Watch out: Cupid's arrow can punch a hole straight through your budget.
That's the takeaway from our latest Be My Valentine Index, which puts the cost of buying a basket of favorite Valentine's gifts at $580.98.
Besides its well-known importance to many couples, Valentine's Day is an important day on the calendar for many businesses. It also represents pitfalls for couples, who may end up overspending to meet a partner's expectations, both real and imagined, says Katie Brewer, certified financial planner, and virtual financial planner at Your Richest Life. Particularly for those who don't plan ahead, "it's easy to get sucked in," she says, and "all of a sudden you're buying someone a $500 piece of jewelry."
To get a sense of just how expensive Valentine's Day can get, we created the Be My Valentine Index last year, using averages for the prices of gifts to come up with an average cost to hit all the popular Valentine's bases.
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That's higher than last year's index, mostly because of a change in methodology. In this year's index, we collected data from NPD group and BloomNation on average flower and dining costs specifically on Valentine's Day, rather than for the entire year.
Prices tend to be higher on Valentine's Day for many items, in part because of businesses cashing in on a rush of demand, and in part because they're passing on the costs of their suppliers doing the same.
Beyond that, prices for most items in our index were mostly flat, with prices for diamond earrings rising slightly and prices for chocolates falling modestly. The latter would make sense given that cocoa prices have fallen markedly since last Valentine's Day, according to data from the Intercontinental Exchange.
A shift toward smart spending, experiences
Since it falls in the post-Christmas retail doldrums, it's easy to see why retailers love Valentine's Day, says Kelli Hollinger, director of the Center for Retailing Studies at Texas AandM University.
"Outside of customers who are redeeming gift cards received for the holidays," consumers typically take a break from shopping after "the splurge of holiday spending," Hollinger says.
"Many consumers simply need a reason or a prompt to shop," she says, and that's what Valentine's Day provides for the many consumers who buy gifts for friends, family and schoolmates.
But it may be that Americans are beginning to see that more isn't always more when it comes to Valentine's Day giving, says Angeline Close Scheinbaum, an associate professor at the Stan Richards School of Advertising and Public Relations at the University of Texas, Austin.
Her research has found that people are increasingly resistant to heavily advertised gift options, like jewelry and roses, and more attracted to "more intimate and personally constructed goods," such as meals made at home and playlists of a partner's favorite songs.
In interviews, Close Scheinbaum says, subjects' "faces lit up when they were discussing these more homemade products really got us thinking, 'Wow, it's not the monetary expenditure that people really seem to appreciate, but it's more of the thought behind it.'"
Indeed, the National Retail Federation's annual survey finds that consumers plan to spend $18.2 billion on Valentine's Day this year. That's down from last year's record estimate of $19.7 billion, and the lowest since 2014.
Based on her recent research, to get the best bang for your chunk of those Valentine's bucks, Close Scheinbaum suggests giving a Groupon or other type of gift certificate or voucher that can be used on Valentine's Day, or another day when the recipient won't have to be fighting off holiday crowds.
Avoiding a harmful splurge
Brewer says one way to avoid overspending on Valentine's Day is to get on the same page with your significant other on a spending limit well beforehand.
In fact, setting a low limit may actually make the process more fun, Brewer says. She's had frugal couples tell her, "we can only spend $20 on each other and so what we have to come up with is probably a lot more creative than if we just went and bought something at a jewelry store."
That approach may be more difficult, however, for those in newer relationships.
At the very least, she says, set a budget for yourself before you start shopping and make sure to set aside money in an account ahead of time to pay for it.
"If somebody wants to propose on Valentine's Day and they have an account set up and they've already been throwing money in there to buy a ring, they probably didn't wreck their budget," she says.
But if on Feb. 1, if they were like 'You know what would be cool, is if I proposed to my girlfriend on Valentine's Day,' and that's when they started planning it, then that would probably wreck their budget pretty quickly."
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