T. Rowe Price recently released the survey – Parents, Kids, & Money, which surveyed more than 1,000 parents as well as their children between the ages of 8 to 14. This survey revealed that most parents actually want to overextend their money and spending in order to get their children what they want for gifts and holiday presents.
This is shocking, especially so because 25% of the parents surveyed have either taken funds out of their retirement funds or even their emergency funds in order to pay for gifts and other holiday costs.
To me, that just sounds crazy. The holidays should be more about spending quality time with those that you love, not being extremely stressed out because you are spending all of your money on the holidays.
Here are some other interesting results that were found in the T. Rowe Price survey:
- The average amount spend on a child between the ages of 8-14 was $422 and 34% spend more than $500!
- 87% of children were encouraged by their parents to give toys or clothing away. This is a statistic that I definitely loved from the survey! The holidays aren’t all about receiving gifts, they are also about being charitable and helping others as well.
- 83% of millennials save for the holidays year round (that is higher than other generations), but they are also more likely to spend more than what they have even saved.
- 64% of parents believe that they spend more money on the holidays than they should have That’s a lot of buyer’s remorse!
- 25% of parents have at one point in their parenting life taken money out of their retirement account to pay for holiday spending.
Marty Allenbaugh from T. Rowe Price, says about the survey:
“No one wants to be a Scrooge. Between our inclination to be generous during the holiday season and the blockbuster retail deals, playing Santa can be kryptonite for even the savviest budgeters. But splurging a little shouldn’t turn into indulgence at the expense of financial well-being. Retirement accounts are meant to fund retirement. Emergency funds are meant to fund emergencies. Payday loans should be the last of last resorts. Nothing that comes wrapped in a ribbon is worth the consequence of bending these rules.”
Spending too much money on the holidays is a major problem because that debt will eventually need to be paid off. Plus, interest and other finance charges may be added to this amount, which may cause the small amount you may have put on your credit card to inflate into a much bigger number.
This can then impact your credit score, your credit history, your debt to income ratio, and more.
Plus, all of that money that you spend on the holidays will most likely only be appreciated around the holidays, and then many of those gifts will most likely be forgotten about later down the line.
Instead of purchasing everything that your child ever wants, parents should think more about having their children think about what they actually want and what they will actually use. Talking to your children about the value of money and holiday spending will help them you better understand money. I recommend having children check out MoneyConfidentKids.com as there are many financial resources for children so that they can better understand money.
I hope you enjoyed the survey findings. I thought they were extremely interesting and had to share them with you. If you’d like to stay on budget this year with your holiday spending, please read my blog post Lower Your Holiday Spending, Stay on Budget, And Prevent Debt.
How much do you plan on spending on the holidays this year? Have you ever experienced holiday spending remorse?
This post is sponsored by T. Rowe Price.
Nothing makes me happier than Christmas! We spend a ton, but it’s saved for all year and paid in cash. We also have my birthday in November, hubby in December and my oldest is early January. Hubby and I always forgo our birthdays and choose to just celebrate at Christmas time. I would be happy to see my kids unwrap a hundred presents (obviously never truly that many)! It’s so fun! This year though we have turned a little bit of a corner where they don’t want a ton of toys, but the things they want are a bit more expensive. So it will be a bit of a balancing act this year.
Kathryn @ Making Your Money Matter says
Spending over $400 per child is shocking to say the least! The number crunching nerd inside of me wants to calculate how much that actually is if they were to put it on a credit card at a typical 15-20% interest rate, or to calculate the opportunity cost of those 25% of people taking money out of their retirement to pay for these extravagant gifts. But instead, I’ll just plug along on my own holiday budget where I’m insisting on not undoing a year’s worth of toy purging by buying all the latest gadgets that the other kids at school are getting. And I know my budget is going to thank me come January 1st when the holidays are behind us.
Mystery Money Man says
Great post Michelle, some pretty scary stats there, but also a few that pleasantly surprised me! So important for parent’s to stick to a budget, but also to understand that they don’t need to be spending anywhere close to the “average”. We need to give our kids more credit about their ability to appreciate and enjoy the Christmas season without the expectation of hundreds of dollars of gifts!
I find that even my friends without kids are still spending a lot of money during the holidays. I personally don’t think it makes sense to get into debt to buy presents when that isn’t even what the holidays are about. My family had been doing a gift exchange for years so it’s just one family gift and I usually by useful (read boring clothes) for my nieces and nephew. Honestly, $400 on one child doesn’t sound totally outrageous considering how much tings cost, but when you can’t afford it and multiply that for multiple children it does become ridiculous.