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Managing A Gift Budget – Always Have Money For A Great Present

Filed under: For Any Occasion, Money

Giving gifts can be expensive.  Between the winter holidays, Mother’s Day, Father’s Day, weddings, and birthdays, how many gifts do you give in a year?  If you make a conscious decision to give presents, you know that costs can really add up.

I love giving gifts.  I love shopping for presents, I love wrapping gifts, and I love giving it to someone I care about.  As much as I enjoy giving, I don’t like the financial stress of the holidays and the summer wedding seasons.  For the longest time, I dreaded winter because of how much I thought I needed to spend on Christmas and Valentine’s Day.  The fact that all of my friends seem to be born in February didn’t help either.  The strain on my wallet was taking away from my enjoyment of the season and celebrating the people I care about.

The only way that I haven’t been caught off budget was to set-up a separate bank account designated just for gifts.  I like ING because I find it easy to transfer the money between accounts, they have ATM locations, and they pay a higher yield interest on savings than most banks.

To manage a gift budget, you have to know how much you want to spend.  I start by listing the occasions for which I need to give a gift during the year.  For me, that’s Christmas, Valentine’s Day, a bunch of birthdays, and a few more occasions.  I ask myself who I want to give a gift to and how much I can afford to spend on that present.  I do the same with birthdays, upcoming weddings and showers, and all other holidays.  I admit that I even speculate on possible engagements and births too.  I add all of that up and I always add more so that I have a nice cushion in case I have unexpected gifts.  This gives me a good idea of how much I am spending that year, and is a good way to manage the amount I spend on gifts.  I’ve found myself staggered by the sum.  This gives me a chance to be honest with myself and adjust as I need.  It also forces me to stick to the budget when I buy each gift because I know how much it all adds up.

To fund my gifts, I have my tax refund directly deposited into this gifts savings account.  Because I try to maximize my deductions during the year, this isn’t a large sum, but will probably be enough to get my Christmas shopping done.  I also directly deposit a set sum from each paycheck into this account; $10 a week is barely noticeable.  I always choose to put more in because in addition to just buying gifts, I also use this for funding out-of-town weddings, birthday dinners, etc.  The money adds up really fast.  Because I do this, I am always prepared for weddings, showers, birthdays, and Christmas.

No personal finance guide that I have read has advised me to set up an account just for gifts.  Maybe presents aren’t considered necessities.  However, from my life experience, I would disagree.  I want to give gifts often, and have felt obligated at times to cough up money for presents.  That makes it a necessity to me and I better have the money ready to cover my necessities.  Having the money handy during the winter holidays really seems to take away from the stress of the season.  And, since there is a sum of money put aside, I can pay cash for gifts if I wanted to and never worry about going over budget.  Better still, this account earns interest and is easily available if I need to do something else with the money.

This entry was posted on January 25, 2011 at 9:09 pm.