Economists have long discussed the wasteful spending that occurs during the holidays. We all know exactly what they are talking about. We spend way more money than we care to, to buy things we don’t want to for people we’re trying to impress. We receive a plethora of gifts we don’t need or want from others (bonus if you don’t get a receipt) only to barter with the store you think they bought it from for store credit. At best.
Joel Waldfogel discussed this phenomenon in the “The Deadweight Loss of Christmas”, a 1993 paper he wrote as an economics professor at Yale University. Waldfogel estimated that poorly chosen gifts caused economic waste to the tune of approximately $4-$13 billion per year. The problem lies in the subjectiveness that one values a gift, say worth about $50. I may think $50 worth of skincare is a great use of money, while my father may not see the same value in what that same $50 will buy him elsewhere. We are guessing what other (mainly adults) like, want, need, and value- and usually not with the best accuracy, unless we are very close with them and know exactly what they like.
Ways To Improve Spending This Year
Luckily, there are much better ways to improve wasteful spending this year while still sharing in special memories with family and friends, or even participating to some degree in the tradition of gift giving.
- Skip buying gifts just for the sake of buying gifts. You don’t have to completely forgo this tradition, but keep it limited to people closest to you and that you know best instead of every single person in your life regardless of how close you are to them.
- Shop for kids only and hold off on the adults. Especially in this economic recession, it’s sometimes best to let small children experience the joy of opening up fun gifts and to take the pressure off of the adults to get random and unneeded gifts for each other.
- Opt to send holiday cards instead. Sometimes it's merely the thought of sending well wishes that is at the core of gift giving. This way, you can still personalize it with a thoughtful, handwritten note to each person on your list.
- Homemade treats. Who doesn’t love a little tin full of homemade cookies? My husband and I enjoy homemade desserts from family members that we get to munch on in the weeks leading up to Christmas and look forward to receiving them every year.
- Consumables, experiences, cash, gift cards. If you still want to actually purchase something, stick to these four categories. Consumables include food, treats, wine, candles, a luxury hand lotion, or specialty olive oils for cooking. Experiences may include a gift certificate to a favorite restaurant, movie theater, or trip to the zoo. Cash is king- enough said. And gift cards either to stores you know someone shops at or even visa gift cards that can be used as cash anywhere.
- White elephant gift exchange. This is a go-to favorite for families who gather for the holidays, and one that mine also partakes in. I personally like this even better than doing a secret Santa only because you don’t have to find that perfect gift for one person. This can be silly and fun, including gag gifts that make for a very entertaining evening. You can also “steal” someone else’s gift or exchange with another person in the group. Set a price limit and enjoy this silly and fun new tradition.
I hope this list inspires you to be a better and less wasteful spender this holiday season. It will also help take the stress and frenzy out of shopping and help you focus more on what matters most. Over the last several years, as my husband and I have adjusted our spending, we get to enjoy more time together and less time running around in a frenzy dropping gobs of money we don’t need to otherwise and being more present in the moment with each other and our growing family. I hope this inspires you to make your holiday season even more special and meaningful in the years to come.