By Jay L. Zagorsky / Boston University
Gift-giving is a big deal this time of year.
To findthe perfect gift, Americans will spend about 15 hours shopping. Women will doabout twice as much as men. And theyll shell out about $1 trillion on gifts.
Whileretailers relish the holiday shopping season as a time when consumers opentheir purses or wallets, for many consumersespecially those who do not likeshoppingthese days are filled with dread. They mark moments when shoppers clogmalls, web sites become overloaded and delivery trucks block streets. Theentire process generates untold amounts of stress and anxiety.
Onesource of stress is just how much to spend on gifts. Spending too much can putyou in financial distress. Spending too little may make you look cheap.
How doyou decide whats the right amount to spend on gifts?
As an economist,I study holidays and gift giving because a large fraction of retail shopping isdriven by seasonal events like Black Friday, Cyber Monday and SuperSaturdayalso and more appropriately known as Panic Saturdaywhich is the lastSaturday before Christmas.
Gift-giving isstressful because nobody wants to buy what they think is a perfect gift only todiscover it is a dud. The long lines of people returning items after theholidays seem evidence enough for that.
Thishas led some economists to argue theres a dead weight loss to Christmaspresents that destroys as much as a third of their actual value. A 2018 studyestimated Americans spend $13 billion a year on unwanted gifts. Other economists, however, have resisted thisScrooge-like view of gift-giving and point to evidence that a present canactually have more value to the recipient than the price the giver paid. Inother words, a gift, even when technically unwanted, could have more valuesimply because someone else bought it for you.
SO ifyoure dead set on buying some gifts, how much should you budget for it?
Sincegifting is a social act, it makes sense to consider how much other peopletypically spend.
Thereare a number of surveys run each year that ask people during the fall toestimate what they plan on spending for holiday gifts. The National RetailFederations annual survey of holiday spending estimates the typical Americanwill spend $659 on gifts for family, friends and coworkers in 2019. On the highend, Gallup puts the average at $942, with more than a third of respondentsexpecting to spend over $1,000 on gifts.
Butthese figures arent that helpful for an individual since $659 means somethingdifferent to someone making $40,000 a year versus $200,000.
Thatswhere the Consumer Expenditure Survey comes in. Its a large survey run by theBureau of Labor Statistics that tracks the spending habits of 12,000 to 15,000families each year. The government uses the survey to determine the cost ofliving and inflation rates for the typical family.
Thesurvey follows gift-giving very precisely. It has categories for common holidaypresents like electronics, books and clothes, as well as gifts that typicallyarent associated with the season, such as housing and transportation.
Afterremoving these non-holiday gifts, the typical US family spends about 1 percentof its annual take-home pay on gifts. So whatever you earn, you could multiplyit by 1 percent to get a figure that is in the ballpark of what the averageAmerican spendsbut wont break the bank.
WHILEcalculating a gift budget is one way to take the stress out of how much tospend on gifts, my family has another: Only give gifts to children.
Adultsget wrapped boxes filled with paper. After the real gifts are opened and theyoung children are safely moved out of the way, we crumple up the paper andthrow it at each other in our annual paper fight.
Thatkeeps the cost down while making the kids feel special. It also ensures thekids dont feel left out when their friends talk about the gifts they received.Other families follow their own methods for controlling expenses, such assecret Santa gifts or by focusing attention more on togetherness than on thestuff received.
Whether you have a paper fight or follow another family tradition, my main message is that it doesnt take very much money to make the winter holidays memorable.
More here:
How to pick the 'right' amount to spend on holiday giftsaccording to an economist - Business Mirror
