Should You Suggest Gift Exchange Rules for Your Extended Family

by Tracy · 25 comments

Recently, I had the opportunity to publish a guest post on managing tricky gift situations in families on the wonderful Frugal Dad’s blog. I was impressed by the insights given in the comments section. One comment regarding family pressure to “figure out” Christmas well in advance by setting guidelines such as limits or exchanging names gave me a lot of food for thought. I’d always thought that such arrangements were a positive thing to help make things less stressful and more fair, but that comment made me realize that there are cons to these sorts of arrangements.

Even though the holidays are several months away, many people start planning for the holidays and talking about them well in advance of the season so now is a good time to start thinking about what you’ll do, if anything, to manage gift giving in your family or circle of friends. This list of common gift exchange rules/arrangements is meant to help you think about whether this kind of arrangement will work for you when deciding if you’ll want to suggest or participate in one this year.

A note: Although it’s tempting to dismiss a lot of concerns as being immature, I believe it’s human nature to want things to be fair and to get your share. Sometimes life doesn’t work out that way and it’s certainly better to handle it with grace and a positive attitude, but I don’t think there is anything necessarily wrong with addressing these kinds of concerns. And let’s be honest, we can’t always choose every person in our life and doing what we can to appease difficult people is sometimes necessary.

Limits on Spending or Kinds of Gifts

Many families and groups set a spending limit or decide that only certain kinds of gifts will be given, such as used items, homemade gifts or gifts from the dollar store.

  • Avoids bad feelings on both sides when gifts exchanged are not of equal value. Nobody feels cheated or embarrassed.
  • Can help keep spending in check.
  • Can encourage creativity and it can be fun to see what everyone came up with.
  • Might help keep the focus on being together instead of material things.


  • Some will feel it’s too restrictive and would prefer to give what they feel they can afford, not what the group decides.
  • The spending limits might still be too high for some members and although these are limits, they might feel obligated to spend at the upper end of the range lest their gift come up short.
  • Not everyone will have the time or inclination to find gifts that meet the criteria.
  • Enforces the idea that fair is always the same as equal, which isn’t always true in real life.

Only Buy for the Children

Some families choose to only buy for the children and not the adults, either within the nuclear family or the extended family/circle of friends.

  • Children are generally easier and less expensive to shop for than adults who might already “have it all”.
  • Many adults genuinely believe that the holidays should be focused on the children.
  • If times are tight, most people are reluctant to disappoint children or have them feel left out when everyone around them seems to be getting tons of gifts.
  • It cuts down on the time spent shopping and wrapping gifts.


  • Those without children might not give and will get nothing in return.
  • There can be disagreements on when a child ages out of getting gifts. Most of the time, the hurt feelings aren’t discussed which makes things worst.
  • Families with more children will get more than those without and for better or worse grandparents might struggle with how to make this fair to their grown children.
  • Many people find a lot of joy in finding that perfect present for somebody old enough to really enjoy it and almost everyone enjoys getting gifts, no matter how old they are.

Buying for Families

Instead of buying individual presents, each family group buys presents for all of the other family groups to enjoy together.

  • The holidays are about family and friendship, so what better way to honor that than to buy a gift that encourages family bonding?
  • Cuts down on time spent shopping and wrapping.
  • One family gift is usually less expensive than several individual gifts.
  • There is an opportunity to be creative in thinking of something the whole family will enjoy.


  • Some people relish the opportunity to buy individual gifts, particularly for children.
  • Single people might get the short end of the stick since they might very well get what they would have anyway.
  • It can be a challenge to find an affordable gift that an entire family can enjoy.
  • If the gift is a household item, like an appliance or towels, the adults might appreciate it but the kids might not.

Drawing Names/Secret Santa

Everyone draws a name from a hat and buys for that person. This is often combined with a spending limit and in some groups, only the adults draw names and everyone buys for the children.

  • Get one, give one, what could be simpler?
  • It’s often more affordable to buy one fantastic gift for one person than to try and stretch that to buy for many.
  • Less chaos under the tree, more time spent enjoying each other’s company than unwrapping gift after gift after gift.
  • Saves time on buying and wrapping gifts.


  • The pressure is really on to make that one gift super.
  • Some might wish to buy for everyone and either feel cheated that they don’t get to or go ahead and do it anyway and people feel awkward that they can’t reciprocate.
  • If the person buying for you drops the ball or is the family cheapskate, you’re out of luck.
  • For many, the holidays equal abundance and a feeling that dreams should come true and one gift can put a damper on that.

No Gifts at All

Generally, this is just the extended family/circle of friends and nuclear families and romantic partners do buy for each other and exchange gifts in their own homes instead of at the big gathering.

  • Saves a ton of money.
  • Saves a ton of time.
  • Takes the focus away from gifts and back to simpler pleasures.
  • No expectations means no disappointment.


  • Gift giving is fun.
  • Gift getting is fun.
  • Somebody is bound to ignore the agreement and others might feel awkward about that.
  • If you don’t like your family and friends, you’ll miss the welcome distraction of gifts and cleaning up. (Editor’s Note: Oh no…)

This list is by no means exhaustive and I’m sure there are several pros and cons I haven’t begun to think of. Ideally, the holidays should be a time where everyone feels welcome and secure and nobody is anxious about material things like gifts. The reality is that even those of us who are completely comfortable with the way we deal with our own finances in every day life can feel pressured by family and friends and welcome ways to keep things fair and happy.

Remember that ultimately you have to do whatever is right for you and your immediate family. If you aren’t comfortable with the proposed arrangements, feel free to decline to participate. It’s up to you to balance your needs with what the rest of your family wants.

Your Turn:

Does your extended family have a holiday gift giving arrangement or rules? Would you prefer that they did or didn’t?

Photo Credit: wader

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  • Ida says:

    My family does a gift exchange, which I am perfectly happy with. However, a few people each year opt out. That’s also fine — there’s never any pressure to participate, so people come in and out as they please. Non-participants are usually folks for whom time and money are tight (new parents, folks starting new businesses, folks saving for something significant). They aren’t opposed to consumption or minimalists. Here’s my dilemma: I hate the idea that they will feel that little bit of sad that comes from not being involved in something that is going on all around you, even if you’ve chosen not to be involved, so I buy a little something for those who’ve opted out and sign it from Santa. They’re small, light-hearted, usually consumable gifts in the $8-15 range (nice coffee, a funny reusable shopping bag, an ornament that speaks to their personality or something similar). The exchange gifts are thoughtful things in the $30-$100 range, depending on who is buying. My husband says that I should respect their decision not to participate. Am I being disrespectful?

  • Kate says:

    One side of my family does a gift exchange every year and there’s a price
    limit but I feel like a lot of them go above and beyond and then get gifts for people who’s name they didn’t even pick and I’m one of the only few who follows the guidelines ($40 limit) and then I feel sad because everyone else is getting much more than me and more than I can give. I wish everyone would just go by the guidelines so there wouldn’t be hurt feelings. I feel so disregarded and swept aside.

    • Mel says:

      This has been my situation for the past 4 years! I’m sick of it. Every year I get to feel like the family jerk because I can’t afford to “keep up” with the exchange. What’s the point of even drawing names! I feel Christmas is so materialistic and it’s all about getting lots of gifts and getting a big expensive gift on top of all the other gifts. It’s just too much.

  • JJ says:

    My brother’s and SILs draw names so instead of 6 additional gifts it’s only one. Where I have issues is that this year, I was only going to buy for my niece (13) and nephew (17) and not my other 5 nieces and nephews. I told my brothers and then was “guilted” into buying for all of them. Was told either buy for all or none. The other 5 are 21 years old to 27. They are not children. And not to sound selfish but these adults who have jobs do not buy for me. I do not have children so it’s gifts for only me and my husband. I love all of my nieces and nephews and didn’t want any one to feel left out but when do you draw the line. Was I out of line to not want to buy for them? Why do I feel so bad now?

  • Lisa says:

    My family does Dirty Santa, which I used to love, until they ruined it. My grandma and aunt always bring extra gifts for those who “forgot.” That sounds nice, but their gifts are always cheap junk that no one wants. And there are more gifts than people. This means my nice gift might not even get opened, but someone is stuck with junk. Everyone is annoyed by this, but no one will say anything because they don’t want to hurt feelings. We are all learning to figure out how to tell which gifts they brought and avoid them like the plague.

  • Elise says:

    On my dad’s side of the family we have a couple gift traditions. The kids under about 8ish (only one now) get presents from everyone, the kids till adulthood (still questionable about what that means) get money in unique and creative ways, only G&G are allowed to give a check in a card and adults pick a name with a $20-30 limit. We also do a Yankee swap with $5 and under presents.

    Mom’s side… umm that’s a good question, we’re still figuring that one out.

  • Jean says:

    We exchange names and donate to the person’s charity of choice. Since most charities don’t list the amount given, it is a nice way to share the finances. I am not working now and this gives me a chance to give a gift to a family member that I know that they will appreciate, but doesn’t break the bank for me. Plus, last Christmas, we did a version of the white elephant with the rule that the object must not be purchased new, it must already be in the gift givers home. That way, no one is out purchasing “nice” items and no competition. These are kind of gag gifts, by the way. And we do buy for the kids.

  • Brenda says:

    During the 22 years I was married, my mother-in-law insisted that everyone buy a gift for everyone at Christmas. They talked vaguely about changing to drawing names when my ex’s youngest sibling graduated from college (never happened) or got married (ditto). Then the grandchildren started to arrive, and still I was looked upon as a heretic when I suggested that we start giving to just the children, or drawing names, or SOMETHING realistic. Then the grandchildren grew up and got married, and these young, struggling couples were caught up in the same insanity–expected to buy a gift for everyone on a list that had grown to 40-something names. It made me dread the holidays, not only because of the expense and pressure of buying gifts for people I barely knew (my ex’s sister’s son-in-law? Puh-leez!), but because of the sheer waste of receiving so many gifts, most of which went straight to Goodwill because they were things I’d never want or use. Sheesh! Divorce sucks in a lot of ways, but I am thrilled to be away from that holiday with that family. I’m free to give to charities who provide for people who truly have needs for the most basic of life’s necessities, and am happier for it.
    Thanks for letting me vent!!!

    • Sue says:

      Hi Brenda, I ONLY had 23 people to buy for when I was married and thought that was overwhelming. Yep divorce sucks but living singly is so much less expensive! I sometimes feel like sending “the other woman” a thank you card! 😉

  • Ashley says:

    The Christmas holiday’s are my favorite of the whole year. I love to listen to the music, bake cookies, and be with my family. My husband and I still go to his mother’s on Christmas Day, and spend a few days there. You have to get a gift for every member of his family. On top of that they play this game called Dirty Santa there are about 6 adult couples, and you have to spend 30 dollars apiece on a his / her gift. This ends up around 60 dollars. So in the end the cost for this gift exchange is 360, this seems extreme. Why do some families have different ideas on gift giving. My family always kept it simple, but this is so expensive and worrisome financially that it takes most of the joy out of Christmas

  • Gail says:

    I would like to limit gift giving to adults. Is a Thanksgiving card to my husband sister/mother appropriate to suggest this? somthing like… The holidays are about family and friends and although we enjoy finding the perfect gift for all of our loved ones, it seems that this year with Dustin’s wedding and family health issues, that this would be an unnecessary burden. We would love to take the emphasis from the gifts and back to the simple pleasures and simply buy gift for the little ones.

  • K says:

    What do you do if you don’t want to participate in a gift exchange? My husband’s extended family always insists that we draw names and have a $20 limit for the gift. My mother-in-law is the one who arranges it. Last year, we opted out because we were tight on money. That was fine then, but apparently this year, they drew the names for us and have given us the $20 limit. I don’t want to be rude but, at the same time, wasn’t it rude for her to just assume we would participate without even asking us? The only reason we apparently do this whole thing is because my husband’s spoiled 22-year-old cousin likes to have a present to open. At 22, shouldn’t you get over it? I want to tell my mother-in-law that we don’t want to participate in this ever again, beginning with this year. We don’t have the extra money and I don’t know some of them very well, so inevitably, there is a lot of gift-card giving and if you’re going to go that route, what’s the point? It is just frustrating… Plus, we have our own kids and our own siblings and parents we want to give gifts to. I just don’t want any part of this.

  • Susan says:

    Gift giving can be quite an ordeal for me. Everyone I know makes more money than I do and I don’t mind spending money on a gift if the recipent will really enjoy it but when you only see someone twice a year how do you know what to get them? And they can buy something much bettter for themselves than I can. I don’t want gifts, I just turned 60 and have way too much stuff, I get more enjoyment out of having dinner and conversation. I keep trying to impress the point that I am de-cluttering my living space and getting rid of lots of stuff but they don’t hear me. One year I tried to set an example by giving gifts from Heifer, these are charitable donations to help people achieve a sustainable life, a gift I would be thrilled with. It didn’t go over very well [sigh].

  • Olivia says:

    In theory on my husband’s side, the kids get the gifts. Except for his youngest sister who has no kids, she expects something. An out of work brother needs help but never asks, so we do what we can for him. On my side everybody gets something. It can be new, used, homemade, big, little, free with rebate, whatever. It only has to be appropriate. They love unwrapping stuff. They are great fun to buy/make for. Next year may be different, and our method certainly isn’t as orderly as other folk’s, but it’s workable.

  • Dd says:

    I think the real issue with gift giving is that we feel obligated to give gifts. If a gift is given because someone genuinely thought of you, it means much more than being told that it is gift giving day and having to do it.

    I think the only reason why people want their share is because of the imposed obligation of holidays and birthdays. If I bought a gift for someone because I genuinely cared for them and thought of them–I would not need a gift to be given back to me.

    • KM says:

      I like that reasoning much better. Once in a while I come across an item and think of someone whom it would be perfect for, so I buy it and if there is no holiday or birthday coming up, I just give it to them just because. But some people are really difficult to buy presents for, so even if I care about them, I am always frustrated when I need to get them something and don’t know what I should get. I wish gift giving was more flexible throughout the year and people celebrated holidays and birthdays by just getting together.

  • Jacque says:

    We have a “white elephant” style of gift exchange with a $20 limit. So it is a get one, give one approach that also gives people a shot to “play the game” to get a gift that they actually want. The exchange also takes up some time, which is a good thing in my family to cut down on the awkward silence. Yes, we are one of those families the author was referencing. Last year was the first time we tried it. There were a few bumps in the road, but it seems to be a good solution.

    • Laura says:

      I love playing the White Elephant game but have grown to hate it. Why? Because I always spend $50 for a decent gift and by the time the game ends, I end up with a piece of junk. Literally. There will be 1-2 “good” presents in the game and my husband and I are never the ones to receive them. I’d rather spend the $50 on 3-4 small gifts that are meaningful than to spend $50 and get a junky coffe mug and some stale danish cookies back (last year’s white elephant loot).

  • vered says:

    We celebrate Hanukkah. At least in our extended family, each family buys for its own children only. The celebration focuses on food more than it focuses on gifts. We may get fatter by the end of those 8 days, but gift giving is very simple. 🙂

    • Tracy says:

      Vered, I admit, I’ve always been curious at how the gift giving worked at Hanukkah. I’m relieved you wouldn’t be expected to buy hundreds of gifts.

      I can 100% get behind making the focus on food and family and friends.

  • Jenna says:

    My family has a tradition where we make gifts and invest time into people we love and care about and then the money we would have spent on buying other people goes towards donations to charities in their name. Money/donations helps those in need, we spend time during the holidays focused on people rather than presents and have lower stress levels, the perfect gift.

    • Tracy says:

      Jenna, that is really lovely and I’m glad your family has found such a wonderful way to make the holidays meanigful.

      I’ve heard of other people getting shot down for suggesting gifts to charity in lieu of presents.

  • Bobbi says:

    We do this. We buy for the little ones, and there are only 3, and then pick a name. Our limit is $50. It works out well, although sometimes one or another has bought for everyone. There are no hard feelings though, and the gifts are usually small and just something that made the person think of you. The whole point for us is to be together. 🙂 That is all that matter to us.

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