How To Approach Budget Differences for Family Gift Exchanges

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The happiest time of the year is upon us, but you’re feeling stressed about holiday gifts. Specifically, everyone in your family isn’t on the same page about spending.

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You need to stick to a budget, but you’re feeling pressured to spend above your means, because your family goes all out. Joyce Marter, LCPC, a licensed psychotherapist and author of  ”The Financial Mindset Fix: A Mental Fitness Program for an Abundant Life,” said it’s important to address this issue before the holidays.

Being proactive prevents problems and gets it out in the open, so you don’t have to be worried about it and can enjoy the holidays,” she said. “After the fact, it may feel more awkward and there’s nothing that can be done at that point.”

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She said the medium of communication used to discuss this issue is also important.

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“Remember that when addressing sensitive money issues, communicating face to face is best, followed by voice to voice if possible,” she said. “Avoid communicating about this via text or email, as much is lost in translation without being able to see facial expressions or hear tone of voice.” 

Marter advised having the conversation at a time when you aren’t already feeling stressed or upset, so you’re able to have a positive and collaborative attitude.

“Speak in terms of ‘I’ rather than ‘you,’ because it makes people less defensive,” she said. “For example, ‘I need to cut back on spending on gifts this year,’ instead of ‘You make me feel pressure because you spend so darned much on everyone.'”

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She said to avoid making assumptions about other people’s expectations on spending. 

You might assume that somebody would be mad if you don’t spend as much on them, and perhaps this isn’t the truth,” she said. “Be mindful of projecting your own feelings onto others.”

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Initiating this type of conversation can feel intimidating, but Marter offered a few tips to help you get started.

For example, she said you might start with something like, “I just wanted to touch base about expectations for gifts this year. I have to really cut back and want to make sure there aren’t any hurt feelings. I love you so much and wish I could give more but I can’t and I don’t want you or anyone else to be disappointed or feel bad.”

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If your family agrees to make spending less on gifts a group initiative, she said there are plenty of different ways to go about this. She suggested setting a low price for gift exchanges, having each person draw a name to buy a gift for just one person, agreeing to only give gifts to the kids or consolidating couples into one gift.  

Jennifer Porter, a Seattle-based etiquette expert and founder of Satsuma Designs, said there are a couple of different ways to handle budget differences when planning gift exchanges. She also recommended a gift swap with a spending cap as the easiest and most egalitarian option.

“We have done this very thing in my family where our group of cousins ranges in age from late teens to mid-30s,” she said. “Given this range in age and life stage, gift budgets very widely.”

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Porter said her family is flexible with the spending cap, so it works for everyone.

“Most years we employ a $25 spend cap, but in other years we have made it as low as $5,” she said. “Honestly, the $5 years have resulted in some of the most creative and thoughtful gifts, as one cousin made grandma’s famous cookie recipe and presented them in a dollar store tin – so sweet.”

Another alternative she suggested is focusing on a gift theme, instead of a budget.

“The thoughtfulness of the themed gift will come through loud and clear,” she said.

Ultimately, she said families should understand each other’s budgetary constraints.

“I hope most families can all recognize each other’s financial position and be flexible,” she said. “I would stress that gift giving is about reflecting an understanding of the recipient’s interests and regardless of money spent, a thoughtful gift will always be appreciated.”

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Lisa Grotts, an etiquette expert known as the Golden Rules Gal, emphasized the importance of feeling pressured to overspend on gifts for loved ones.

“Just because it is the holidays doesn’t mean you won’t have to budget,” Grotts said. “Given our current economic climate where inflation is on the rise, budget[s] and gift-giving should go hand-in-hand.”

Ultimately, she said it’s most important to focus on younger family members this season.

“All in all, Christmas is about children and the joy that it brings,” she said. “My guess is that most adults won’t even care about getting a gift, but again, have the money conversation ahead of time.”

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Ultimately, there are many different ways to handle holiday gifting. However, no matter what route your family takes, Grotts said children need to be part of the equation.

“There is nothing wrong with an aunt, uncle, or grandparent who wants to spoil a child during the holidays — especially if they can afford it,” she said.

No matter what the outcome, Marter said you should avoid feeling pressured to spend more than you can afford.

“Practice self-compassion and good financial self-care by prioritizing your financial wellness and setting appropriate limits and boundaries,” she said.

Ultimately, she said it’s best to be open-minded and respect people’s choice to give as they wish.

“You can’t force them to spend less or not give a gift if they want to do so,” she said.

If you find yourself in this situation, she said to practice gratitude and thank the other person for their generosity.

“Avoid making somebody feel bad for spending lavishly on gifts for you or your loved ones,” she said. “Receive openly with kindness, grace and gratitude.”

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In the true spirit of the season, Marter said to remember the holidays are about love and connection — not materialism.

“Remember love is the true currency of life,” she said. “You do not have to give beyond your means to feel like you are enough. You are always enough. Period.”

The holidays can be stressful, so stop worrying about the price point of the gifts you give to family. After doing your best to find common ground, accept the situation for what it is and try to make this season your merriest yet.

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