How Much a No-Gift Christmas Could Save You This Year and Throughout Your Lifetime

By Jami Farkas

November 1, 2021

vladans / iStock.com

Look at the calendar: The December holidays are coming. And fast. And that means the decorating, baking, shopping and gift-giving frenzy is about to begin.

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The National Retail Federation estimates that Americans will spend an average of nearly $1,000 this year to celebrate the holiday season: $648 on gifts, $231 on holiday-related food and decorations, and $118 on other purchases for themselves and their families.

And what if you decided just to say no to the gift-giving this year, instead, inviting family and friends to celebrate around the Christmas tree to share stories, sip hot chocolate, watch holiday movies and make other memories? Some people just might rather save the nearly $650 spent on gifts and fete the season a different way.

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The Financial Implications

Deciding to pass on Christmas gifting this year could save you $650. But what would that money be worth 10 years from now? John Hagensen, the owner and founder of Keystone Wealth Partners, did the calculation.

“At 5% interest, the person would have $1,059,” he said. “At 10% interest, which wouldn’t be earned in a junk bond at today’s rates but is historically relevant to broad stock market returns, the person would have $1,686. If the person is 30, bypasses the gift purchases and waits 37 years until current Social Security full retirement age, roughly 67 years old, that single decision for one holiday season nets them a handsome $22,103.

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“This is the power of compound interest. Think about that for a moment, not spending $650 today as a 30-year old could add over 20 grand to your balance at retirement.“

And what if you didn’t spend $650 each year on holiday gifts for 10 years? Scott Stanley, a certified financial planner and the founder of Pharos Wealth Management, figured that out.

“If you socked $650 away into a high-yield savings account each year instead of spending it on gifts, you’d end up with about $7,117 after 10 years,” he said. “Of course, that’s assuming that the interest rate in a high yield savings account averages about 2% per year over the next 10 years. Now, imagine if you invested that in the stock market: Assuming an average return of 9.2% per year — average S&P 500 performance — you’d end up with about $9,970 after 10 years. It’s pretty clear how quickly your invested savings can add up. So, think about spending a little less of gifts each year and invest the difference to help set yourself up for the future.“

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But, as Stanley cautioned, the American economy isn’t built for people to stop spending in the holiday season.

“If everyone, or even a fraction of the Christmas gift buyers in the U.S., decided to save instead of spend, we’d see our economy get hit. Hard,” he said. “The current U.S. economy is working with a certain balanced rhythm: the savings and spending rate of Americans averages out to create a sort of equilibrium, albeit a delicate one. If there is any disruption to that balance, the economy could react like an out of balance washing machine until it starts smoking and dies.

“Sure, a bit of hyperbole, but the point is, that the retail industry can’t handle a major slowing of sales — especially in the new Covid world we’re in today. When the economy suffers, so does the job market — hiring slows and then the very people that stopped buying and started saving are the people that end up losing their jobs. Ironic.“

Gift Alternatives

Cutting back on gifts, or even eliminating them, doesn’t have to make the holidays any less festive, especially if you celebrate with adult children, other adult relatives, friends or co-workers — the people who don’t expect the latest toy under the tree. How about these ideas instead of buying stuff?

Have a “Buy Nothing” Christmas: You’ll find “Buy Nothing” sites for many neighborhoods on Facebook, and you just might have luck fulfilling a Christmas wish that way. Does your sister want an air fryer? Your husband an exercise bike? Someone in your community could be cleaning out the basement and offering those for free to a neighbor. If you don’t see what you’re looking for, sites often allow you to post an “in search of” message — and that just could remind people they’ve got what you’re looking for collecting dust. It’s a fun scavenger hunt. Never heard of the Buy Nothing Project? As of July 2021, it had more than 4 million participants in 6,500 communities in 44 countries.

Plan a game night: Instead of exchanging gifts with co-workers or your circle of friends, plan a get-together. All you need is someone to offer up a place to meet and someone else to be your shopper. Chip in $25 and bring a potluck dish to share. While you’re playing games, you’ll likely share some laughs. Have your shopper buy fun $25 gifts to fit interests of those in your group: lotto tickets, gift cards or maybe a nice bottle of champagne to celebrate New Year’s Eve. Everyone goes home a winner — even if they didn’t win a game.

Share an experience: Have a night out together doing something all of you like — and Dutch treat. Set aside a weekend day in December for a hike and lunch. Put on your Christmas sweaters, have dinner out and go to the local drive-through holiday lights display. Or get all dressed up, have hors d’oeuvres and go see the production of “White Christmas” at the local playhouse.

Cutting back on your spending still can leave you with an enjoyable holiday season. While it won’t be long until the calendar turns to December, you have plenty of time to make a pact with friends and family to come up with creative, low- or no-cost gifts — or spend little, enjoy the pleasure of each other’s company this season and put the savings toward your nest egg. 

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Last updated: Oct. 29, 2021

About the Author

Jami Farkas

Jami Farkas holds a communications degree from California State University, Fullerton, and has worked as a reporter or editor at daily newspapers in all four corners of the United States. She brings to GOBankingRates experience as a sports editor, business editor, religion editor, digital editor — and more. With a passion for real estate, she passed the real estate licensing exam in her state and is still weighing whether to take the plunge into selling homes — or just writing about selling homes.