To Gift or Not to Gift: Frugal Gift-Giving Strategies

With the holiday season just around the corner, it’s time to start thinking seriously about your gift-giving budget. One common problem is that, over time, your gift-giving obligations have a tendency to grow to the point that you’re actually taking a substantial financial hit every time the holidays roll around…

While it all starts innocently enough with gifts exchanged mainly between you, your siblings, and your parents, as you make your way up the ladder of life, your gift-giving circle has a tendency to swell to include a significant other, kids, in-laws, nieces and nephews, etc. There may even be step-parents and step-siblings mixed in for good measure. Not surprisingly, all of this generosity can get quite expensive.

Consider the case of a family with three kids, each of whom marries and has three kids. Suddenly, the gift giving sphere of one of those original kids has expanded from a couple of siblings and their parents to include three kids of their own, six nieces/nephews, a couple of sibling-in-laws. While I’m hugely in favor of being generous with loved ones, things can eventually get to be overwhelming. So if you’re stretched for time and/or money, how can you combat the gift-giving madness?

Draw names

One tried and true method of reigning in holiday spending is to do draw names to determine who gives a gift to whom. This is most easily done at a preceding get together (perhaps Thanksgiving), and results in everyone giving and receiving a single gift. No fuss, no muss, and no feelings get hurt. That is, unless stingy Uncle Bob draws your name and re-gifts some apricot-colored towels from his wedding 30 years ago.

If you’re not getting together in advance of the holidays, you can always do the drawing remotely (though that’s not nearly as much fun). There are even online services that offer to draw names out of a virtual ‘hat’ and manage your wish lists.

Establish limits

Another alternative is to establish limits on who gives gifts to whom. We did this a few years back in our family, and it’s worked out great. In short, My parents still give gifts to everyone, and we all give gifts to them — that’s the way they want it, and we respect our elders. 😉 But when it comes to siblings, neither my wife nor I exchange gifts with our brothers and sisters. Rather, we just buy gifts for our nieces and nephews, and our siblings do the same.

In the end, the kids get their gifts, and the adults don’t have to go crazy thinking up (and paying for) gifts for each other. It’s a win-win. The main challenge here is that this system can create some inequities if, for example, someone doesn’t have kids, or one family is considerably larger than another. But the rules are up to you, so you should be able to work around these difficulties.

Make it a game

Another alternative would be to make the gift giving a game, wherein everyone brings one gift to put under the tree. Recipients then draw numbers to detemine the order in which they get to choose and unwrap gifts. The game then starts with whoever drew #1 choosing a gift from under the tree and unwrapping it. Later ‘players’ then get to choose another gift from under the tree, or they can opt to ‘steal’ one of the unwrapped gifts from a preceding player. Known as ‘Dirty Santa‘ or ‘Yankee Swap‘, this is a fairly popular office Christmas party game that could easily be adapted to a family setting.

The downside to a gift-swapping game is that it might be tough to implement when it comes to kids, as there are bound to be some hurt feelings if several kids are going after the same gift. But it might not be a bad idea if you take a hybrid approach. For example, you could do standard gift-giving with the kids, while the adults play a round of Dirty Santa. My final word of warning is that you should probably establish some sort of limits on how many times a particular gift can be stolen, otherwise you could be there all night.

Be a grinch

Yet another possibility would be to just thumb your nose at the whole gift-giving ritual and focus on the holidays as an opportunity to spend time with family. While this might be disappointing to kids, you might consider establishing a Christmas “firewall” in which you exchange gifts within your household (and possibly with grandparents), but not with extended family. If you don’t do huge gift exchanges in the first place, your kids won’t learn to expect it.

Bite the bullet

A final possibility would be to just suck it up and give gifts like there’s no tomorrow. While this might be a difficult option if you’re strapped for cash, sometimes family relationships are more important than saving a few bucks. If someone in your family has exceptionally strong feelings about maintaining the status quo, then the best course of action might be to acquiesce. Either that, or suggest a trial period during which you phase in some limitations. If it works out, great. If not, you can regroup and reconsider your options in the future.

If you have suggestions of your own, please don’t hesitate to share them in the comments.

29 Responses to “To Gift or Not to Gift: Frugal Gift-Giving Strategies”

  1. Anonymous

    A few ideas:
    with my family-in-law, the adults (3 couples) buy each other a food gift $10 and under. It’s fun to find something good, cost almost nothing, and does not clutter. Last year my brother in law got coffee, my sister-in-law chocolate, and my parents-in-law fine cheeses.
    With my own family, the adults do not exchange gifts, we only buy gifts for the children. The problem is that of my sister and me, I’m the only one with children so I end up feeling bad; my solution is to buy something for my sister’s dog (something that alleviates her budget) and something for my mom’s house! Ok, I’m being creative.
    Finally, at home, we often make or create gifts – for example, I have made felt princess crowns for my own children, made a painting for my eldest (something she had seen on pintest, etc.

  2. Anonymous

    Who likes to be stressed about money during the holidays or shortly there after..NOT ME! Excellent ideas. I will be linking this post on my blog, Thanks!

  3. Anonymous

    Small handmade gift and a modest gift card for MIL and mother (both are widows). Just holiday cards for Brother in law, aunts and uncles of my parents and cousins.

    One sibling (usually handmade something and a CD or DVD), one child and his (very serious) girlfriend (ditto).

    I know when grandkids come along, it will be more complicated. It was certainly more difficult when the Marine!Goth was little.

    When DH was alive, we usually bought a ‘joint gift’ or would agree on a budget for our gifts for each other. It’s never been about the huge amounts under the tree for either family, thank goodness.

  4. Anonymous

    I’m surprised only two of the comments mention giving to charity in someone’s name. Better that $10 go to feed the hungry or save the rainforest than to clutter your neighbor’s home with useless stuff. It’s also an important lesson for kids. The point on time is well taken, but perhaps instead of creating things for each other, the family could work, cook or shop together to help local families in need?

    A fun charity for children is Heifer International. You can “shop” for different animals based on your budget. The animals selected support poor families around the world, providing them with a sustainable form of nutrition and income.

  5. Anonymous

    On my side of the family, I have one child, and 10 neices and nephews. We have all the neices and nephews draw names for each other, so they are receiving a gift from their cousin and the parents aren’t burdened with a ton of gift buying (there are a maximum of 2 kids in each family, so the gift giving is pretty equal). For the adults, we all bring a $25 gift item and do the Swap game.

    On my husband’s side of the family, there are only two nephews and we buy a gift for each of them. The adults do the same $25 gift in the swap game that we do with my family.

    We still buy individual gifts for our parents and grandparents, but nothing for aunts and uncles other than Christmas cards.

    It works for us and everyone is much happier to have less stress.

  6. Anonymous

    I have 3 older siblings (and one younger one who, for this purpose, gets lumped in with nephews/nieces). I also have 13 nephews/nieces. I finally talked my siblings a few years ago into not exchanging gifts. We all pool our money and give to some charitable orginazation. With 8 of us (including spouses), we can give a rather nice amount. Nephews/nieces we buy for until they’re 18. At that point we won’t buy for them anymore, but they’re welcome to put money in with our charitable giving.

    Also, most of my nephews are into music and they don’t mind receiving used cd’s when it means I can buy 3 of them for the price of 1.

  7. Anonymous

    My holiday spending includes drawing names for the adult family members with a spending limit, buying over the year at rummage sales especially for nieces and nephews and homemade items (with a bit of regifting thrown in occasionally). With all these strategies, I have managed to to keep in my gift budget and not go into debt!

  8. Anonymous

    Charities are fine but it sounds like an excuse not to think about what to give people.
    You can always give to charities but it takes some time to make your family and friends feel special. Even if you don’t have the money to exchange gifts, you should do something to make people feel loved, especially at this time of the year. Bake something, cook something, use your talents. Sometimes people use an excuse at this Christmas time that they don’t have the money but they really don’t want to spend the TIME to figure out what to give. Stretch yourselves. I don’t think that people care about receiving gifts as much as they want to be remembered somehow. That excludes the kids, of course. They would love a Christmas stocking filled with single dollar bills! You don’t have to spend alot of money to make people feel special.

  9. Anonymous

    My birth family doesn’t exchange gifts since my dad died, but my wife and I have continued to do gift exchange with our best friends locally.

    We have plenty of “stuff” already, so last year we tried a giving agreement where we could only give things that cost no money. We could give something we already owned, something we’d bartered for, chores (I gave gutter cleanings), or something we’d made from supplies we already had (I made photo prints).

    That made for fun, unexpected, and much appreciated gifts. It was a blast, and the holidays were more about spending time together than things. To be fair to those who like shopping and spending, we promised we would allow spending this year. We’ll set a moderate spending limit.

  10. Anonymous

    My family recently changed our gift-giving strategy. Originally, the aunts and uncles all give gifts to the nieces and nephews until they turn 21. From there, the older kids were entered into the adult gift exchange ($50-$75 limit) where we would draw names.

    However, a few years ago, we all decided that if we want something, we pretty much just go buy it, so there’s nothing we really “need” for Christmas. With that, the family decided to take that money we would’ve spent and give it to the charity of our choice. During Christmas dinner, we all get to share who received the benefit of our family’s Christmas. That way, the we are all helping others, we get to feel good about it, and on top of it all, the tax deduction helps too!

  11. Anonymous

    I don’t even exchange presents with my best friend anymore – we both have way more than we need. Last year we went shopping together and each picked out a sweater for the other to buy us. The shopping trip together was the best part of the “present”. This year, we’re going to get pedicures together!

  12. Anonymous

    My immediate family (two parents, three kids including me) all buy for each other.

    My husband’s family (one parent, seven kids, 11 grandkids) were doing a name draw when I married in, but with half of the family not living locally, not everyone’s gifts were delivered in a timely fashion, which was upsetting to the kids when it was their gift that was late, so they stopped doing the drawing altogether. We buy for his mom, and she buys for everyone, but that’s all.

    I was buying something small for my close friends, but I’ve been out of work without pay since May, so the budget is tight. I’m hosting a “girls tea” instead – since we all rarely have common free time. We’re all looking forward to it, and it’ll be nicer than a book or something.

  13. Anonymous

    My husband and I got both of our families into drawing names (for the adults) a few years ago. However, this year we have told everyone that we do not want to be in the draw (we told them last year, but his mom put us in the draw anyway and we didn’t find out about it until 8 pm Christmas Eve). I think as long as you let people know your gift policy, then they have no business being offended by it (e.g. start announcing NOW that you are only giving gifts to kids, not adults, and do not expect anyone to buy you gifts either). I was surprised by some comments that families would be offended by this. The response we have always gotten is along the lines of THANK GOODNESS. My family dropped the adult give exchange as soon as we said we wanted to be out of it.

    My husband had also gotten us into gift exchanges with some of our neighbours, and I thought it was ridiculous. Let’s face it, what are you going to get me in the ten dollar range that I will really appreciate and that I wouldn’t just go and get for myself? Pretty much nothing. And it was stressful when every week or so, husband would come up to me and ask “did we get anything for the K—‘s?” (he doesn’t shop himself, he just kept bringing up families he thought “we” should buy for). A couple years ago I told him to tell everyone that we were not going to buy presents for neighbours anymore, we were going to donate to charity. Many charities will give you an insert stating “a gift has been donated in your honour”, and I would put them in with the Christmas cards. I generally donate to charities supporting children and families in the developing world, but you can pick anything — eg SPCA, medical research, universities, arts, museums, food banks, local charities. Also, they don’t reveal the amount (or at least they shouldn’t), so you can stick to your budget. This year, the charity I have chosen is very small, so I don’t think they will have inserts, but I will just write up my own note about it. I know some families take turns choosing a charity, and everyone donates to that charity in lieu of gift exchanges. One of our neighbours still gives us a present every year, but it is usually a box of the seashell chocolates (probably under $5), and I actually think that is kind of fun, because they are tasty and when they are done, no clutter. Just right for a token gift, and because I know it is inexpensive, I don’t feel guilt about not having something to give back.

    I have also told my best friend that instead of buying presents, I would much rather go out for dinner with her or something when she comes up to visit than exchange gifts.

  14. Anonymous

    We’ve gone with two options, one for my family and one for my wife’s.

    For her family, we draw names for adults, and the limit is $100. That way you can get something reasonable without going overboard. We also encourage a list to pick things from.

    With my family, my brothers and mother are struggling financially, and have been for a while. So we have simply agreed not to exchange and just enjoy a nice dinner for the holidays at my mother’s house. While it sounds corny, getting together is a gift since we travel from out of state and we enjoy our time with them.

    With respect to the kids, we buy the presents, typically all the presents, for our kids and let the grandmothers and uncles know what they bought. We’re in control of what the kids get, the kids get something from their realatives, and the realatives have no stress. It has worked for us.

  15. Anonymous

    Each adult family member in our family is only buying one general gift, no more than $50, and we will all open and swap til we find something we like. Only the kids will get more items – but even then, not much (maybe also some hand-me-down VHS tapes & books) b/c we’re boycotting plastic toys and anything made in China.

  16. Anonymous

    I just gave up on one side of the family entirely. Too much struggle to be at family gatherings. Our values are far too different (So what are we supposed to talk about? No common ground!), the diets we eat are incompatible, and the things that matter to us are not the same. It is too difficult to be in the same room, no less figure out what to buy each other. I decided to cut down the stress for all of us, and I chose not to participate in any activities.

    My mother enjoys the family activities, but she is retired, does not have a big budget for gifts, and it stresses her a lot because she never knows what to get anyone and she hates shopping. She has asked for years to do a gift exchange, but her requests have fallen on deaf ears. She still chooses to buy gifts for everyone and go to all the gatherings. But I know that the holidays are no longer fun for her because of the stress.

    Mother and I still exchange small gifts. She enjoys the gifts I give to her, and I took the stress out of buying gifts for me. I gave her a list of very inexpensive items (most are under $3) that I use regularly and that she can find at the grocery or the local dollar store on her regular rounds.

  17. Anonymous

    We have a nuclear family with only five members in it. My parents and three brothers. Relatives live in different cities which are distance apart.We all meet once a year for Diwali (a festival in India). Till date I never thought of gift giving as an expensive proposition but now I have to keep in mind that in future I have to take care of this also.

  18. Anonymous

    We have a problem in our family. One brother has 3 kids and they already have EVERYTHING! If I mention some item, they already have it. My other brother has 2 boys and is frugal. They believe time together is more important than “things.” We have 1 child and the only time she hears from her cousins is on her BD and Christmas. We have no extra money cause our kid is in college and we have the great sucking sound constantly as we shell out money.

    I don’the want to give the 3 kids anything because they don’the appreciate it and can’t even remember what anyone gives them they get so much. The other 2 boys are not spoiled and appreciate everything. Being an only child, if our daughter doesn’t get gifts from aunts and uncles she gets almost nothing.

    Frankly, I need a gift because we don’t buy anything for ourselves, it all goes to bills, retirement or college.

    If I had money I would buy gifts for everyone but I can’t and now I feel I have to bail on everybody since I can’t pick and choose.

  19. Anonymous

    We do the grinch thing between adults. I just don’t see the point in adults who all have jobs, trying to buy little gifts for each other.

    Now just the kids get gifts.


  20. Anonymous

    Good alternatives to the give everyone a gift idea since it’s not only expensive but VERY time consuming! We used to give gifts to many of our friends (and get one in return from all of them) but it took so much time and money everyone just agreed to stop all that. We ended up happier and spend the money and time being together and having fun rather than shopping by ourselves for the gifts!

  21. Anonymous

    I concur with Cleverdude on the feeling awkward about receiving gifts. Its hard for family to ‘guess’ what I might like to receive, its hard for me to figure out something that I really would ‘like’ to receive. So we are left with a kinda- double blind guessing game where all too often I end up semi-feigning surprise and excessive delight with a gift about which I rather ambivalent. Awkward.
    Best solution for me is to have a family gathering with fabulous meal, fun jokes, photo or tale sharing and no gifts.

  22. Anonymous

    Another idea is to give people who “have everything” something interesting but practical like CFLs (compact flourescent lightbulbs). Southern California Edison is encouraging people to Pledge to Change a Light, Change the World.” The lightbulbs could be a good gift for friends and family who have an interest in energy efficiency and reducing global warming – with each CFL used, 500 pounds less coal is burned. Check it out at

  23. Anonymous

    That last option seems to be what we do most often. It’s just not worth trying to fight over it sometimes, and sadly we do end up paying for it the whole year through… but what can you do when you are the lone person who wants change?

    Good article!

  24. Anonymous

    I do also tell people to not buy me gifts. Honestly, I don’t like getting gifts. I don’t really know how to respond to praise or how to give thanks without feeling akward (always been that way). Over the last couple of years, I’ve told my parents, grandma and siblings (and in-law siblings) to not get me anything for my birthday, even cash.

    However, that does not hold true for Stacie. She loves presents and has put no restrictions on the family for gifts.

    I did find that a great gift for many people is a magazine subscription. However, you’ll need to be sure they like to read, have the time to read and don’t already get that magazine, as well as know their interests too. At you can get great deals, and if you use Upromise, you get like 25% cashback rewards (and sometimes more).

  25. Anonymous

    This christmas I’ve put down $100 for gift-giving (good thing I’m in college and people dont’ expect me to hand over a ton of money for gifts!), I’ll probably only buy something for my sister and my parents…that’s enough money to get them each something nice. I usually don’t exchanges gifts with my friends just because I would have no idea what to get them and chances are they wouldn’t get me anything too amazing either…so I’ve just been telling people not to buy me anything.

  26. Anonymous

    We started on our christmas gift giving budget this year and its working out great so far.We allocated 1000$ for gifts this year (50$ per child and 150$/adult includes christmas and their birthdays). I did send over some christmas presents already (yes got some fabulous deals with free shipping) with strict instructions on no peeking till christmas :).It helps that most of the family have their birthdays around christmas and new years.My husband, who does not believe in budgeting on gifts, is constantly amazed by what wonderful gifts you can get for so less.He used to give outrageous amounts on gift cards and was stunned by the fab deals i got for kids toys for 50$. He is slowly becoming a convert to my budgeting experiments. We also asked our respective siblings to send us gift cards or cash for our “Wii FUND”. We try to do this every year make a “fund” for what we think we want (this year its the Wii) and then ask our siblings to “contribute” to it for christmas.They give us what they can afford and we save for the rest of the amount and buy our present.This way we get what we want and they dont need to worry about what to get us.

  27. Anonymous

    We do the white elephant gifts since our extended family has grown to 30 people. It’s a lot of fun finding junk in your basement and wrapping it up. We combine it with a swapping game where you can steal from each other. Takes away a lot of the stress.

  28. Anonymous

    We do the exchange thing. With a spending range. Works great. If you opt-out, no harm done to anyone else because they still get their one present.

    And for birthdays, people over 25 don’t get presents from extended family members. Maybe it’s younger–all I know is that I still get presents and I’m 22. But my older cousins don’t.

    Works out really well in our family. 🙂

  29. Anonymous

    Good article. My wife and I already have a gift budget (one amount for parents, one for siblings, one for in-law siblings, one for nieces/nephews, grandmas, etc.), but we’d like to find a way to notify people that we’re not including them in our gift-giving this year.

    I did also consider doing the drawing names thing, but I need to get our families on board for this. Overall, though, our budget is about $1100 for gifts this year, and we stuck very close to it last year too. I’ll bring it up over Thanksgiving next week.

    I do like the idea of not exchanging gifts with siblings (only giving to parents/grandparents). It’s a great way to show appreciation for elders and gift even more to them that would otherwise have gone back and forth between siblings.

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