This is a guest-post from my wife.

Amanda recently sent J.D. an e-mail looking for advice about gift-giving:

My husband and I have made huge lifestyle changes since our son was born with congenital heart disease four years ago. He’s had five open-heart-surgeries, and we’ve had some killer medical bills. My husband stays home with both of our kids to help prevent Liam from getting sick too often, so we’ve gone down to one income, one car, basic cable, and a really aggressive budget.

One of our worst budget breakers however is gifts. I have eleven nieces and nephews, two kids, etc. At Christmas we’ve convinced both sides to just do a name exchange and then we only have to buy for two nieces/nephews on either side, which helps and we’ve just outright stopped exchanging gifts with our brothers & sisters, but there are still our parents, his grandparents, kids of friends who have birthday parties, and graduations, weddings, and baby showers!

We actually do plan most of these things into discretionary spending since we know when people have birthdays, but it’s always those gotchas like weddings and new babies (and we didn’t pre-think graduations with this year’s planning).

Could you offer any advice on fitting generosity and gift giving into a frugal budget? No one wants to be a grinch, but it really adds up some months. Sometimes, it’s half of our discretionary spending just to get small gifts (we only spend $10-15/kid!).

Ah, Amanda, I hear you! Gifts can be a budgeter’s downfall! Many of us readily accept our own sacrifices in the name of being frugal, but don’t want to seem “cheap” when it comes to giving gifts to others. I’ve struggled with both sides of this issue.

One side of me likes choosing and giving gifts, likes having those gifts appreciated, likes receiving gifts in return. But the other side opposes the commercialism and expectations that accompany holidays and occasions. Too often, hastily-purchased gifts can seem like a substitute for the spare time and energy we don’t have to make a gift meaningful. These gifts can be merely an obligation, which is no fun for either giver or recipient.

For big family gift-oriented occasions like Christmas (Hanukkah, Kwanzaa, etc), you must have “The Talk”. In some families, money is a difficult subject, but your options are either to continue spending more than you want on presents, or to mystify everyone when you cut them off cold turkey. A good way to start is to explain your budget goals, as in, “We’re starting to save for the kids’ education funds,” “…to buy a house,” “to be able to afford to live on one salary,” “pay off the credit cards” or something like that — just make sure you’re being honest.

Whatever you do, don’t insist that everyone stop giving gifts to you (or your kids). You have the right to stop giving gifts, but for many people, being generous with presents is a true pleasure and you should avoid depriving them of that pleasure. It may seem wrong to accept without giving, but you can give back in other ways. Of course, your relatives and friends may be relieved at the prospect of the never-ending gift-exchange ending — maybe they were just too shy to bring it up.

If you don’t want to stop all gifts, here are some ideas to cut costs.

Draw names. As Amanda does, this can allow you to focus on one or two recipients instead of the whole clan. There are various arrangements. Some families write their name and a gift suggestion or two on a slip of paper. In some systems, adults pick an adult and each kid gives to a kid (with adult help as needed). Or, if everyone is gathering together, each person can bring one gift (marked as adult or child) and you can do a sort of “Yankee swap” exchange where unwrapped presents can be stolen or traded until everyone ends up with someone.

Be creative. On J.D.’s side of the family, we have been doing $5 gifts for several years. Everyone (7 adults, 4 kids) buys a $5 (or under) gift for everyone else. (This was my sister-in-law’s idea.) J.D.’s mother asked to be excepted — she loves piling gifts on everyone and exercises her grandmotherly rights to do so. The $5 limit has forced us to be bargain hunters and the results are often both surprising and hilarious. We found a practically new set of drafting pens for a brother’s gift: $80 new, marked as $10 at a garage sale but we bargained it down to five!

Emphasize the experience. Some people have more time than money. If you fit in that category, you can use it to your advantage for all sorts of occasions. Do friends have a new baby? Deliver dinner to the new parents, then stay to hold the baby while they eat the meal. Clean up afterwards, of course. Nieces and nephews? For that special occasion, invite them to join your family for camping, a hike, miniature golf — whatever your family does for fun. You’ll all get to know each other better, too. Parents and grandparents often would rather have you spend time than money on them, as well. Invite them over for brunch, or go feed the ducks at the park, or hear a free concert together.

Don’t turn your nose up at used. Aren’t we silly Americans! We talk about how great recycling is but we want everything we get to be new, new, new! It’s all about mindset. For kids’ toys, as long as they’re in safe condition, the fact that they’re “pre-owned” means little to a child — unless non-stop commercialism has already gotten to them! J.D. and I found two wooden sleds set out for the trash pickup in a ritzy neighborhood. After swallowing our hesitation, we grabbed them. With a cleaning and a few minor repairs, they were good to go — and looked great under the Christmas tree. Keep your eyes open all year for bargains, or arrange a toy exchange or toy hand-me-down system with friends and neighbors. Get to know people’s tastes and decorating styles so you can choose gifts they will appreciate.

Kids love the dollar store. I know, I know — everything’s made in foreign countries by underpaid workers. But seriously, if you are spending more than $3 for a kid’s birthday party gift, you need to visit a dollar store. The kids I know are fascinated by dollar store stuff until age 6 or 7. The parents may turn up their noses, but what kid wouldn’t love growing giant lizards or sharks (600% growth — just soak ‘em in water!), red-white-and-blue glow necklaces, or a hundred fuzzy animal stickers?

Agree that gifts are only for the kids. Not having kids myself, I wouldn’t vote for this option, but I know many families like it. I think a better choice if you’re going to do this is to have adults buy small gifts for the kids ($5-10), and let kids make homemade gifts for the adults. I think this gets kids to think about giving as well as receiving.

Use homemade gifts. I’m a big fan for using the homemade gift for most every occasion. Special birthdays get a bouquet of garden flowers in a mason jar. Or, I take the time to write a sincere note in a beautiful card. If someone’s a fan of sweets, I’ll whip up a batch of cookies. If the season’s right, I might present them with fresh berries or a holly and cedar swag. The cost for all these gifts is minimal, but the gesture is still meaningful.

Mass produce. Last year, English Major offered a great tip about gift-giving ideas. You can save lots of dough by the assembly line approach. Pick a gift that will be appropriate for your list of recipients and buy craft items, ingredients, or components in bulk. Before you start, figure out how many gifts you’ll need and the cost per assembled gift. Check the figures against your budget. To maximize this idea, choose an idea that still allows for some personalization, say in the color or style of gift.

Just speak up. At my workplace, the envelope is constantly being passed for one event or another. The loss of a parent, a new baby, a retirement, etc. The flowers or gifts purchased with the collected cash may very well be much appreciated. But if your budget prevents you from chipping in, instead write a heartfelt note or tell the person face-to-face. A verbal expression of sympathy or support may be just what they need.

Shrug it off. Unfortunately, some people are all about the goods. If the people in your life aren’t going to appreciate or adjust to your frugal mindset, you have a choice to make. Keep spending to keep up with the Joneses, or go your own way and hold your head high. Find ways to show you care that don’t just involve handing over your debit card. Give when you can; give what you want to.

The side benefit of implementing any of these ideas is that it moves the whole concept of giving gifts back to thoughtfulness, effort, and individual creativity, rather than the focus on prices and packaging. Think of it as one small chink in the great wall of marketing and consumerism!

These are just some thoughts on the topic to get the discussion rolling. I’m sure there are scores of creative solutions out there.