Budget for a whole year of gifts at once instead of paying for birthdays, weddings, showers, and the holidays as they come. Total what you spent on gifts last year from your card and bank statements, set a cap for each person and occasion, and save a twelfth of this year’s total every month in a separate account.
One at a time, each gift looks small enough to put on a credit card. Over a year, a shower in March, two weddings in June, a graduation, and the holidays add up to a card balance that takes months to pay off.
The fix starts with what gifts cost you last year. Birthdays and the holidays come around at the same time every year, and the people on your list rarely change, so last year’s total is the best starting point for this year’s. Once you know that number, a year of gifts becomes one cost you can spread across 12 months.
Go through last year’s calendar one occasion at a time, and find each gift on your card and bank statements. Count the wrapping and shipping too. Then list everyone you’ll buy for this year and every occasion, with a cap for each. Holiday food, travel, and decorations belong in a holiday budget of their own.
Decide how much you can set aside each month and multiply it by 12. That’s this year’s limit, so trim the caps until they total about 90% of it, and hold the other 10% for invitations nobody saw coming. Save the monthly amount in a sinking fund, money set aside a little at a time for a cost you know is coming. An automatic monthly transfer into a separate high-yield savings account keeps the fund apart from your spending money.
Say your statements show $2,400 in gifts last year, and your budget can spare $150 a month. Your limit is $1,800, split into $1,620 in caps and a $180 buffer. When a gift won’t fit under its cap, pick a cheaper one instead of putting the difference on a card.
Start the transfer this week, and pay for each gift out of the fund.
Choose the gift fund’s account from the best high-yield savings accounts.
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