The tradition of giving gifts on Christmas hasn’t always been focused on children. Originally rooted in the three gifts the Magi gave to the baby Jesus, the practice has taken numerous divergences, from early Christian rulers demanding gifts from their subjects to rowdy throngs of impoverished 19th-century New Yorkers taking to the streets to demand handouts from moneyed elites.
Now, of course, it’s mostly about the kids. For many parents, it’s an opportunity to get our families stocked up on the things they wish for and need, hopefully for a good deal, delivered with a dash of magic.
As we all know, however, just how much we give and to whom and for what price can easily turn into a complicated calculation exercise that’s not always easy to navigate. With holiday retail marketers pitching hot deals everywhere you look, it’s all too easy to get lured into overspending. When it’s all said and done, you find yourself sitting next to the tree with a mountain of torn wrapping paper and a feeling that it was all too much.
The Rule of Four
To keep it all in check, one popular approach is to stick to the so-called “Rule of Four” for appropriately gifting children:
Something they want
Something they need
Something to wear
Something to read
There are numerous variations on this theme, including “The Rule of Three,” which eliminates something to wear because clothes are often bought throughout the year as kids grow and the seasons change. Other versions add categories such as “something to do,” like an experiential gift, or “something for family” that everyone can do together.
Start With Your Budget
When trying to determine just how much is appropriate to spend, there’s no one-size-fits-all approach. The important thing to remember is to start with a budget that works for your own family — and go from there.
Fo Alexander, a certified financial educator and founder of MamaandMoney.com, says her family’s approach is first to set the overall budget for gifts and then prioritize around the kids.
“When it comes to how much we’ll spend,” Alexander said, “a lot of the discussion is driven by what they need. Whatever balance is left on the budget is what we’ll spend on everyone else.”
The age of the kids is a major factor in determining spending caps, which will increase as the kids grow and their needs and wants change from things like toys and games to video game consoles and bigger ticket items such as laptops or even cars.
A mother of two young children, Alexander says her spending cap for both of them combined is around $400.
“I cringe saying that for toddlers and infants; but, if you keep it to $300 to $400, that seems reasonable,” she said. “But it depends on your financial resources. If your entire budget is $500, you’ll need to adjust to what works for you.”
As the kids get older and their gifts get more expensive, that means the adults on the list may get less. Rather than buying individual gifts for her adult siblings and their kids, Alexander opts for family gifts.
“We have a sibling who has four or five kids, so buying individual gifts for them really adds up,” she said. “Instead we give them a gift card to go out to eat, so that’s one way to keep the budget within reason but still treat your family.”
Parents aren’t the only ones spending money on their kids. From spoiling grandparents to doting aunties, it’s just as important to establish reasonable boundaries for the other relatives bestowing their gifts, to keep them from spending on your kids outside of your comfort zone.
“Grandparents are a real challenge,” Alexander said. “Ideally, I wouldn’t want our parents to spend more than $100 on a gift for our kids. Granted, it’s their money and they can spend it how they choose, but they have more than one grandchild, and I would hate for them to blow the bank or their retirement on gifts for them.”
To manage the gifts from other family members, Alexander creates a list of her kids’ wanted and needed items that fall within an appropriate spending budget, and she shares that list with everyone who’s buying for them. By using an online tool like a wish list on Amazon or a favorite store, you can see what has been purchased and others will hopefully refrain from going overboard and buying everything on the list.
Start Your Own Traditions
The great thing about gifting traditions is that they’re fluid, on both societal and familial levels. You may choose to buck consumerism and focus on handmade gifts or create a family tradition of volunteering or gifting other families in need during the holidays. Maybe you skip all but one small gift and spend most of your budget on a family vacation.
If it ends up being affordable and meaningful, it wasn’t too much.
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This article originally appeared on GOBankingRates.com: Holiday Gifts: How Much Should I Spend on My Kids?