A survey from T. Rowe Price reveals some sobering truths about holiday spending, one of which is that children whose parents buy them every item on their wish list are more likely to be irresponsible with money. Parents of children ages eight to 14 who say they make an effort to fulfill all their kids’ material desires say they have trouble getting their kids to save their allowance, rather than spending it immediately. Fifty-six percent of these parents report that their kids don’t save their allowance, while only 38 percent of parents who show more restraint at the holidays say their kids spend their allowance right away.
Charging the holidays to a credit card
Parents who indulge their children with all they desire are also more likely to use credit cards or payday loans to finance their holiday spending. Fifty-one percent say they had to get some type of loan to cover their holiday spending, and 48 percent admit going into debt to buy something their child asked for. And that’s not the only concerning thing. Trying to get everything on a holiday wish list may also mean they’re not saving for retirement: more than half of parents who said they blow their budgets at the holidays also report having no retirement savings.
Senior financial planner at T. Rowe Price Stuart Ritter says kids may be getting the wrong lesson when their parents bend over backward to accommodate their desires. “We all want our kids to have amazing and memorable holidays,” he says, “but there’s evidence that being overly generous has consequences.” He suggests teaching kids about prioritizing and making trade-offs—skills they’ll need in the future. “Creating a holiday wish list can be an opportunity to help them understand that even the generous holiday spirit has limits, and we all must make trade-offs.”
The tenth annual T. Rowe Price Parents, Kids & Money Survey was conducted in January 2018 and included responses from over 2,000 people across America.
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