• Betsy at RVPF

A Holiday Spending Plan that Actually Works

Happy Halloween! It’s my family’s first Halloween back in the Midwest and wow! Here’s a picture of us a year ago in Northern California.

Halloween 2018 in Northern California

Today the high temperature in Decorah is barely above freezing. I meant to take a picture of my daughter at preschool drop-off today with her hat, mittens, coat, overpants, and boots, but the morning crazy won again. Suffice it to say that we knew it would be a change and mother nature didn’t disappoint.


According to an October 2019 National Retail Federation press release, holiday spending is expected to be $1,047.83 per consumer this holiday season. Shoppers in the 35-44 age range expect to outlay the most cash at $1,158.63. Although I don’t have the data to support it, my suspicion is that this demographic is most likely to have children hoping for expensive gifts.


I remember seeing Christmas and holiday decorations in Costco back in August and thinking “this is crazy!” But I recognize that retailers only do what is profitable so holiday buyers must be spending already. Today I’m going to share a holiday budgeting strategy that our family started implementing a couple years ago. For decision-making matrix minded people like us it’s amazing! Those who enjoy spending without constraints may find it a bit more restrictive, but I’m hoping it’s useful for all.


Get out a piece of paper, use the notes app on your mobile device or open a spreadsheet and let’s get started!


Step 1: Identify your total holiday gifting budget.Sometimes this is the hardest part. Be realistic about what you can handle. Discuss this with your spouse, maybe over a glass of wine.


Multiply the total holiday gifting budget by .935 to get a tax-adjusted holiday gifting budget. Some experts say a rule of thumb for holiday spending is 1% of annual income, but I have found that suggestion to overdo it for high income households. Lower income households are well served in being very creative this time of year to avoid overspending.


Total Holiday Gifting Budget x Tax Adjustment = Tax Adjusted Holiday Gifting Budget

$800 x .935 = $748


Step 2: List all the people you either want or must gift to this season-- your kids’ teachers, the postal carrier, the office secret Santa, etc.


Pat Katie Jeremy Mrs. Grocke Grandma

Probably a bunch of other people


Step 3: On a scale from one to five, rate the importance of each gift with five being the highest. I’m hoping that your spouse or partner rates the highest, but I’ve known couples who place little emphasis on gifts so that isn’t necessarily so. I recommend that you and your partner come to an agreement on your gift budget for each other early in this process. Keep in mind that the rating doesn’t indicate the importance of the relationship. My spouse and I don’t give our kids the highest rating because they have so many other gifting sources and we see little reason to spend loads of money on them. This gift giving list can get quite lengthy, especially if you have a professional obligation to gift at work or your kids are involved in a lot of activities. I once heard of a physician group where the norm had become to give medical assistants gifts valued over $100. The new physicians to the group were shocked by this expectation, though perhaps not as much as their spouses.


Pat - 3 Katie - 2 Jeremy - 2 Mrs. Grocke - 1 Grandma - 5

Probably a bunch of other people – 67


Step 4: Add together all the ratings.


Total of All Ratings: 80

Step 5: Divide your tax-adjusted holiday gifting budget by the total rating to get a value for dollar per point.


Tax-adjusted Holiday Budget / Total of All Ratings = Dollar per Point

$748 / 80 = $9.35


Step 6: Multiply each rating by the dollar/point value.


Pat - $28.05 Katie - $18.70 Jeremy - $18.70

Mrs. Grocke - $9.35. Grandma - $46.75


The sales tax has already been built into the equation in step one so you don’t have to worry about sales tax blowing the holiday budget. If there is any money left over after purchasing, I’ve found it to be helpful to pick up a few coffee gift cards to have on hand just in case you find yourself receiving an unexpected gift and you’d like to have something to give in return.


Here’s an insider tip from a former teacher: Please, please avoid giving teachers and coaches gifts like coffee mugs, lotions or hand soaps. It’s far better to give them a gift card, even if it’s only $5, to somewhere they are likely to love. I’ve never known a teacher who can’t find a way to spend $5 at Target. They are probably buying tissues or hand sanitizer for the classroom with their own money there anyway. The National Education Association lists the average salary for a public-school teacher as $60,477 in 2017-2018. California public school teachers make an average of $82,282 and those in Florida make $48,395. The National Retail Federation reports that the most wanted gift is gift cards anyway.


Try to also have some thought about the inequity between elementary vs. middle/high school teachers. I’ve known elementary teachers who received hundreds or thousands of dollars in gift cards. But by the time kids are middle or high school the students are either less interested in giving to their teachers or it gets cost prohibitive for families to gift to allthe teachers so they drop out of the game entirely. If that’s the case, it’s a great time to teach kids the value of expressing gratitude. It’s an opportunity to say thank you to teachers and it costs nothing more than a card and a little time. A heartfelt thank you will be both appreciated and meaningful - especially if the teachers have to finish semester grades before they can enjoy the holidays.


The holiday ads are already pouring into our mailboxes and inboxes. Using this budget strategy in advance of making any purchases helps your household be on track for a prosperous year ahead.


Do you have other easy holiday spending plans? I'd love to learn about them. Comment or send me an email!

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