As a parent, you likely spend a lot of time trying to make sure your kids are safe, healthy and happy. So when the holidays roll around, there can be a lot of pressure to make the season feel magical for your children — especially in a year like 2020, where there’s already been so much disappointment. But it’s important to remember that the lessons you teach your children will be even more meaningful than what’s stashed underneath the Christmas tree.
Parents may be tempted to provide magic in a magicless year
2020 has been a difficult year for many families. So if you’re tempted to overcompensate with presents and treats, it’s understandable. And you’re not alone: The temptation to spend more this holiday season is one that many people share.
According to the National Retail Federation, holiday sales for November and December of 2020 could hit as high as $766.7 billion compared with the same time frame last year. Those numbers would be as much as 5.2 percent higher than holiday sales in 2019.
Increased holiday spending — assuming it takes place as predicted — is on trend for 2020. A survey from October 2020 found that nearly three in four parents with children ages 17 and under had planned to spend more on Halloween this year. These respondents were aiming to up their spend to try and make up for a lousy year, where kids have already missed out on so much due to the COVID-19 pandemic.
Yet the impulse to buy more money for the sake of your kids this holiday season could have unintended consequences. In particular, overspending on your kids can be dangerous because:
- You could get into too much debt. Increased debt, especially on credit cards, can be expensive. The Federal Reserve’s most recent data showed that the average interest rate on credit cards (namely accounts that assessed interest) was 16.43% in August 2020. If you’re already struggling with high-interest debt — credit cards or otherwise — increasing the amount you owe is the last thing you want to do. Instead, you may want to do some quick math to determine whether you need help addressing the debt you already have.
- Kids may develop poor financial habits in adulthood. In addition to potential credit and financial consequences for you, spending too much money during the holidays can set a bad example for your kids. According to a 2018 T. Rowe Price survey, nearly half of parents try to buy everything on their child’s holiday wish list, regardless of the cost. Those same parents also admitted that they have trouble getting their children to save money instead of spending it right away, such as when they receive an allowance.
Instead, focus on experiences, traditions and lessons
Of course, there’s nothing wrong with giving your children presents at Christmas — provided you can do so without going into debt. But you should also remind your children, and perhaps even yourself, that there are more important things than gifts.
Instead of focusing on material goods, you might consider supplementing the gifts you give your children with some important lessons. For example, you could:
- Support a charitable project as a family. Giving Assistant has a list of six Christmas charities that your family could contribute to this year. Even a small donation can make a difference when it’s combined with the giving of others.
- Adopt a local family in your community. The COVID-19 pandemic has made finances tight for many families — some of whom live in your own community. The Washington Post reports that over 850,000 Americans sought new unemployment benefits during the first week of December 2020 alone. If you’re fortunate enough to still have an income during this time, it’s a great opportunity to help others in your local community while teaching your children some important money lessons at the same time.
- Embrace old and new traditions. When your children look back at their childhood, holiday family traditions are likely to stand out in their memories far more than gifts. You might not have a lot of money, but there’s still a host of holiday traditions you can enjoy together on a budget. If you’re looking for inspiration, you might try planning a holiday movie or game night. Baking together, making homemade Christmas cards or driving around to look at Christmas lights as holiday songs blast from the radio can also bring a lot of joy without breaking the bank.
In the end, the holiday season is about much more than the number of presents you can fit under the tree. It’s about the memories and lessons that can last your children a lifetime.