There are many money traps we have to look out for in life: Getting into debt, an elaborate wedding, blindly signing for loans and more. But this holiday season, the money traps will come from your own generous and giving nature and how it can get the better of you, and your wallet. Can you see yourself starring in any of these costly holiday roles? (For related reading, also take a look at Host A Holiday Party For Less.)
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The Excessive Homemade Gifter
If you are planning on giving a thoughtful gift of homemade baked treats this year, be careful of feeling like it's just not enough. There's no need to rush out and buy a "real" gift. Although it may only cost you a fraction of the retail price to make your own chocolates, it doesn't mean they are any less worthy. Consider the time, labor and love that goes into making those treats to be worth more than just buying a box of chocolates for friends and family, not to mention that homemade usually tastes better, too.
To put it in perspective, make a list of what you plan to give along with the time spent in baking, crafting and wrapping those treats, and step back to look at what it'll cost you in time and money.
The Too-Fair Gifter
It's a wonderful trait to always want to treat everyone on your list equally, but it can get out of control when you try to be too fair. For instance, if your son asked for a single, costly present this year, but your daughter asked for a bunch of lower-priced items, don't start trying to buy more for your son because you feel like your daughter has more. Set a budget for each child stick to it, even if it means some one only receives one present.
Fair gifters also fall prey to feeling guilty over saving money by buying gifts on sale, so they end up spending over budget to equalize the gift giving. Instead of spending the money, consider putting those savings into a future education savings account.
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The Surprised Gifter
You should have expected it - your new neighbors showed up with an unexpected gift for the whole family, but you are caught totally empty-handed. In an effort to reciprocate their goodwill, you rush out to buy yet another gift which is the straw that breaks your holiday budget's back. Think about it this way: if there wasn't an established tradition of gift giving, how could you have anticipated it? Cut yourself some slack and next time, set aside a slush fund for those unexpected gifts, or add your neighbors to next year's budget.
Another good way to handle these surprise gifts is to keep a spare gift set aside specifically for these occasions. If you end up with these gifts still in the cupboard at the end of the holiday season, you can reuse them next year, or gift them to yourself as a reward for staying within your budget.
The One-Up Gifter
It all started so innocently with one small gift of homemade cookies that your neighbors reciprocated with a very fancy bottle of wine, which made you want to buy something even nicer the next year to thank them for that bottle of wine, which they returned with a gift certificate for a swanky restaurant in town. This kind of gift giving tends to spiral out of control, because neither of you seems to want to stop. Unfortunately, this will never go back to just gifting each other with homemade cookies, but you can give yourself some financial relief by giving the same gift you gave last year. This should send the signal that you've hit your limit.
Hopefully this hasn't escalated to giving away exclusive concert tickets or expensive trips, but catching the gift-giving snowball before it turns into an avalanche will probably relieve both parties' wallets. You could always just invite your neighbors over for a great meal rather than buying them something, or maybe talk to them about setting a budget this year.
The Bottom Line
We all want to do the right thing, and when someone has been kind to you, we can't help but want to reciprocate to show how grateful and appreciative we are. There's nothing wrong with that, just keep that generosity in line with your budget. (For an interesting read, be sure to also check out 10 Ways To Make Money This Holiday Season.)
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