The dollars you spend on birthday gifts and parties for family and friends can add up fast. If you have young school age children, you could spend hundreds of dollars each year. If you carry those costs on your credit card, it could take you months to pay them off. So how can you keep birthday spending under control?
Here are some tips to help you set up a budget for birthday gifts and parties. For tips on how to spend less, read How can I save money on birthday gifts and parties for kids? To learn more about the dangers of overspending, read How much does that expensive gift really cost? Luc's story. You can also use this calculator to find out how long it will take you to pay off birthday debt on your credit cards.
Three tips to budget for birthday gifts and parties:
1. Save ahead for all the birthday gifts you will buy over the year for friends and family.
You should have a household budget that includes these gifts. If you don’t, you are more likely going to scramble to pay the bills as they come up from month to month. Or, you may end up charging them to a credit card.
Let’s say you have 10 birthday gifts to buy this year. It’s easy to spend $5-10 extra on each one – especially if you use a credit card to pay when you shop. Well, that little bit extra for each gift could add up to $100 of credit card debt by the end of the year. If you only pay the minimum amount due each month, you could still be paying off those gifts in March!
Tip: If you have a household budget, don’t include these costs under “Other” or “Miscellaneous.” Instead, do the math to calculate what you think you will spend and list that amount in your budget on a separate line. Set those dollars aside in a savings account each month.
How much should you save each month? As an example, let’s say you:
- have 2 children and 10 other family members or friends to buy birthday gifts for each year. That’s a total of 12 gifts.
- plan to spend $25 in total on each person. That includes a card, gift and gift wrapping.
If this is your plan, you would have to pay for 12 gifts at $25 each, for a total of $300. You would need to save $25 a month to cover those costs.
Just remember: be realistic when you set up your budget. For instance, if you know you will spend more than $25 a gift, your monthly savings would have to rise to cover those higher costs. The amount you save and spend should match over the course of a year. In other words, only spend what you can truly afford.
2. If you have children, save extra for birthday gifts for their friends or classmates each year.
Again, let’s say you have 2 children. You expect they will attend 5 birthday parties each over the year. That’s a total of 10 more gifts to buy. At $25 in total for each gift, you would have to save $250 each year to pay those costs. That’s another $20 a month you need to save.
3. Save ahead for birthday parties and entertaining.
Even a modest birthday party for a child can cost $100 or more. Costs can be similar if you plan a large family birthday dinner. Again, sit down and do the math. Be realistic. Your costs will go up if you plan special activities or hold the party outside your home.
For instance, let’s say that you plan to host parties for 2 children, your spouse and your parents. If you spend just $100 for each event, those costs will add up to $500 over the year. You would need to save more than $40 a month to pay the bills for those parties.
Remember: the costs of birthday gifts and parties can really add up.
Many families would need to save more than $100 every month. That’s why it’s important to budget and save ahead for those costs.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.