This Valentine’s Day, spend only what you should—and insure only what makes sense!

By Alysia Boehner, Certified Insurance Counselor

We’re headed for a record-setting Valentine’s Day. And though I hate to put a damper on this heart-filled holiday, the revelation that the majority of people are planning to spend more than ever on Valentine’s Day this year is less-than-great news for most gift givers this year.

According to a new survey by personal finance website WalletHub, the average amount people plan to spend on romance this year is about $162.00—and that’s per person, not per couple. Men expect to spend an average of $196, while women are relatively thrifty, with an estimated budget of about $100. Of course, at least in my mind, that begs the question: is a budget actually part of the equation?

If you’re managing your finances the way you should, whatever you plan to spend is already part of your overall budget. Hopefully, you (or you and your spouse or partner) have looked at the numbers, determined what you can really afford based on your cash flow, and created a responsible budget for gift giving throughout the year. Budgeting is one of the most important pieces of your financial foundation, helping you to make wise choices about every dollar you spend. (If you don’t have a budget in place, check out this episode of our Wise Money podcast: The Secret Tips of Successful Budgeting.)

That’s a great first step, but even with your budget in place it can be a challenge to keep spending under control—especially when retailers and the media spend huge dollars from their own carefully-managed budgets to get you to forget all about yours! According to the National Retail Federation, US manufacturers ship more than $32 billion in products for Valentine’s Day, including a whopping $26 billion in candy, and $6.7 billion in jewelry. To get all of that product off their shelves and wrapped in lovely red bows, retailers are happy to spend a bundle on advertising. Valentine’s ads are everywhere you look—online, in emails, in magazines and newspapers, and in huge store displays designed to persuade and even guilt you into buying whatever they are selling. The message is loud and clear: “Your loved one isn’t going to feel loved unless you spend!”

If you’re feeling swayed by all the hype, here’s another statistic to keep in top of mind: 4 in 10 people surveyed said that irresponsible spending is a bigger turnoff than bad breath! Which indicates that, just maybe, it’s the retailers who are really getting all the love. To really spark the romance, be sure you are spending responsibly and making the best possible choices for you.

That said, how much is too much is different for everyone. If you happen to be someone who really can afford to give expensive jewelry on Valentine’s Day, here’s another word of advice: talk to your advisor about whether it makes sense to insure that new piece to protect your purchase—especially if it’s an extravagant one. While your homeowner’s policy may cover jewelry in general, theft of jewelry is limited under most home policies. (The same is true for firearms, watches, furs, and silverware/goldware.) If the value exceeds your policy’s sublimit, you may want to “schedule” the item to obtain more coverage. Scheduling may also make sense for items like artwork or collectibles that have high financial or sentimental value and musical instruments that leave your home regularly.

What is scheduled personal property? Put simply, it is a way to achieve any of the following:

• assign a value to a particular item on your home policy
• extend coverage outside the home
• assign a separate deductible
• add coverage for breakage or mysterious disappearance

This type of additional coverage is often quite inexpensive (in the case of jewelry, as low as $1 for every $100 of coverage per year). To be sure everything is covered and scheduled properly, be sure to have your items appraised about every three years.

Another option is to work with your insurance company to set an “agreed value” on an item. When using this type of coverage, you pay a certain premium and, if a claim is made, you receive a fixed payout equal to that value. This is particularly useful for irreplaceable items of unique or sentimental value, such as an heirloom diamond, inherited antiques, or valuable artwork that may be hard or impossible to replace.

Keep in mind, however, that scheduling an item doesn’t always make sense even if the premium seems low. In general, if an item is scheduled to your home policy and you file a claim, you are likely to see a hike in your premium for the next three to five years. Knowing that, it may not even make sense to make the claim at all, which would make the additional premium you’ve paid worthless. A Certified Insurance Counselor can help you make the most appropriate choice regarding how—or if—you should cover these types of items.

Gift giving, of course, can be a wonderful and, yes, romantic gesture. Just be sure that you are making choices that are right for you and right for your budget, and that if you do head down the road to extravagance, that what you give or receive is covered with the right insurance. And don’t forget: 4 in 10 people surveyed said that irresponsible spending is a bigger turnoff than bad breath. If that’s not the best reminder to give within your means, I don’t know what is!

Happy Valentine’s Day!