It's a hard message to deliver at the holidays: Santa is in debt or needs to shrink spending to avoid a credit hangover in the new year. How do you tell the kids and still make the holidays memorable?
"As parents, we get fixated on giving kids what we think is best, but part of giving them the best is giving them financial literacy," says Shannon McLay, founder and president of the Financial Gym , a financial planning company helping Gen X and Y clients. "Kids need to know that money is finite."
Americans will spend an average of $967.13 on food, gifts and decorations this holiday season, predicts the National Retail Federation .That is up 3.4 percent from 2016.
Because nobody wants to feel like a Grinch, here are some easy, low-cost ways to scale back, reset gift expectations and still make the most of the holidays:
Don't worry about younger kids.
Children under the age of 4 won't remember what gifts or how many they received, so there's no need to pile on the presents or explain why Santa is tightening his belt.
"For a certain age group, I highly advise clients to go very minimal," McLay says. "Starting earlier is better because you set the expectation early." Kids who grow up with smaller Christmases also won't feel entitled to loads of expensive gifts later.
"As parents, we get fixated on giving kids what we think is best, but part of giving them the best is giving them financial literacy. Kids need to know that money is finite."
Focus on activities, not gifts
Family traditions, such as watching holiday movies, making pancakes on Christmas morning or listening to Christmas carols can create a festive feeling without blowing the budget or going all out on gifts. Emphasize these activities to help offset a reduction in gifts.
"Do more holiday extracurricular activities like baking or looking at lights with hot cocoa in a thermos," suggests Scott Palmer, who founded The Money Couple with his wife Bethany.
Help others
Volunteering as a family to wrap gifts for needy children or serve at a soup kitchen can help kids put their own situation into perspective and feel grateful for what they do have.
"By serving, they learn the real meaning of the season," says Gail Perry-Mason, founder and director of Money Matters for Youth, an organization that teaches financial literacy to kids. "You're never too young to learn how to serve. Find creative ways to make it a family tradition."
Kids can also choose toys or clothing they've outgrown to donate to others.
Make your own gifts
Encourage family members to make each other gifts, so there's more to open under the tree and "it's not just parents giving to children but children giving to each other," says Bethany Palmer. "They're not just being consumers as children but being givers as children."
"You're never too young to learn how to serve. Find creative ways to make it a family tradition."
Set a gift limit
One way to limit gifts is to create a tradition in which children expect only a few gifts. McLay says her son loves their family's "gift of four" tradition, which includes "something you want, something you need, something to wear and something to read."
Aside from the single item that a child wants, the three other gifts all fall easily within a modest budget. "It's a fun way to give a budget without them knowing they're getting a budget," McLay says.
As another option, Bethany Palmer suggests choosing more gifts of lesser value. This way, children will feel as if they're opening a lot of gifts, but the gifts may not be as expensive as they're used to receiving, she says.
Be honest (but not too honest) with older kids
By age 11, most children can sense when times are tough, so it's better not to try to hide it. Scott Palmer suggests saying something along the lines of, "Things are a little tight, so we're tightening our belt a little bit so we have more financial freedom later."
That approach shows that you're taking steps to improve the situation, he says. No need to provide too much detail about financial woes, such as credit card debt or medical bills, as this could upset your kids.
"It's really important not to give too much detail that they don't need to know and they don't need to worry about," he says.
"If everybody could come together just for one gift for a child, it's OK to do that."
Talk with other relatives
If grandparents or other relatives already give the kids loads of gifts, you may not have to tell your children that you are cutting back, because your kids will be so busy opening those gifts. And if your daughter has her heart set on a game system or bike that's not in the budget, talk to relatives about pooling resources.
"If everybody could come together just for one gift for a child, it's OK to do that," Perry-Mason says.
In many families, adult relatives exchange gifts out of routine, but nobody would miss those gift cards or fruit cakes if they stopped coming. Set expectations in advance and consider forgoing the grown-up gift exchange or switching to a secret Santa in which you pull names from a hat.
Most importantly, don't take on more debt out of a perceived obligation or sense of guilt. "It's not worth getting in debt," Perry-Mason says, especially when you're already feeling financial pressures.
See related:Holiday guide of credit card tips , Rack up card rewards with holiday bonuses, perks , How four families rein in their holiday spendin g, Help! I can't afford my child's wish list
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
