Trans World Assurance Blog

Trans World Assurance's Tips for Budget-Friendly Holiday Gift-Giving

Posted on Fri, Oct 26, 2012

With the holidays quickly approaching, Americans are beginning to anticipate the family gatherings, indulgent feasts, and generous gift giving that characterize the Christmas season. Though all the holiday cheer is typically a positive experience for most, families must budget for Christmas gifts, which can be a costly endeavor.  In fact, according to Consumer Reports, approximately 12 million Americans had not paid off their debt from the previous holiday season, as of October 2008.

If you cannot afford to empty your wallet at the checkout counter this holiday season, and the thought of being in debt for a year or more terrifies you, read the following tips from Trans World Assurance to learn about ways to keep your budget for holiday gifts within reason.

1) Create a Budget and Stick to It

To keep holiday spending in check, you must create a reasonable budget and stick to it.  Eric Tyson, author of a 2012 report published in the journal Personal Excellence, recommends creating a budget and documenting the cost of each gift you purchase to ensure that you do not exceed your spending limit.

First, determine how much you can afford to spend.  Then, create a list of every person for whom you intend to purchase a gift, and budget a reasonable, set amount for each person.  Total the amount you plan to spend on gifts for each person and ensure that the amount falls within the amount you can afford to spend.  As you are shopping, write down the cost of every gift you purchase and keep a running total of the amount you have spent.  Once you have spent the total amount that you budgeted for gifts, your Christmas shopping is done.

2) Take Advantage of Free Shipping Offers

You may think that making a trip to the mall is a cheaper alternative to ordering online and paying shipping fees, but free shipping offers can make online shopping more cost effective than traveling to stores. When you travel to a store, not only do you spend money on gas, but you are also likely to stop for takeout or a meal at a restaurant after a long day of shopping.  This can quickly turn a shopping trip into a budget wrecker.

Save money by staying at home and enjoying a cup of hot chocolate as you relax in front of the computer, make online purchases, and enjoy having them delivered to your home free of charge. Check out to learn about free shipping deals offered by your favorite retailers.

3) Cash in on Rewards

If you have been saving up credit card rewards all year, now is an excellent time to cash them in to buy gifts.  Credit card companies often give you numerous options for redeeming your rewards.  For example, Discover allows its credit card customers to redeem their cash back rewards in the form of gifts cards or select merchandise. Discover customers can also opt to have the value of their cash rewards direct deposited into their checking accounts, or rewards can be put toward their credit card balance. Chase offers similar perks for credit card customers.

Use your rewards to purchase gift cards for loved ones, or have them direct deposited into your checking account so you have extra cash for shopping.  You can also accumulate cash rewards by using your credit card throughout the holiday season, and then use those rewards to pay off your credit card balance.  When using a credit card, however, remember not to spend more than what you can afford to pay off in full, or the value of your rewards may be negated by interest charges.

4) Shop eBay or Amazon

By shopping online at eBay or Amazon, you can save a considerable amount of money on brand new items, such as clothing, electronics, and toys. For instance, Amazon recently boasted 20 percent off the sticker price of a 4th Generation 32 GB Apple iPod Touch. 

Though some items on eBay are used, eBay does offer significant savings on brand new items.  EBay allows users to sell items that are “new with tags,” and these items are typically much cheaper than the brand new item in stores.  For example, Jen Long, an eBay customer from Ohio, recently purchased a brand new Lands’ End black dress, originally priced at $69.99, for just $19.99 on eBay.  Taking advantage of savings like this can profoundly reduce the amount of money you spend on Christmas gifts.

5) Choose Alternatives to Gift-Giving

It may be inappropriate to remove children, close family members, and your spouse or significant other from your Christmas list, but you can find an alternative to gift giving among your friends.  For example, instead of shelling out hundreds of dollars on gifts for your friends, host a holiday dinner and ask everyone to bring a dish or side item, or get together with friends for a holiday cookie-decorating party.  Chances are, you will save money and enjoy the experience more than the act of giving costly gifts.

Perhaps you can also reach an agreement with your spouse. Instead of buying expensive gifts for each other that neither of you truly need, you could contribute a $100 donation to a charity of your choice.  Not only would this likely be less costly than the gifts you usually purchase; it is also a way to give back to your community during the holiday season, which is much more meaningful than any gift under the Christmas tree. Choosing to give to charity instead of spending mindlessly is a telling way to reduce your holiday spending. 

Regardless of the number of people on your gift-giving list or the amount you can afford to spend, you can create a reasonable holiday shopping budget and stick to it with proper planning and a few small sacrifices.


Consumer Reports.  (2009). Holiday shopping gotchas.  Consumer Reports Money Adviser, 6(12), 1-5.
Tyson, E. (2010). Limit your spending.  Personal Excellence, 17(1), 11.

Tags: personal finance, money saving tips, purchases