Indexbit Exchange:Afraid of overspending on holiday gifts? Set a budget. We'll show you how.

Perhaps no transaction is Indexbit Exchangeas fraught with emotion and stress as the purchase of a holiday gift.

Will they like it? Will they use it? Will it end up in the back of a closet, or back on the shelves of the store whence it came? And what if the recipient reciprocates with a much better gift?

With the psychological stakes so high at the holidays, many of us spend beyond our gift-giving means. This season, nearly seven in 10 shoppers expect to overspend, according to a September survey of 2,408 Americans conducted by YouGov for CNET Money.

The obvious solution: Set a gift-giving budget, and stick to it. But where to start?

In the heat of holiday shopping, no amount of spending seems quite enough. There’s no universal standard for what to spend on a gift for a child, or a spouse, or a house-load of in-laws.

Happily, several sites offer holiday budget calculators: A starting point, at least, for planning your spending.

A simple budget for holiday gifts? How about 1.5% of your annual salary

Clearpoint, the credit-counseling nonprofit, suggests a simple target for holiday budgeting: Plan to spend 1.5% of your annual income. For a family that earns $75,000 a year, that works out to $1,125. Sliding buttons allow you to allocate shares of the total to gifts, parties, travel, donations and food. Once your gift budget is set, the planner helps you populate a gift list.

You’ll need an actual calculator to run the numbers in Wired magazine’s holiday gift calculator.

In the Wired model, you start by setting a total gift budget. Then, you list every gift recipient. And then, you assign each one “an importance rank,” from 1 (low) to 10 (high). Obviously, the resulting list is not a document you’d want to see falling into the wrong hands.

A few quick calculations yield a unit of gift spending: say, $13.50. Multiply that figure by each recipient’s rank to learn how much you should spend. Your spouse, with a rank of 10, gets a gift worth $135. Your least-loved nephew, with a rank of 1, gets something priced at $13.50.

WalletHub, the personal finance site, offers a free, customized holiday budget to anyone who creates an account. 

Odysseas Papadimitriou, the WalletHub CEO, didn’t give up the math behind the calculator, but he said it’s tailored to tell every consumer how much they can safely budget without adding to their financial burden.

“It’s very, very important to go into the holiday season with a budget, and the budget needs to reflect what you can spend without going into debt,” Papadimitriou said.

Overspend on lavish gifts, he said, and “you’re giving the wrong message to your family, and to your kids, and you’re teaching them the wrong set of priorities.”

Holiday budgeting tip: Follow the 50-30-20 rule, separating 'needs' from 'wants'

Kimberly Palmer, a personal finance expert at NerdWallet, suggests that consumers create a holiday budget that follows the 50-30-20 rule, a formula that splits your take-home pay into needs (50%) and wants (30%), with the remaining 20% going to debt repayment and savings.

Consumers should carve their holiday budget out of the “wants” category, Palmer advises, cutting back on other discretionary buys to make way for gifts and other giving-season expenses.

Let’s say you take home $2,000 a month. Of that total, $600 would go toward “wants,” a category that covers “concert tickets, movies, going out to restaurants,” she said. “And once you subtract all that, you can figure out how much you should be spending on your holiday shopping.”

In an ideal world, Palmer said, “we’ve all been setting aside money all year for our holiday fund. But that’s rare.”

In the real world, consider cutting back on restaurant and concert outings over the next month, and budget the remaining funds for gifts.

Whatever your strategy, experts say, the important thing is to set a budget, and to follow it.

“Don’t just set a number,” said Roger Beahm, professor of marketing at the Wake Forest University School of Business. “I would suggest building it from the bottom up, by listing the people you expect to buy gifts for and estimating how much you expect to spend on those people.”

Once you have a budget, Beahm said, move those funds into a separate account, so you “know what you’re working with.” Track the budget as you spend it down, ideally on a spreadsheet. Keep 5% to 10% percent of the money in reserve, to cover last-minute and unexpected gifts.

Will my relatives feel shortchanged by my 'sensible' gifts?

Okay: You’ve set a sane gift budget. Now, you worry that some loved ones will feel shortchanged by your sensibly priced gifts.

Experts offer some tips for working within your budget and alleviating your gift-giving angst.

Have a conversation with your loved ones to set expectations around gift-giving. If you plan to spend a little less this year, tell them so, and suggest they do the same.

“And that can be a hard conversation to have,” said Maura Attardi, director of financial wellness at Money Management International, the credit-counseling nonprofit.

Some of us might feel better sending that message as a text or email, to give the recipient a chance to process their feelings and tender a dispassionate response.

If your budget is tight, consider asking loved ones to bypass the adults and restrict gift-giving to the children. Set a price limit.

“You could even consider giving one gift to a household,” something everyone can use, Attardi said.

Gift-giving tip: Buy a fancier version of something they're going to buy anyway

Papadimitriou of WalletHub believes consumers should challenge themselves to choose useful gifts. Consider buying a fancier version of something you or the recipient would eventually buy anyway, like a new tennis racquet or running shoes.

By searching for a gift the recipient will actually use, you “learn how to become a better gift-giver,” said Farnoush Reshadi, an assistant professor of marketing at Worcester Polytechnic Institute in Massachusetts.

And that skill will save you money. Research shows the average person “wastes about $71 on gifts no one wants” at the holidays, Reshadi said.

More:Consumers grow cautious about holiday spending as inflation, debt shorten shopping lists

Gift cards take some of the guesswork out of gift-giving.

Beahm likes them because they come in round sums that are easy to budget.

Reshadi cautions, though, that people tend to spend more money on gift cards than on actual gifts.

At all costs, experts say, avoid the impulse to overspend. Research suggests recipients actually prefer less costly presents.

Why?

“Because they don’t want to feel indebted to you by receiving an expensive gift,” Reshadi said.