Wednesday, 7 December 2011

A formula for how much you should spend on that gift.

The average shopper will spend £673.56 on gifts this Christmas.
But how much of that will be spent on the wrong people?

I was thrilled to be asked by Warrington-based Golden Square Shopping Centre to come up with a 'gift formula' to help people decide how much to spend on everyone on their gift list this Christmas. 
You can cap how much you spend.
Whether they’re having a cut-back Christmas or a festive blow-out.

After all this is the time of year when most people feel under pressure to spend more than they should. Many shoppers will be tempted to impulse buy, spend too much and risk going into debt – a real issue in the current economic climate.

Ian Cox, Marketing Manager at Golden Square said: “We realise that it may sound strange that a shopping centre is helping shoppers to cut back on their Christmas budget, but this season is the time of year that sees most people slip into debt."

The formula takes into account two key factors: your current financial situation as well as the closeness to the person you are spending for.

So what/s the magic formula?
Work out how much you should spend on everyone this Christmas:

Average spend - Financial situation X Closeness = CHRISTMAS SPEND
To work this out you:
1.    Take the average amount you spend on most gifts.
Do this by taking the total amount you spend and divide it by the number of people you buy for (exclude your partner or anyone you spend a lot more on).
            2.    Reduce the amount to take account of your financial situation.
            Unless we’ve won the lottery, we should all take off 5% for austerity/inflation or up to 20% if you’ve hit harder times.
             3.    Adjust that amount for closeness*.
Add half as much again for someone you are very close to. But consider spending just a quarter of that amount for anyone you are buying for out of obligation.
*The Closeness Scale
See where the person you are buying for fits on the scale below. Then adjust the amount that you spend.
I’m just buying this person a present out of habit/obligation.
I’m buying this person a present partly out of obligation
I’m buying them a present because we are close
I’m buying them a present because we are very close
Divide by 4
Divide by 2
Multiply by 1.2
Multiply by 1.5

So, for example, a person spending £300 on 10 people last year, reduced 5% for inflation and buying it for a person partly out of obligation, should spend just £14.25 on their gift.

In short:
  • Use the ‘gift giver’ formula to help bring real meaning to gift giving. 
  • Remember to spend according to how close you are to the person, and keep within your financial means. 
  • If that means not giving to those who have become an ‘obligation’, that makes sound economic sense.

You can read more about my psychological research into gift-giving (and gift failure) here.
And remember Sheconomics is stuffed full of tips to help you manage your budget.


  1. OMG, where's the fun in a formula? It's interesting though. How about we all stop buying gifts for people whom we find it too tricky to buy for - that's usually a sign we're not close enough to them to bother anyway! Happy Christmas Karen.

  2. You're right, it may not be fun- but it's a fact of life for some who live outside affluent herts I'm afraid.
    I was in Golden Square Shopping Centre in Warrington yesterday filming a BBC piece about this, and there were shoppers who really appreciated the help.
    One lady had seen her income cut by a third this year.
    She took the brave step of cutting out people who'd become an 'obligation purchase' and cutting back a bit on those who mattered.
    I agree, Jessica, about those 'tricky' people. They might be tricky because they have everything so a present would be a waste of money anyway.
    Might be better to just suggest spending some quality time with those people instead. We can show people we care in all sorts of non-monetary ways.
    Have a Happy Christmas!


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