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How to save money on Christmas gifts (and still have fun)

HO HO HO!

Just like that, the holiday season is upon us!

This year, I intend to do most of my Christmas shopping during a three-week tour of Europe with my cousins. We’re deliberately visiting as many Christmas markets as possible, so I hope to find a variety of interesting and unusual gifts for my family and friends. (They need to be small, though. I don’t have much space to carry things home.)

While I’m buying new (and possibly expensive) gifts this year, that’s not normally my style. I’m a fan of keeping Christmas frugal.

Being a frugal shopper doesn’t mean you can’t give thoughtful gifts though. In fact, my experience has shown that it’s often more fun and rewarding to impose limits on gift-giving. These limits breed creativity and inspiration. “Christmas on a budget” doesn’t have to mean “Christmas without fun”.

This article contains some smart ways to save money on Christmas gifts while celebrating the season. (These tips are great for Christmas, for Hanukkah, for Kwanzaa, for Festivus, or for whatever feast you celebrate this time of year.)

It’s an amazing frugal Christmas savings spectacular!

What Kids Really Want for Christmas

I have this idea in my head that kids become mercenaries at Christmas, demanding the newest, most popular toys. I’m not sure how I’ve arrived at this notion because that’s certainly not how my brothers and I were when we were younger. Sure, we wanted cool stuff, but we never made demands.

In fact, Dad used to tell the story of how ashamed he was one Christmas when he and Mom were going through a particularly rough patch. They were always poor and struggling with money, but this year was especially bad. They couldn’t afford Christmas presents for us three boys. Rather than cry about it, we went through the toys we already had, wrapped them up, and gave them to each other.

I have only a dim memory of this myself, but Dad used to talk about it often.

This bit of personal family history reminds me of Unplug the Christmas Machine by Jo Robinson and Jean Coppock Staeheli. This book urges readers to escape the commercialism of the holiday season, to make it a “joyful, stress-free” time for the family. In a chapter entitled “The Four Things Children Really Want for Christmas”, the authors write:

One concern voiced by most parents is that of shielding their children from the excesses of holiday commercialism. While adults can mute the TV when the ads get annoying, children are defenseless against the onslaught of ads. As early as the age of four or five, they can lose the ability to be delighted by the sights and sounds of Christmas, only to gain a two-month-long obsession with brand-name toys. Suddenly, all they seem to care about is how many presents they will be getting and how many days are left until they unwrap them.

Many parents find it a challenge to create a simple value-centered Christmas in the midst of all the commercial pressure. But the task is made much easier when parents keep in mind the four things that children really want for Christmas.

Robinson and Staeheli argue that children don’t really want clothes and toys and games. The four things they actually want are:

  • A relaxed and loving time with the family. Children need attention. During the holidays, normal family routines are temporarily set aside for parties, shopping, and special events. It’s important to slow down and spend quality time with your kids.
  • Realistic expectations about gifts. Kids enjoy looking forward to gifts and then having their expectations met. The key is to manage their expectations. You might try, for example, to educate your children about advertising in an attempt to mitigate its effects.
  • An evenly paced holiday season. The modern Christmas season starts months before December 25th, when the first store displays go up, then things end with a bang on Christmas day. The authors suggest beginning the season late in the year. Get out the Christmas music on December 15th, then get the tree on the following weekend. Schedule some low-key family events during Christmas week. Stretch the season to New Years Day.
  • Reliable family traditions. When I talk to my friends about what Christmas was like when we were children, it’s not the gifts that we remember. We recall the things we did as a family. I remember sleeping next to the tree every Christmas eve, but never being able to catch Santa in the act. I remember seeing the cousins. I remember decorating the trailer house. Your kids will remember the traditions, not the gifts.

Because I don’t have kids, I don’t have first-hand experience with their expectations around the holidays. Other folks in the GRS community do, though. A reader named PB, for instance, emailed some similar thoughts. She writes:

We keep our children’s expectations realistic by following an old tradition — that Santa fills the stockings and only the stockings — nothing under the tree. This limits the size and quantity of gifts. Plus, because they’re all relatively sure what they can and cannot wheedle out of parents for tree presents, their expectations are kept in check.

We buy one new outfit for each, usually a special piece of clothing that they really want, and spent only about $100 per child. I also shop all year long and get some real bargains.

We also emphasize doing a lot of things with our church — food delivery to the elderly, singing at nursing homes, and service to others. Our ongoing tradition is a big Christmas eve dinner with lots of friends and then the midnight service, where we all play an instrument or sing in the choir. This is what the kids talk about — not about what they receive.

It seems that the key to keeping kids happy at Christmas is to manage their expectations. But what about exchanging gifts with other adults?

1980 Gates Christmas - Tiff and Kris

Exchanging Gifts with Adults

Gift-giving among adults can be awkward. If you spend too much on another person, they may feel uncomfortable. Worse — and this has become more common the older I get — what if you give something and the other person doesn’t reciprocate? Or they get you something and you give nothing? Again: awkward!

Many people welcome the idea of doing away with gift-giving completely. Some, like my family, establish specific rules.

We’ve made a tradition of the $5 gift exchange. We give larger gifts to the kids and to my mother, but the rest of us exchange gifts that cost no more than $5. It’s become a game to find interesting, thoughtful gifts for just five bucks. (Or to find amusing, tacky gifts for the same amount.)

The first year we did this, the gifts were kind of lame. But with time, we’ve become more creative. Once in an antique store, I stumbled upon an old photograph that I recognized as depicting some of my sister-in-law’s relatives, for example. Other years, I’ve discovered awesome gifts at garage sales.

Some people practice a variation of this. They do a $100 holiday, where their entire budget for a particular group (family, circle of friends, etc.) is limited to $100, and that money is divided as needed.

Others agree to only give presents to the children in the group. This relieves the adults of the pressure to buy gifts for each other while still allowing the children to experience the magic of Christmas. (Of course it could be argued that this isn’t the sort of Christmas magic kids should be learning.)

The goal here isn’t to be cheap for the sake of cheapness — it’s to give thoughtful presents without breaking the bank. (And, for me, to not participate in the mad rush of consumerism during the holiday season.)

One last important piece of advice: if your family (or circle of friends) agrees to gift-giving guidelines, don’t be the person who breaks them. People feel resentful when one person takes it upon herself to give more than the agreed terms. Stay within the rules and have fun.

Christmas Gifts That Don’t Cost a Lot of Money

For most people, Christmas gifts mean shopping at the mall. Or Amazon. But it doesn’t have to be that way. Many of the best gifts aren’t tangible items purchased from a store. Here are a few examples:

  • Give the gift of experience. People are likely to forget about the things you give them. They’re much more likely to remember gifts of doing. Examples: sky diving, scuba lessons, hot-air balloon rides, cooking school, lunch with a hero, etc.
  • Personal gift certificates also make great gifts. In essence, these are gifts of time. Give new parents a gift certificate for a night of baby-sitting so that they can enjoy a night on the town. Are you good with computers? Give your brother-in-law a gift certificate for free computer repairs.
  • Similarly, my ex-wife and I used to give each other love coupons. Sounds sappy, I know. But it was nice to be able to come home at the end of the day and redeem a coupon for a dinner out, or for a back rub, or for an evening watching a favorite movie.

My favorite gifts tend to be those that people have made themselves. Homemade gifts demonstrate caring, creativity, and passion. I’m fortunate to have many crafty friends. Every year, I’m delighted to see what they create for Christmas gifts. In the past, I’ve given or received:

  • A hand-assembled collection of gourmet salts, complete with written description of each.
  • Ginger snaps.
  • Art. (Do you dabble in photography? A framed print of your nephew is a great gift for your sister-in-law.)
  • Chocolate-dipped hazelnuts (from a family with a filbert orchard).
  • Home-made jams and jellies.
  • Flavored liqueur brewed from vodka, sugar, and fresh herbs.

The best-home made gift I’ve ever received? A couple of years ago, an old friend found a poem I had written for her when we were in high school. It was a silly ode to a teddy bear scribbled on notebook paper. She framed the page and gave me a cheap bear. Believe it or not, that meant a lot to me. (Yet it was, in essence, I gift I had given myself!)

Homemade gifts are fun to produce, and are generally more valued by the recipient. I’d take a plate of PCCCs (plain chocolate-chip cookies) over some plastic gee-gaw any day.

Christmas gift

Frugal Christmas Ideas from GRS Readers

This is Get Rich Slowly’s thirteenth Christmas. Over the years, GRS readers have shared tons of great tips for saving money during the holidays. Here are a few of my favorites.

First up, Samuel suggests:

Give your favorite things as gifts. Find items you love and use everyday, then share these with others. By giving favorite things, the focus is on sharing things you like rather than how much you spent. For example, my “favorite thing” gift this year is a pizza cutter. It’s an unbelievably useful kitchen gadget! We use it to cut up everything, not just pizza. It costs about ten bucks!

Like me, Pam prefers home-made gifts. She thinks it’s even more fun when these home-made gifts can be personalized:

Do crafts that require the same basic supplies but still remain customizable to the recipient. Homemade baking mixes are good for this, because with big bags of ingredients you have the bases for several different kinds of baked goods: Aunt Julie can get oatmeal-raisin and Cousin Larry can get peanut-butter chip with a minimum of tweaking and few extra ingredients.

My all-time favorite, though, is marble magnets, which require absolutely minimal supply (florist’s gems, silicon glue, a scissor or craft punch, old magazines), offer tons of opportunity for personalization (I do cartoon images for my boyfriend, the letters of their names for my little cousins, and flowers for a garden-crazy friend), look great packaged in tulle or an Altoids tin, and get much, much cheaper when you make them in bulk.

RJ shares another creative way to keep costs down:

Sometimes when my partner and I exchange cards at Christmas, we’ll include a cut-out image or two of a really expensive gift that we might have liked to buy, but didn’t.

For example, a couple of years, he inserted a pic of a $175 bottle of scotch, but gave me a perfectly wonderful and less costly (~$25) bottle of a different kind of scotch instead. This year I’m giving him a matchbook from a very expensive restaurant in town, though our holiday dinner will actually be at a friend’s house. It’s our jesting way of reminding each other of the shopping insanity at this time of year, and it helps us appreciate what we do get for the little money we spend.

By now, you probably know that buying experiences tends to make people happier than buying stuff. Does the same concept apply to gifts? Angie thinks it might. She writes:

My husband and I have a tradition of giving each other experiences for Christmas, rather than more stuff. This doesn’t always end up being the cheapest route, but it does keep our house from being cluttered up with extraneous stuff.

For instance, my husband had always wanted to try blowing glass. An art glass studio opened up a few blocks from our house, and last year at Christmastime they held workshops where you could blow your own glass ornament. I gifted him two sequential half-hour workshops, at $25 apiece — once so he could “get the hang of it”, and the second so he could better use his new skills. (He’s that kinda guy.)

He came home with two beautiful ornaments he made himself, and he absolutely raved about how much fun he’d had. I saw essentially identical blown-glass ornaments at the local art gallery for about $20 apiece. For a $10 premium, I fulfilled his longheld wish and gave him a really awesome memory. Now that’s a bargain!

Finally, Amberlynn says that the best gifts don’t have to cost anything at all:

My family draws names with a $20 limit, but we’re phasing that out for something even better. We’re writing a chapter of our family history each year. We pick a topic, and each family member will write about it. One person plays “editor”, collecting the stories together for Christmas.

We’ve written about our favorite Christmas (seven differing perspectives on the same year), the house we grew up in, and this year we’re writing about how we met our spouse. Last year, my Mom sent out her first draft of her entire life history. This gift costs nothing. It does take a little time if you want to contribute quality. It will, however, carry a lasting value unmatched by any tangible gifts we’ve exchanged, or even experiential gifts!

Frugality doesn’t take the joy out of Christmas. In many ways, it adds to it. It’s a great feeling to find a perfect gift for only five bucks. Besides, when I think back to Christmases past, it’s not the gifts I remember, but the time spent with friends and family.

Author: J.D. Roth

In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he’s managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.


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