It's natural to want to show appreciation for a spouse, parent, child, college buddy, or close friend on their birthday. But it can get expensive fast.
Part of the problem is that it is difficult to know how much to spend on presents. Most budgets include allotments for groceries, utility bills, and rent or mortgage payments, but not birthday presents.
Gift giving gets even more expensive if we fall into the trap of thinking that a present worth $100 is more meaningful than one worth $10.
Statistically, people do have a tendency to purchase high-priced items for birthday gifts.
A survey from Toluna found that 35% of respondents pay between $41-100 per gift; that means five gifts would cost you up to $500.
Without setting limits or budgeting for gift expenses, spending on birthday presents can easily get out of control.
It's possible to make instant changes to your budget that keep you from overspending on gifts.
Part of this is a mindset change. It takes learning how to feel good about giving gifts for the joy of giving, rather than trying to use gifts to impress or make up for not spending enough time with friends, family, kids, or other loved ones.
Still, spending money on some presents will be unavoidable–and for those times, a few tips will have you shopping around for thoughtful, practical gifts like a pro.
1. Know your budget to know how much to spend
Birthday gift expenses can skyrocket without designating a firm cap on how much you can afford to spend.
Before you can set a limit on what you can afford, you need to find out how much money you can responsibly allocate to presents by creating a budget.
Tracie of Penny Pinchin' Mom offers a great five-step plan to create a simple budget:
- Gather all the items that show how your money comes in and goes out such as bank statements, pay stubs, receipts, loan information and monthly utility statements.
- Determine your monthly income by tallying your pay stubs for the past month and adding them up. If your income fluctuates due to being paid hourly or on commission, total up four months worth of your pay stubs and divide by four to get an estimated monthly amount.
- Determine your fixed expenses by adding up the payments you must make every month like rent, utilities, insurance, vehicle payments, and other bills. For fluctuating expenses like electricity, add up the bills from the four highest months and divide by four to find out the highest average amount you can expect to pay – that way you're not caught unaware when your bills rise as the seasons change.
- Calculate discretionary expenses for items like food, gas, clothing, and entertainment. Add up three months worth of each category and divide by three so you know around how much you spend per month.
- Subtract your estimated fixed and discretionary expenses from your income.
These calculations will tell you how much money you have left over at the end of each month.If it's a negative number, you're spending more than you make; try and find ways to balance your budget and worry about gifts later.
If it's a positive number, then you can decide how much you can comfortably spend on gifts every month.
Keep this amount reasonable and low enough that it doesn't impact your ability to put money into savings.
Make the amount for birthday presents a monthly line item on your budget as if it were any other bill, ensuring you'll never be caught short and forced to buy expensive, last-minute gifts right before someone's big day.
Save any money that's left over during months with few birthdays to cover the extra expenses during months with more celebrations.
Budget a little extra money to give yourself some wiggle room
Charlotte Alice of Snapguides suggests adding a little extra padding– think about $20 – to this number to cover expenses for any birthdays you may have unknowingly left off your list.
That way, if your best friend from college mentions they'll be throwing a party in your part of town for their birthday, you don't have to break the bank to get them (or any other unexpected birthday celebrant) a gift.
This extra money could also go into upgrading presents for a milestone birthday, such as your parents turning 50, or your child's sweet sixteen celebration.
A solid budget is the foundation for all smart money management – including gift giving.
By knowing how much money you can responsibly allocate to birthday presents, you can make sure you don't go overboard with your spending.
Make budgeting even simpler using technology
Making a budget is never the most fun thing in the world. It's time-consuming, requires constant double- and triple-checking to ensure everything adds up right, and is often stressful.
Luckily, tech-savvy folks can take advantage of the budget-creating tools Lars Peterson rounded up in a list for U.S. News to make budgeting less painful. You can use an app like Mint which automatically tracks and categorizes your spending.
Or there is PearBudget. This website lets you track income and expenses online, and offers tools for financial goal-setting and planning.
Google Sheets, Excel or Apple Numbers are pre-installed on your computer and provide built-in budget templates that can be used for tracking your money. Google Sheets is free with your Gmail account.
These tools will help you create a budget and easily discover how much money you can set aside for presents.
2. Find out the best time to buy presents by creating a list of birthdays
As Joanna and Johnny of Our Freaking Budget explain, creating a list of upcoming birthdays is essential for planning out your birthday gift expenses.
A solid grasp on whose birthday is coming up lets you manage your time, shop for presents when prices are low — like on Black Friday or during back-to-school sales — and get a jump on crafting a handmade gift without the anxious deadline rush.
Use technology to create your birthday list
Kit Eaton of the New York Times recommends using Davia to easily keep track of upcoming birthdays for everyone you care about. This app integrates with Facebook to show a calendar view of upcoming birthdays among your Facebook friends, pulling any birthdays stored in your phone's contact list and adding them as well.
By knowing whose birthday is coming up when you won't be caught flat-footed and forced to buy an expensive last-minute gift while rushing to a friend or loved one's party.
3. Decide how much to spend on different birthdays with one simple formula
Even when you know how muchyou can spend on birthday presents, it's difficult to choose whomto spend that money on.
Putting a cap on your birthday gift expenses means that if you buy a large gift for a spouse or significant other, there's less money to spend on gifts for a close friend, coworker, child, or relative.
Luckily Garth Sundem created a great formula for Wired that takes all the guesswork out of deciding how much to spend on gifts for different people.
This will prepare you for an entire year of birthday gift giving.
Rank upcoming birthdays by importance
First, take your list of every birthday requiring a gift that will be coming up this year. Rank each person from 1-10, with ten being the most important to get a gift for, and one being the least.
Remember, just because you're close with someone doesn't mean you should necessarily give them a high rank.
Some people dislike receiving gifts, or won't necessarily appreciate an expensive gift.
Parents of two-year-old children doubtlessly love their kids with all their heart, but that doesn't mean their child will appreciate a $200 rattle more than a $2 one.
Take into account what that person likes and appreciates when setting this number.
No two people will be alike, and your gifts should reflect that.
For example, I've got one friend who loves delicious food.
They'd be happier if I took them out to eat for $50 at a new and trendy food truck instead of buying them a $500-meal at a fancy restaurant for their birthday.
The most important thing is to make this money go as far as possible by giving each person gifts they value.
That could be your attention, your talents, or your time. For those impossible-to-shop-for friends, that could even be your philanthropy, by making a charitable donation in their name.
With that said, let's say someone was planning out their gift-giving budget for their spouse, two children, three friends, and two parents. Their list may look like this:
- Spouse: 10
- Child: 8
- Child: 8
- Parent: 5
- Parent: 5
- Friend: 3
- Friend: 3
- Friend: 3
Do some math to find out how much to spend on each birthday.
Now, sum up all these numbers. In this example, that would look like 10+8+8+5+5+3+3+3 = 45.
Take your monthly budget for birthday gifts and multiply it by 12 to find out your yearly allotment for birthday presents.
Divide this amount by the sum you found in the last step.
In this example, let's say the monthly budget was $75 per month, $900 for the year. Our hypothetical gift buyer would calculate $900/45 = 20.
You now know that the each point is worth $20.
Now, multiply the number assigned to each person by the number found in the last step to find out how much you should spend on each person.
In our example case, that would produce the following results:
- Spouse: $200
- Child: $160
- Child: $160
- Parent: $100
- Parent: $100
- Friend: $60
- Friend: $60
- Friend: $60
Now whether you're buying gifts for kids, parents, or other friends and loved ones, you've got firm limits on how much to spend on different people in your life based on your relationship with them.
4. Make the most of your budget with these gift giving strategies
Now that you've worked out how much to spend on birthday gifts for different people in your life, it's time to make sure you use that cash to give the best presents possible.
There are four main ways to give affordable, meaningful, and memorable gifts:
- Give experiences, not objects
- Shop smart
- Get deals on gift cards
- Take a DIY approach
For more meaningful presents, give experiences
Think back on some of your happiest memories. Most of them are probably of doing something – camping with friends, vacationing with family, or maybe attending a party.
There's actually a scientific basis for this.
According to the findings of psychologists Paulina Pchelin and Ryan T. Howell in the Journal of Positive Psychology, people gain more happiness from experiences rather than material possessions.
Factoring this into your gift-giving can help you give better presents for less money.
For instance, the music-loving child in your life will probably appreciate a pair of $50 concert tickets to see their favorite band perform more than a $200 drum set (and so will their parents).
How to create or buy great gift experiences
If you're looking for inspiration into different kinds of experiences you could give, Katie of Wellness Mama offers a ton of great ideas including passes to amusement parks, tickets to a museum, or seats at a cooking or art class. There are plenty of ideas that could work for parents, kids, or friends.
For those on a tighter budget, Stephanie of Six Figures Under recommends using your talents to give low-cost experiences.
For instance, those with culinary inclinations could save money by creating a restaurant-style atmosphere inside your home and cooking a meal as a present rather than taking someone out to eat.
By giving experiences rather than another gadget, toy, or expensive item, your presents will create a happy memory that lasts a lifetime instead of a momentary thrill during the unwrapping ceremony.
5. Shop like an expert to get the best prices on gifts
Of course, objects do sometimes make better gifts than experiences.
If your parents have been hinting that they are running out of places to store their books, they would probably appreciate a new bookshelf more than taking a carpentry class on how to build a bookshelf from scratch.
In these cases, shopping smart for gifts can save you a significant amount of money by cutting out expensive, last-minute purchases.
Give great gifts by avoiding these common pitfalls
Let's get into the common mistakes people make when shopping for presents. Dean Obeidallah came up with a terrific list of ways to avoid giving a horrible gift. After asking people on Facebook and Twitter about bad holiday gifts, he came up with useful suggestions for gift givers.
Don’t give gifts that imply something negative about the recipient, like a gym membership, self-help book, deodorant, or any other presents of that nature. He also says to avoid overly practical gifts, and cautions that regifting can work, but only if done correctly.
Save money by stocking up on gifts in advance
Kerrie McLoughlin offers some great gift-shopping tips in her article for San Diego Family. She suggests stocking up on gifts in advance.
If you see a deal on an item that would make a great present for an upcoming birthday, buy it right then – even if the party is months away. Keep an eye out for these bargain-priced gifts at store closings, back-to-school sales, on Black Friday, or other times when prices fall. Shop smart and you'll find a lot of excellent gifts at wallet-friendly prices.
Keeps costs low by buying the same present for multiple people
Our Freaking Budget authors Joanna and Johnny also suggest buying multiple items that are on-sale and giving them to different people; that can save you money and take care of a whole lot of thoughtful gifts at once.
For example, if you know a lot of aspiring artists and see low prices on canvases, then purchase a bunch and give them as gifts throughout the rest of the year.
Buying in bulk, planning ahead, and watching for deals can help you keep your costs low while still giving great quality gifts for kids and adults alike.
Give great gifts by getting practical
Yes, I did say to avoid giving overly practical gifts in an earlier section. There's a right way to give practical gifts though, and these types of presents can be some of the presents their recipient cherishes the most.
If you give a gift that a person genuinely needs, you're pretty much guaranteed to make them happy.
Listen to your friend or family member. If they've frequently talked about how much easier their life with be with a new ice scraper or flat-out asked for the steel-toed boos they need for their job, you're in the clear to get them a practical gift.
Save money by getting great deals on gift cards
Gift cards can make the perfect present, especially for acquaintances whose interests you may not know, or people who are just plain hard to shop for. You can save money on gift cards by buying them pre-owned, finding them on sale, or swapping your unused gift cards for new ones to give as presents.
How to get a deal on pre-owned gift cards
Ebay and other online re-sellers often have a great selection of pre-owned gift cards, often at pretty hefty discounts. However, buying gift cards online means running the risk of purchasing a depleted gift card from scammers.
That's why Shelley Hunter of GiftCards.com suggests always looking for a money-back guarantee when shopping for gift cards on these sites. This ensures that even if the balance on a gift card has been used up, you'll have recourse for getting a refund.
Many online gift card resellers require sellers to verify the balance on their gift cards, so this isn't usually a problem. If you want to make sure that you're getting what you pay for when it comes to buying gift cards online, Raise Marketplace offers a comprehensive guide to checking gift card balances for different vendors and retailers.
Bargain hunting for new gift cards
If you want to avoid resold gift cards, Shelley also recommends browsing online retailers like Amazon and physical stores such as Staples for occasional gift card discounts.
These vendors usually drop their prices on gift cards for many popular stores and services around the holidays, so check out their prices around that time and stock up on cards in advance.
Swap out unused gift cards for new ones to give as gifts
Sarah Purewal of CNET offers another option for finding great deals on gift cards: trading out gift cards you don't use for new ones to give as gifts using online card swap marketplaces. The article mentions sites like CardCash where users can trade their unused gift cards with each other.
Whether you buy used or new, or trade for gift cards, these tips can help you save money on one of the most popular types of gifts out there.
6. Take a DIY approach for meaningful, affordable gifts
Handmade gifts can be some of the most thoughtful presents.
They let the recipient know that you care about them enough to take time out of your busy schedule to create something just for them–and frequently cost much less than store-bought items.
Make sure to price DIY gifts appropriately
While DIY gifts are usually cheaper than purchased presents, make sure to factor any costs for their materials into your birthday gift budget. Stacey of Trends & Ideas writes that even homemade gifts can cost a bundle if they require frequent trips to a craft store to pick up pricey supplies. Just because you're not getting a gift from a store doesn't mean it's free.
Know when it's acceptable to give a homemade gift
Some people may wonder whether it's appropriate to give a homemade item for someone's birthday. Luckily the answer is almost always yes, according to Alan Henry of Lifehacker.
As long as you can answer yes to the following two questions, giving a handmade gift should be perfectly acceptable as long as you have the skills to make it and you think the gift will be appreciated.
If you have the time and talent required to create a thoughtful gift and are just in need of some inspiration, Tara Block of PopSugar has compiled more than 100 different types of DIY gifts you can create.
These range from the perfect presents for kids to homemade items for fashionistas, foodies and more.
How to use apps and technology to make awesome DIY presents
Even if you're not the craftiest person in the world, technology and apps can enable you to make meaningful handmade gifts using only your computer or smartphone.
For instance, Shriya Joshi of Storypick has 26 ideas for ways to turn photos into gifts. While some of these do require spending some money, these could make the perfect present if the intended recipient has an overly active Instagram account.
You could also consider making a birthday playlist on Spotify or Google Play as a gift, as recommended by Rachel of Simply Gifted. It's a free, thoughtful gesture that music lovers are sure to enjoy – especially if it could serve as a great party soundtrack.
Whether your DIY gifts are made from craft supplies or tools online, using your time and talents can result in an economical, meaningful gift.
7. Keep costs under control by knowing when not to give a gift
We all only have a limited amount of time and money, meaning there's only so much handmade or purchased gifts that can be given every year.
There will be some birthdays where giving gifts simply won't be possible.
That's okay. Colette McIntyre of Refinery 29 put together a great FAQ on when it's okay not to give a present.
For most casual friends, it's perfectly okay not to get them a gift, even if you feel guilty because they gave you a present for your birthday.
Gift-giving should be done because you value your relationship with another person, not simply to pay them back for a past gift.
Sometimes, just showing up to the party is enough.
If you still don't want to show up to the party empty handed, then consider bringing some homemade treats or a low-cost DIY gift from the previous section of this guide.
If you include a few extra dollars worth of padding in your birthday gift budget, then that should cover the costs for these unanticipated gifts.
Consider the age of the birthday boy or girl.
A one-year-old child won't particularly care whether you give an expensive gift or not, so consider whether you necessarily need to bring gifts to birthday parties for kids.
Remember, knowing when not to give a gift is just as important as knowing how much you should spend on a gift.
8. Solve your gift-giving conundrums with this birthday present cheat sheet
Now, you should feel prepared to budget for, buy, and create thoughtful birthday presents without breaking the bank.
If you ever need a quick refresher on these topics, refer to this easy-to-use cheat sheet.
DO
- Create a budget that includes how much you should spend on birthday gifts
- Create a list of all the birthdays in a year that will require a present
- Assign a hard limit to how much you will spend on gifts for each person on this list
- Consider giving meaningful experiences instead of gifts
- Buy gifts in advance when they're on sale
- Give practical gifts when they're asked for or needed
- For gift cards, either swap unused gift cards for new ones, purchase them pre-owned, or look for discounts
- Give DIY gifts made by hand or using technology only when they will be appreciated
- Know it's okay not to give a gift, even when someone gave you a birthday gift in the past
DON'T
- Buy last-minute presents – this leads to over-spending and extra stress
- Give overly practical gifts unless they're asked for
- Choose presents that seem to imply something negative about their recipient
- Re-gift items that aren't in their original packaging or are like new
- Give gifts that can't be used
- Go over-budget on presents, even if it's for someone you care about
- Think that you have to spend a lot of money on a gift for it to be meaningful
- Try to pick up a new skill in order to give a handmade gift – you won't be able to learn how to sew overnight
- Feel like you have to bring a gift for every birthday celebration or party you attend
Whether handmade or purchased, experiences or items, you can give meaningful gifts without breaking the bank.
All it takes is careful budgeting and planning ahead.
You can get started down the road to knowing exactly how much to spend on presents right now by creating a budget.
Once you know how much money you have going in and going out, you can easily figure out how much you have to spend on gifts for your kids, parents, nephews, nieces, and friends.
If you're interested in learning more about how to budget for other life events like birthdays, check out these other articles:
- 12 Tricks Department Stores Use To Make You Spend More (without realizing it)
- 6 Budget Myths To Stop Falling For
- 17 Strategies on How to Save That Actually Work
Got a thoughtful, low-cost birthday present you've either given or received that you think others might like to know about?
I'd love to know.
Tell us all about it in the comments below.
