American parents can go to heroic levels to buy every last item on their child’s holiday wish list when Christmas and Hanukkah arrive. But it’ll cost. T. Rowe Price interviewed 2,100 parents and their children, and here is what they found.
Six out of 10 parents admit they “never” stick to their holiday budget, and 53 percent get everything on their children’s wish lists “no matter how much it costs.” A quarter of the parents have borrowed from their 401(k)plan, dipped into emergency funds or taken a payday loan to pay for it all.
“No one wants to be a Scrooge,” said Marty Allenbaugh, a financial planner for the investment company, which found that parents spend an average of $422 to $500 per child, though the total can go higher.
“Splurging a little shouldn’t turn into indulgence at the expense of financial well-being,” Mr. Allenbaugh said. “Retirement accounts are meant to fund retirement. Emergency funds are meant to fund emergencies. Payday loans should be the last of last resorts.”
But the respondents were candid about their buying habits: Two-thirds of the parents say they spend more than they should, but about six out of 10 say they pay off their holiday debt in about six months. Another 68 percent say they save for holiday spending throughout the year.
There is some redeeming news in the survey: 87 percent of children say their parents encourage them to be charitable and give away toys or clothes; 69 percent said their parents encourage them to donate money.
See more results here.