Skip to main content

Did I Spend Too Much on Gifts This Year?

When is enough, enough? Adviser Sam Galloway provides a quick tip for answering this perennial question.

By Sam Galloway, CFP

With the holiday season wrapping up, we are left wondering, “did I spend too much on gifts this year?” And the gifts are only the icing on the proverbial cake! Let us not forget about the holiday photo shoot with the kids, the dinner party (or four), the white elephant party, the small items of appreciation you shared with the colleagues who kept you sane over the past year, the holiday cards, envelopes, stamps, wrapping paper, ornaments, and yard decorations—it all adds up.

Sam Galloway

Sam Galloway

It’s the spirit of the season, as they say. The servant heart sharing love, joy, and gifts to all those surrounding you. We associate this with the most wonderful time of the year. Yet, we inevitably ask, “when is enough, enough?”

As a CERTIFIED FINANCIAL PLANNER™, I can answer that question in two unequivocal truths:

1. It depends.

2. It’s going to be the same next year.

It depends on your personal and professional circumstances and, while I understand that to be a vague and potentially flippant answer, only you can determine where to draw the line. Start out by reviewing your bank and credit card statements for November and December, highlight all the items that were tangentially related to the holidays, and review them with one question in mind, “did this bring me joy?” If the answer is yes, add it to a new separate list and tally the total.

We are going to use this total to start planning and budgeting for next year. Too often, we associate budgets with a limit on our spending instead of a helpful target that can be used for planning and achieving our goals. For example, if you divide this new holiday budget by twelve, you will have set your monthly savings goal for the holidays of 2022 and you will have spread your joy throughout the year as you save.

2021 Holiday Spending ÷ 12 Months = 2022 Monthly Holiday Savings Goal

Now, you can take things a step further and calculate your gift-to-income ratio. Add into your calculation the birthday gifts, Mother’s and Father’s Day gifts, baby showers, weddings, holiday dinners, etc. Take this new sum and divide it by your annual income and you have just calculated one of your most important financial key performance indicators (KPI).

2021 Gifts ÷ Annual Income = Gift-to-Income Ratio

This is not a KPI you will find in traditional finance textbooks but, as the proverb goes, charity begins at home. It will be an annual tradition to pause, reflect, and give thanks for your ability to give back to those who matter most, in such a meaningful way.

For that reason, I recommend you track and share your newfound gift-to-income ratio with your financial advisor, spouse, close friends, or drop me a note and we’ll rejoice in your success year-after-year.

About the author: Sam Galloway, CFP®

Sam is a CERTIFIED FINANCIAL PLANNER™ in addition to holding his Series 7, 24, and 66 securities registrations. Sam is also licensed in health insurance, life insurance, and variable products. He earned a degree in Business Administration from Chaminade University of Honolulu and is helping build a world class service team at Valmark Financial Group.

When not working, Sam enjoys time with family, triathlons, fly fishing, skiing, and spending time at his family farm. Keep the conversation going with Sam on Twitter or LinkedIn.

Securities offered through Valmark Securities, Inc. Member FINRA/SIPC. Advisory services offered through Valmark Advisers, Inc. a registered investment adviser.