Your Smart Guide to Holiday Finances

It's the season of giving, but you can be generous without blowing your budget with these money saving tips


Gift giving should be a joy-from the planning and the shopping to the swapping. These ideas will please your recipient, your budget, and your sanity.

Maximize your money

Always allow for a little wiggle room in your gift-giving budget: First, determine your comfortable upper spending limit-then set aside 20 percent of it for unanticipated last-minute shopping. For instance, if you can afford $500, spend only $400. That way, if you receive a present from someone who wasn't on your original list, you can reciprocate without blowing your bottom line, says Judith Akin, M.D., a staff psychiatrist at Vanderbilt University. There's a good chance you'll need the cushion: Last year, Americans estimated they'd drop about $536 on the holidays but ended up spending an average of $730 each, a National Retail Foundation survey found.

Focus on What Matters

As much as you love pampering your friends and family, it's easy to feel like even your best efforts aren't enough (especially if your social circle includes a couple big spenders). That's no cause for stress, though, say Stanford Graduate School of Business researchers. They found that while givers believe receivers will be more appreciative of expensive presents, in fact cost has no impact on gratitude. If you're still feeling overshadowed by über-generous pals, try pooling money for group presents, or instituting a themed Secret Santa, like 80s-inspired gifts with a $20 price cap.

Remember the Romance

If you and your guy are considering skipping the present swap (because you just went in halfsies on a new sofa, say), don't do it, says Elizabeth Dunn, Ph.D., professor of psychology at the University of British Columbia. Her research shows that the right gift can remind your man of your similarities, making him feel more optimistic about your future. To really deepen your connection, focus on gifts that reflect your shared interests, she says: If you met during a photography workshop, get him a camera. Both movie buffs? Buy him a box set you can watch together.

Give Experiences, Not Things

Trips (like these 5 Amazing Fit Trips to Take this Winter), meals, shows... these make people happier than material goods, according to research in Psychological Science. Dunn says to remember this as you shop, and consider concert tickets or a subscription, like a wine-of-the-month club. For less expensive options, think movie vouchers, a mani/pedi gift certificate, or even simply a lunch at a new restaurant. "You can get away with spending less on experiential gifts," Dunn says, "because people tend to value them more highly."

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