Amidst U.S. inflation, a recent holiday retail survey finds that the average American may spend as much as $1,652 on holiday gifts this year—up nearly $200 from last year and surpassing pre-pandemic levels for the first time since 2019.

“With the expectation of paying higher prices, consumer spending on holiday gifts may look a little different this year,” says gift-giving and holiday marketing expert Deborah Y. Cohn, Ph.D., interim dean of the School of Management.

In fact, 42 percent of shoppers told Bankrate.com that they expect to buy fewer items this year, and 41 percent planned to seek out more coupons, discounts, or sales. Many also planned to start their shopping earlier to avoid taking on debt.

While it may be too late to shop earlier or set aside money each week, Cohn, who has conducted extensive research on the consumer psychology behind “bad gifts,” shares tips to create positive gifting experiences on a budget.

The first step, she says, is to set gift exchange expectations with friends and relatives.

“If you’re working with a tight budget, it’s time to make deals with your friends and family that everyone will keep the costs down. Talk about what everyone can afford to spend and set limits,” says Cohn.

Another option, she says, is going in on group gifts. “You might also consider pooling your funds with friends and family and chipping in for a gift. This is made easy with online payment methods such as Splitwise.”

For those looking to cut costs by re-gifting, Cohn urges caution.

“Many people view gifts as symbolic gestures. To these individuals, the act of giving a gift is viewed as ‘sacred,’ with the gift seen as an expression of love and connection. So, if you choose to re-gift for financial reasons, be sure that all signs of the original gift exchange are hidden from the next recipient. Any cards or indications that the item was previously gifted should be removed, and it should be rewrapped and transformed.”

Ultimately, however, the true cost of a gift might be determined by its effect on the relationship. Given this, Cohn emphasizes that gifts always prioritize the wants of the recipient, no matter the price tag.

“The message of the gift matters most, so be sure that yours says something positive.”