We all like to give gifts to our kids. But when it comes to spending on holiday gifts, it may be helpful not to grab everything on their wishlist. According to T. Rowe Price’s 2018 Parents, Kids & Money Survey, parents who try to get everything on their kids’ holiday wish lists are more likely to report that they have gone into debt for their kids, worry that they’re spoiling their kids, and have kids who are less likely to save their own money. How do your holiday spending habits stack up to your neighbors? Read the following insights from the T. Rowe Price study:
Many parents work towards crossing off everything on their kids’ wish lists rather than a budgetary number: 45 percent of parents agree with the statement, “I try to get everything on my kids’ lists, no matter the cost.”
Trying to get everything on kids wish lists may have hidden costs for parents: Parents who try to get everything on their kids’ wish lists are more likely to finance their holiday spending (51 percent vs. 44 percent) and say that they have gone into debt to pay for something their kids wanted (48 percent vs. 26 percent). They are also less likely to have retirement savings (42 percent vs. 56 percent) and more likely to currently have a payday loan (10 percent vs. 4 percent).
Kids may be getting the wrong message from when parents are overly generous: When parents say they try to get everything on their kids’ wish lists, they are also more likely to report that they’ve tried various ways to get their kids to save their money, instead of spending it right away, to no avail (69 percent vs. 51 percent). Additionally, they are more likely to admit that their kids spend their allowance as soon as they receive it (56 percent vs. 38 percent).
Nearly half of parents finance holiday spending: 46 percent of parents use credit cards to finance their holiday spending or have taken a payday loan to cover it. This includes 22 percent of parents who continue to pay off credit card balances from holiday spending more than six months after the holidays.
Parents rely on current income and credit cards to cover holiday spending: Parents cite current income (67 percent) as the most popular way to cover holiday spending. However, credit cards (61 percent) are a close second, and only 28 percent of parents who use credit cards for holiday spending pay of their balances in full within one month after the holidays.
A minority of parents use more costly methods of covering holiday spending: To cover holiday spending, 10 percent of parents have dipped into their emergency fund, 7 percent have taken a payday loan, and 4 percent have withdrawn from retirement savings.
Most parents concede that they spent more on the holidays than they should have: 59 percent of parents agree with the statement, “I spent more on the holidays than I should have.” In fact, 48 percent say, “I never stick to my holiday spending budget.”
Some parents spend more on themselves than their kids: 15 percent of parents agree with the statement, “I spent more on myself than my kids.”