Our idealized images of the holiday season are times of cheerful merriment, big, happy family get-togethers and of course piles of presents. We can try to use piles of presents to make up for missing pieces of our own holiday images. While we can’t put our wish for a big, happy family get together on a credit card, we can try to comfort ourselves and others with stuff that we’ll be paying for long after the season ends.
The stress associated with money, spending and debt is widely known. While it’s easy to look around at everyone else having fun at the mall buying gifts and gleefully listing what they picked out for their friends and family, it’s easy to forget how prevalent money woes are around us this season. The figures back up just how many people are spending what they don’t have, and that only leads to anxiety and fear about what is and isn’t in their bank accounts.
In a recent survey reported in CNN Money, 56% of Americans said that they’re planning to incur debt this holiday season; 16% of which say it will take them six months or longer to pay off.
Before you even have to think about the debt, let’s think about how much money gets spent. According to the American Research Group, U.S. shoppers estimate that they spend an average of $929 around the holidays. Parents report that they spend even more than that. Recently released T. Rowe Price data confirms that parents are spending an average of $422 per child on holiday gifts, with 34% of parents spending $500 or more per child.
This research shows that parents are making very risky decisions with their money to pay for the long list of items on their kids’ wish list. It’s thought that 25% if parents are doing things to pay for presents that a personal money manager would balk at. Things like withdrawing from 401K’s or dipping into emergency funds or other saved money, definitely not intended to have been spent on toys. Desperate parents have even looked for ways to finance their gift lists by taking out high interest payday loans. Budgeting for gifts and keeping real expectation is the prudent thing to do for you and your family. However, 58% of families don’t use simple budgeting to track money and priorities.
Using a budget and keeping your own (and your family’s) expectations managed when it comes to gifts, makes it a lot easier to feel like you’re giving your family carefully thought-out gifts, instead of just dropping a lot of money at a Best Buy or Nike store.
Too many people feel that the amount of gifts and the monetary value of those gifts translate to how much they care about the recipients of the gifts and that’s not always true. You can find a gift for someone that is in your price range by spending the time, not money, to find what would mean the most to them. And in turn, this prevents you having to get into trouble with debt. Also, consider finding an inexpensive experience that you and your gift recipient could do together. Gifts of experience are better than gifts of just stuff, especially if it’s not something that was specifically asked for.
Lastly, just because you bought gifts and maybe regretfully overspent in previous years you can change your gifting behaviors this year. Put the word out that you aren’t participating in gift exchanges this year. Just opt out and explore other ways to share the love and celebrate the season. Think of ways to enjoy the company of friends and family and maybe begin traditions that aren’t about overspending.
Wishing you a happy holiday season and a happy, healthy and prosperous 2017.