Families with young children feel pressured to overspend on holiday gifts
A recent survey reveals that parents of young children are feeling the urge to spend more on holiday gifts than they are comfortable with this year.
The average spending planned by parents of kids under 18 this holiday season is $1,070, which is notably higher than the $860 planned by parents whose children are older, according to a survey conducted by NerdWallet.
“Many parents want their children to enjoy a joyful holiday, and spending on their little ones brings happiness,” explained Kimberly Palmer, a personal finance expert at NerdWallet.
The survey found that 48% of parents with younger children feel guilt about their spending, motivating them to go over budget.
Here are some additional insights regarding parents of young children and their holiday gift purchases:
- 12% will prioritize gift shopping over settling regular bills.
- 38% admit they’ll incur more debt than usual to buy gifts this year.
- 15% are planning to buy second-hand gifts.
- 13% will likely dip into emergency savings to fund their gift purchases.
- 29% plan to buy gifts for fewer individuals compared to previous years.
Some shoppers are compounding last year’s holiday debt
The 2024 Holiday Spending Report from NerdWallet reveals that nearly 30% of Americans who used credit cards for holiday purchases last year still owe money on those balances. The same applies to around 30% of holiday travelers who haven’t paid off their flight and hotel expenses from last year.
Additionally, 10% of all participants — not just parents — mentioned that they might need to use emergency savings to buy gifts, while 9% plan to prioritize gift spending over their regular bills this season.
This can pose a concern, noted Palmer.
“Gifts are generally not emergencies,” she stated. “Emergency savings typically cover unexpected expenses like an urgent bill or job loss.”
Families using emergency funds or reworking their budget to accommodate holiday shopping should start discussions about reducing their spending during the holidays, Palmer advised.
Managing debt can be tricky, added Jamie Young, managing editor for loans and credit at YSL News Blueprint, a personal finance content collaboration with YSL News.
“If you’re still managing debt from last year’s celebrations, remember that you’re incurring ongoing costs. Adding new debt for this year’s holiday spending just amplifies your financial burden, making it harder to regain control over your finances,” Young explained.
“It’s easy to get swept away in holiday spending in the hope of giving our loved ones the best gifts, but it’s not worth incurring debt,” Young cautioned. “While gift-giving is fine, consider limiting your purchases to immediate family and friends.”
Families might also initiate a new tradition, like a “white elephant” or “secret Santa” gift exchange to minimize the number of gifts needed, she suggested.
Reusing holiday decorations and organizing smaller gatherings or potlucks can also keep costs manageable, she advised.
Tips for managing holiday spending
Here are some suggestions from NerdWallet for planning holiday shopping:
- Establish a budget. It’s vital to create a budget for holiday shopping as well as for emergencies, bills, and debt management.
- Explore second-hand shopping: Thrifting is increasingly popular, especially among younger consumers. Look for inventive ways to give gifts without exceeding your budget; younger kids typically won’t mind if their gifts are second-hand or regifted.
- Simplify your holiday gift list: Nearly 30% of parents of children under 18 indicated they will buy gifts for fewer people this year compared to previous ones.
- Be cautious with Buy Now, Pay Later options: Many consumers are opting for Buy Now, Pay Later services, which allow payments over time. However, these still incur debt, so have a strategy for paying them off.
