on Turkey Day, but they’ll only be available online. Even when stores reopen on Black Friday, most sale merchandise will also be available over the Web, according to a separate DealNews article. True, there are usually some “doorbuster” deals they only sell in stores — but they often sell out so quickly they could be gone by the time you make it in the door, resulting in a wasted trip.

Shopping online can be a lot more relaxing than plunging into the mall mosh pit. You don’t have to battle the traffic in the parking lot or the crowds inside. Instead, you can finish your turkey dinner, wash the dishes, and then fire up your laptop to get the same deals other shoppers are fighting over at brick-and-mortar stores. And you don’t have to worry about when the store closes — the Web is open all night.

However, online shopping has its drawbacks too. DealNews warns that some online deals only pop up at certain hours of the day, and you have to watch the clock carefully to catch them. Furthermore, heavy holiday traffic can sometimes overwhelm a website and cause it to crash. And just like in stores, online sale items sometimes run out before you hit the buy button.

A final downside to shopping online is that you can’t see and touch the goods before making a purchase. A sweater that looks gorgeous on the screen might turn out to be flimsy and cheaply made — so it pays to check the reviews and the store’s return policy before you buy.

Finally, remember to take shipping costs into account. A $30 game marked down to $15 looks like a fantastic deal — but not if it costs an extra $10 to ship.

Shopping Sales Wisely

No matter where you choose to shop, you need to be strategic. Thankfully, many tactics can help you score the maximum yield for your dollar:

  • Shop Early — or Late. Although there are lots of sales between Thanksgiving and Christmas, U.S. News & World Report says you can often find even better prices on specific goods at other times of the year. For instance, there are big sales on linens in January, jewelry in February, and appliances in May. So, by spreading your holiday shopping throughout the year, you can often find better deals than you can in December. Another good time to look for deals is after the holidays are over, when retailers mark down their unsold merchandise. For someone you’re not expecting to see in person over the holidays, consider shopping these after-Christmas sales and sending a late present.
  • Compare Prices. Not every holiday “deal” is a money-saver. The sale price of a product at one store may be higher than the regular price of the same product at another store. To ensure you’re getting the lowest price, use a Black Friday shopping app, such as ShopSavvy. When you scan the item’s bar code, the app shows you how much it’s selling for in other stores and online. For online shopping, you can use an app or browser extension like Capital One Shopping to compare prices and search for coupon codes automatically. You can also use a price tracker to save money on Amazon. For example, browser extension Camelcamelcamel monitors prices on the retail giant’s site over time so you can buy when the price hits rock bottom.
  • Stack Deals. Stacking is a standard technique used by extreme couponers: Wait until a product goes on sale, then “stack” a coupon on top of that sale price for maximum savings. When shopping online, you can find stackable deals through PriceBlink or rewards apps like Rakuten. Other rewards apps, such as Ibotta, can help you find coupons to stack with sale prices in stores.
  • Stick to Your List. Impulse buys are a significant holiday shopping hazard. The more time you spend in the store looking at tempting deals, the more unplanned buys you’re likely to put in your cart. To resist the lure of impulse buys, make a shopping list and stick closely to it.
  • Use the Right Card. In general, using a credit card rather than a debit card gives you more protection against fraud. As CNBC explains, if a hacker obtains your credit card number, your liability is limited to $50, a limit that doesn’t exist with a debit card. And if you use a cash-back credit card for your online purchases, it’s like getting an extra 1% to 6% off everything you buy.
  • Keep the Receipt. No matter how hard you try, you can’t find the perfect gift every time. Sometimes, you buy the wrong size, end up buying a duplicate of something they already own, or a product just doesn’t work as expected. In case one of your gifts doesn’t hit the mark, make it easy for the recipient to return or exchange it by keeping the receipt. While some retailers accept returns without proof of purchase, they generally don’t have to, so a receipt increases the chances of a successful return. If you don’t want the recipient to see the price, ask for a gift receipt that leaves that information off.

5. Ship Gifts for Less

Even if you stay within your budget, if you have to pay $10 each to ship the gifts, there goes your savings.

Fortunately, there are some ways to keep your shipping costs under control.

  • Watch Your (Gift) Weight. When shopping for gifts you plan to ship, consider weight in addition to the sticker price. For example, instead of shipping a new bowling ball to your uncle, send him a lightweight bowling gear store gift card in the amount of the bowling ball you wanted to buy.
  • Wrap It Securely. You can waste a lot of money on a gift if it doesn’t arrive in one piece. Popular Mechanics says the best way to protect your gift is to wrap each part separately, leaving at least 2 inches of cushioning between the parts. Leave 2 well-stuffed inches between each piece and the walls of the box as well. Then seal the box with wide packing tape, applied evenly across each seam along its whole length. Scotch tape, masking tape, and even duct tape don’t hold up as well.
  • Don’t Pay for Packing Materials. There’s no need to pay extra for packing materials like Bubble Wrap or foam peanuts when crumpled sheets of newspaper work just fine. Stuff newspaper snugly into every corner of the package until nothing rattles. When the package arrives, the recipient can recycle the newspaper sheets, so there’s no waste.
  • Compare Shipping Costs. According to Consumer Reports, the United States Postal Service (USPS) is almost always the cheapest way to ship a package. However, for some cities, it’s cheaper to go with FedEx or UPS. So before you decide which to use, check the prices online. Enter your package’s size, weight, and destination on the USPS, UPS, and FedEx websites — each site produces a list of shipping options with the cost and transit time for each.
  • Ship Directly. If you’re buying a gift online, there’s no point in having it shipped to your house and then immediately shipping it off to someone else. Having it shipped directly to the recipient, called drop shipping, can save you money and time. The only downside is that you don’t get to wrap the gift yourself or enclose a card. However, many online stores provide gift wrapping (which typically costs up to $7, with the vast majority being between $3 and $5, according to RetailMeNot’s 2019 data) and allow you to include a personal message for free.
  • Subscribe for Free Shipping. Consumer Intelligence Research Partners estimated that as of 2018, roughly 101 million Americans subscribed to Amazon Prime. If you’re one of them, you can take advantage of free two-day shipping on all your Amazon holiday purchases. Walmart, another retail behemoth, also offers a delivery subscription service called Walmart+, which offers fast, free shipping on orders over $35. Both services come with a $13-per-month fee, but if you plan to send a lot of gifts from one particular site, shelling out for a one-month subscription could be cheaper than paying the shipping costs. To decide between them, read our article comparing Amazon Prime and Walmart+ or look into other online stores that offer free shipping.

Final Word

When it comes to the holidays, what makes a present special is the amount of thought that goes into it. So when you’re shopping for a gift, take time to think about the person you’re giving it to. Ask yourself what they like and what kind of gift would mean a lot to them.

For example, say your mom has a massive collection of old family photos she treasures, but they’re all jumbled together in shoe boxes. Your gift could be to scan all those pictures onto CDs or a memory stick so she can find them more easily. That costs very little, yet it would surely mean a lot to her. Or use copies of some of those cherished photos to create photo craft gifts, such as jigsaw puzzles or coasters.

Amy Livingston
Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

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