Holiday gift giving to children is growing very expensive. So you would be wise to figure out how to rein in the spending before it gets out of hand.
Parents spend an average of $422 for a child ages 8 to 14, according to a survey by T. Rowe Price of more than 1,000 parents and their kids. And 34 percent of parents spend $500 or more on holiday presents for their kid.
More than half of parents also agreed with the statements: “I try to get everything on my kids’ lists, no matter how much it costs,” and “I never stick to my holiday spending budget.”
Between keeping up with the Joneses and wanting to make their kids happy, how do parents get through the holiday season without breaking the bank?
Kumiko Ehrmantraut, financial counselor and founder of The Budget Mom blog, said it’s all about having conversations and drawing boundaries.
“It’s always important to involve kids in family finance meetings,” she said. They should be “aware that money is not limitless, so keeping them involved along the way helps.”
If your child asks for a $400 Xbox, it’s time to set boundaries. Ehrmantraut recommended that you say, “Maybe we can get the smaller item this year and work on a savings plan, and maybe the following year we can look at it for Christmas.”
She offered a few more practical tips on curbing outlays during the holiday season:
Set a spending limit per kid. Ehrmantraut said establishing a spending limit for each recipient helps to hold down expenditures, versus keeping a general budget.
“Setting a value or amount limit per child helps keep things on track,” she noted. Then when you go shopping, “You pay attention not to what you want to buy, but how much you’re able to buy, so you focus more on value than an item.”
For her 4-year-old son, Ehrmantraut has set a budget of $100 this year for one big gift and one small gift.
Be careful on Black Friday. She stressed the importance of sticking to your shopping list on a day like Black Friday, which is the day after Thanksgiving and the unofficial start to the holiday merchandising season.
“A lot of sales aren’t that good of deals or aren’t deals at all, and people go and buy things that are not on their list because they say ‘I can get this TV for $150 off,’” she explained. “But you spent money you weren’t planning on spending, so you weren’t really saving.”
It’s important, she added, to check prices online, so you know if you’re really getting a deal.
Buy bundled gift cards to make purchases. For instance, Ehrmantraut said, stores like Costco sell bundled gift cards at a discount, which means you can buy your gifts for cheaper.
Use rebate and coupon sites. Small rebates and discounts add up. “Sites like Ebates save not a ton of money, but some,” Ehrmantraut said.
Create a savings plan for next year’s gifts. Her son asked for a brand-new trampoline, and it wasn’t in the budget. “We weren’t expecting to spend $250 -- so the deal was, we set up a new chore chart for him,” she said. The Ehrmantrauts’ son will earn money for each chore for his savings jar, allowing him to contribute toward the trampoline next Christmas.
“It gets him in the mindset of saving,” she explained. “At the end, of course, you can also pitch in however much the difference is.”
The most important thing, Ehrmantraut said, is talking with your kids to manage expectations.
“I think it will help them understand that we as parents might not be able to offer or give what other parents do … it’s totally fine to let them know that,” she said.