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Why Staying Home May be the Best Way to Save Money on Holiday Gifts

The best way to save money on gifts is to maximize the thoughtfulness.

In the balance, thoughtfulness wins when it comes to gifts.

How do you “save money”, by spending it?

It’s that time of year again: retailers will tell you that you are saving money by spending it on gifts. It’s a form of salesmanship called the “presumptive close”. They start the discussion by assuming that you were going to buy that item, so by getting a discounted price you therefore saved money! You needed to buy it anyway right?

When it comes to gifts,  the price tag will have little, if anything, to do with the best way of saving money this year. That’s because the most expensive gift you give this year is the one you should have avoided it entirely – the bad gift. The cost of a bad gift can be even steeper than the price itself.

Every gift has two components – a financial and an emotional component. Sometimes this emotional component is called the “thought that counts”, but basically it’s the expression of love and meaning behind the gift. The best gifts tend to weight heavily on the emotional component. The best gifts can even be free.

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Figuring out the financial component of a gift is more often than not rather straight forward. If you want to give someone a bicycle, a toy, or even if you are one of the apparently many, many people who want to give tools or jewelry this holiday season (you always know Christmas is coming when you start seeing ads for tools and jewelry…), there’s a pretty good chance you can find a bottom-line price that will be the same across certain retailers. The financial component of a gift is therefore typically well understood.

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The emotional component? That’s not so easy to commoditize, is it…?

If you are suffering with finding “the right gift” this year, know that you are not alone. The average American shops for about 10 people every Christmas and they struggle with finding the right gift for 6 of those people. Fortunately, they eventually figure something out for most of those people. But too often, one or more of those gifts will badly miss the mark. Learn more about the high cost of bad gifts.

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It’s awkward all around when a bad gift is given, but possibly most painful for the receiver. “Faking” excitement and happiness for a gift is a massive psychological stress and has added to the demand for “no gift” policies and strict adherence to wish lists.

What happens when we don’t know or can’t satisfy the emotional component? Overcompensation. It’s not just found in plastic surgery or sports cars. It’s found in gifts too. People will spend waaay more than they have to in order to hit some magic threshold of value in a gift.

Anecdotally, it’s obvious, but it’s also coming out in our data. Data from our site indicates that gifts developed with a higher emotional component, cost about 33% less than the average gift. The right gift costs less, it would seem.

The price tag will have nothing to do with the most expensive gift you give this year – the most expensive gift will be one that doesn’t have the emotional component nailed down. The best way to save money on your gifts is to avoid buying items that aren’t a meaningful expression of your relationship – find something else. Like a hug, for example.

Armed with that knowledge, here are the best ways to save money on your gifts:

  • Get advice from their friends – Before finalizing a purchase, or even before you hit the store, talk to the friends of the receiver. As a group, you are more likely to decide on something meaningful. Remember, the right gift costs less.
  • Shop with a plan – Ideally, you should know what you are going to get before you set foot in the store. Studies clearly indicate that your ability to make good decisions will deteriorate as you shop (even when that’s online). If you have a plan going in, you’ll be better off.
  • Avoid the gift card trap - Givers tend to spend more on gift cards than they would on an actual gift. There almost certainly is a product or service available for less that will please the receiver.


Written by Brian Jessup

Written by Brian Jessup on February 26, 2013

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