Be honest with children, share more experiences and set gift limits
a hard message to deliver at the holidays: Santa is in debt or needs to shrink
spending to avoid a credit hangover in the new year. How do you tell the kids
and still make the holidays memorable?
parents, we get fixated on giving kids what we think is best, but part of
giving them the best is giving them financial literacy,” says Shannon
McLay, founder and president of the Financial
a financial planning company helping Gen X and Y clients. “Kids need to
know that money is finite.”
will spend an average of $967.13 on food, gifts and decorations this
holiday season, predicts the National Retail Federation.That is up 3.4 percent from 2016.
nobody wants to feel like a Grinch, here are some easy, low-cost ways to scale
back, reset gift expectations and still make the most of the holidays:
Don’t worry about younger kids.
Children under the age
of 4 won’t remember what gifts or how many they received, so there’s no need to
pile on the presents or explain why Santa is tightening his belt.
certain age group, I highly advise clients to go very minimal,” McLay
says. “Starting earlier is better because you set the expectation early.” Kids who grow up with smaller Christmases also won’t feel entitled to loads of expensive
“As parents, we get fixated on giving kids what we think is best, but part of giving them the best is giving them financial literacy. Kids need to know that money is finite.”
Focus on activities, not gifts
Family traditions, such
as watching holiday movies, making pancakes on Christmas morning or listening
to Christmas carols can create a festive feeling without blowing the budget or
going all out on gifts. Emphasize these activities to help offset a reduction
“Do more holiday extracurricular activities like baking or
looking at lights with hot cocoa in a thermos,” suggests Scott Palmer, who
founded The Money Couple with his wife Bethany.
Volunteering as a family to wrap
gifts for needy children or serve at a soup kitchen can help kids put their own
situation into perspective and feel grateful for what they do have.
serving, they learn the real meaning of the season,” says Gail Perry-Mason, founder and director of Money Matters for Youth, an
organization that teaches financial literacy to kids. “You’re never too
young to learn how to serve. Find creative ways to make it a family tradition.”
Kids can also choose toys or clothing they’ve outgrown to donate to others.
Make your own gifts
members to make each other gifts, so there’s more to open under the tree and “it’s not just parents giving to children but children giving to each
other,” says Bethany Palmer. “They’re not just being consumers as
children but being givers as children.”
“You’re never too young to learn how to serve. Find creative ways to make it a family tradition.”
Set a gift limit
One way to limit gifts
is to create a tradition in which children expect only a few gifts. McLay says
her son loves their family’s “gift of four” tradition, which includes “something you want, something you need, something to wear and something
Aside from the single item that a child wants, the three other
gifts all fall easily within a modest budget. “It’s a fun way to give a budget
without them knowing they’re getting a budget,” McLay says.
option, Bethany Palmer suggests choosing more gifts of lesser value. This way,
children will feel as if they’re opening a lot of gifts, but the gifts may not
be as expensive as they’re used to receiving, she says.
Be honest (but not too honest) with
By age 11, most children can sense when times are tough, so it’s better not to
try to hide it. Scott Palmer suggests saying something along the lines of, “Things
are a little tight, so we’re tightening our belt a little bit so we have more
financial freedom later.”
That approach shows that you’re taking steps to
improve the situation, he says. No need to provide too much detail about financial
woes, such as credit card debt or medical bills, as this could upset your kids.
“It’s really important not to give too much detail that they don’t need to
know and they don’t need to worry about,” he says.
“If everybody could come together just for one gift for a child, it’s OK to do that.”
Talk with other relatives
If grandparents or
other relatives already give the kids loads of gifts, you may not have to tell your children that you are cutting back, because your kids will be so busy opening those gifts. And if your daughter
has her heart set on a game system or bike that’s not in the budget, talk to
relatives about pooling resources.
“If everybody could come together just for one gift for a child,
it’s OK to do that,” Perry-Mason says.
In many families, adult relatives
exchange gifts out of routine, but nobody would miss those gift cards or fruit
cakes if they stopped coming. Set expectations in advance and consider forgoing
the grown-up gift exchange or switching to a secret Santa in which you pull
names from a hat.
don’t take on more debt out of a perceived obligation or sense of guilt. “It’s not worth getting in debt,” Perry-Mason says, especially when
you’re already feeling financial pressures.
See related: Holiday guide of credit card tips, Rack up card rewards with holiday bonuses, perks, How four families rein in their holiday spending, Help! I can’t afford my child’s wish list
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