Santa Claus is sneaking into more than chimneys this month. Apparently, he’s getting into wallets and retirement accounts.
T. Rowe Price interviewed 2,100 parents and their children about their Holiday spending patterns. The results maybe show why Santa wears red instead of black.
Six out of 10 parents admitted that they “never” stick to their holiday budget, and 53 percent said they get everything on their children’s wish lists “no matter how much it costs.”
A quarter of the parents even went so far as to borrow from their 401(k)plan, dip into emergency funds or take out a loan to pay for it all.
Financial planner Marty Allenbaugh found that parents spend an average of $422 to $500 per child, though the total can go much higher. He said “No one wants to be a Scrooge,” but added that “Splurging a little shouldn’t turn into indulgence at the expense of financial well-being. Retirement accounts are meant to fund retirement. Emergency funds are meant to fund emergencies. Payday loans should be the last of last resorts.”
The anticipation of a Merry Christmas morning seems to be trumping common sense. According to the survey, two-thirds of the parents say they spend more than they should. Fortunately, about six out of 10 say they pay off their holiday debt in about six months.
It’s not all about lack of restraint. Children were also surveyed and it turns out that 87 percent say their parents encourage them to be charitable and give away toys or clothes. The survey didn’t show if they actually do it!
69 percent said their parents encourage them to donate money. Again, no data on if that’s happening.
How much exactly are Americans spending?
According to Deloitte’s 2016 Holiday Survey, the total expected holiday sales this year are expected to exceed $1 trillion. American Express says that’s 8%: more than Americans spent last year. While that’s good for the economy, it may not be so good for the financial health of individuals and families.
But hey, It is fun to give and once you start shopping, suddenly you see things you want to give to yourself as well. The old ‘One for you and one for me’ shopping spree…
Our family decided to get out of this Holiday-turned-consumer-frenzy a few years ago. We let the kids know that we’d rather have experiences than stuff. This year we’re going to Costa Rica – in part to see the 800 acres of fertile land we just purchased through our Real Wealth Network syndication.
But also, because we felt the greatest gift we could give each other was our undivided attention, while exploring the world together.
We still celebrate our Christmas by the tree and everyone gets a few presents. But we no longer need to fill the room with things everyone will forget about in a few weeks.
Also, with our very large extended family, we just play the gift exchange game where everyone gives one gift, you pick numbers, and then grab a gift. If the person with the next number wants that gift, they can steal it. So it makes for a fun evening, and maybe the chance to get something you actually really want.
Our family also loves to make gifts together. It doesn’t cost much and makes for quality time spent together. Though one year our American bull dog ate all of the hand-crafted cookies and chocolates we made as gifts when we all left the room for a few minutes.
Maybe an easier and greener way to go is to have some cook up those cookies for you – Denver-style. Pot shops are reporting a 21% increase in purchases the week before Christmas. That’s according to the marijuana-software firm Baker, which reports that the most popular items are marijuana-infused brownies and cookies.
Also near the top of the list are vaporizers, pipes and other smoking accessories, in the states where medical and recreational pot is legal: Arizona, California, Colorado, Nevada, New Mexico, Oregon and Washington.
Anyway, enjoy your Holidays! And never forget that the things that really matter and the moments that will be remembered forever don’t cost a dime.
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