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How Parents Can Navigate Their Finances During the Holidays

by Harrine Freeman

Harrine Freeman

Harrine Freeman is a speaker, author and personal finance expert. Read more »

Sorry, Harrine Freeman is no longer taking questions.

The holiday season is quickly approaching. While it is a wonderful time of the year, many parents find themselves filled with stress, anxiety, pressure or guilt -- especially if their finances are tight. Children don't make it any easier, as they constantly recite the list of games, toys and electronics they're expecting.

If you don't have the money to buy a lot of gifts or celebrate the holidays the way you would like, then it's best to be honest with yourself -- and your children. Buy what you can afford and only use your credit card to purchase gifts if you can pay off the debt in two or three months. Remember, we just finished experiencing a recession and many of us are still feeling the effects. Besides, the holidays are really about spending time with your family and friends, being thankful, reflecting on the past year, and thinking about things you would like to change in the New Year.

So, before December arrives, consider these seven tips to navigate your finances during the holidays:

1. Manage expectations. Many times, children's expectations for holiday gifts are obtained from friends, classmates or from watching television. Be realistic: Let your children know your financial situation and give them a price limit for holidays gifts. If they can only get one big gift or one toy, tell them as soon as possible. If your children still believe in Santa, buy several small gifts from the dollar store (gifts that actually cost a dollar). Also, help your kids understand that receiving gifts doesn't mean a better holiday experience; spending time with loved ones is the most important thing.

2. Create a budget. Set a spending limit for your holiday shopping including groceries, gifts, etc. This will reduce your chances of going into debt and relieve the stress of having to buy things that aren't in your budget. Don't go into debt trying to buy gifts for your children. Do they really need a new desktop or laptop, or can they use the one they have until next year?

3. Be strong. Don't give in to puppy-dog eyes, whining or complaining from your children. Stay firm with your decision about gifts for the holidays. Giving in to your children sets unrealistic expectations and does not prepare them for the disappointments that occur in the real world.

4. Be prepared for unexpected gifts. If your children decide to give gifts to their babysitter, teachers or new friends, don't be alarmed. Let your child help you bake cookies or make handmade gifts for those people.

5. If you have an ex-spouse, consult with her or him. Make sure your children are not asking for the same gifts and are not using guilt as a way to get more from both parents.

6. Follow traditions. Continue or start inexpensive family traditions such as cooking or baking special treats together or going through the neighborhood caroling. Another idea is to have your child gather gently used toys to donate. This will get her in the holiday spirit, keep her active and distract her from thinking about all the gifts she wants for the holidays.

7. Volunteer. Consider letting older kids volunteer to help sick children or the homeless. Not only will they learn the meaning of compassion, but it will also help change their perspective about life and what's really important. Other children and families have less than they do. Explain that they should be appreciative of whatever they have.

I hope you find these tips helpful. Tell me, what kinds of things are you going to do to save money over the holidays?

Sorry, Harrine Freeman is no longer taking questions. Feel free to comment on the article and let us know what you think about the topic.


nicole writes...

Harrine, every year I set a Christmas shopping budget, and every year I exceed it.

At the last minute, I think of someone else I should buy something for. Or, I think my children need a little something more under the tree. Help me stop this?! Thanks.


Harrine? writes...

Hi Nicole. I know as parents we want to spoil our children, give them the best or give them more than we had but all children really need from their parents is your love and support. Gifts are just an extra bonus.

As parents you also have to be careful about setting expectations too high. One year you may not be able to buy any gifts so you don't want your children to think "Mommy didn't buy me any gifts because she doesn't love me".

To help with going over your budget set a certain dollar amount and stick to it. I know that is easier said than done, but start by taking baby steps. If you feel that you should buy something else, stop and ask yourself - Do I really need to buy that now? Can I wait until the item goes on sale?

Usually when we think about it for a few days we reconsider and don't buy the item. Try that approach and see how it works for you.

Take an inventory of how many gifts you bought for your children that they still use or play with and how many have dust on them or are thrown in a closet. This will help you to gauge if you still need to buy that extra gift.

Jeffrey writes...

One of the problems we have managing our children's expectations comes from their peers. Do you have any suggestions on how best to explain to kids that they may not get as many presents as some of their friends do? We seem to be surrounded by families that overspend on the holidays!

Harrine? writes...

Hi Jeffrey, that is a great question. Sit down with your kids and explain to them about finances and spending – have them think in terms of needs vs. wants and stress that you should always buy more needs than wants.

Let them know that some parents spend more money than they have and gifts do not equate with how much money someone has or how much someone loves you. Yes gifts are an expression of love but if you only get one gift it doesn't mean your parents love you any less, it just means that your parents have good spending habits or simply cannot afford to buy more than one gift.

A great way to manage their expectations is to take them to volunteer at a homeless shelter during this holiday season so they can see how fortunate they are or sit with them and watch a documentary on children in other countries who have no food, clothes, parents or shoes to go to school.

Hopefully that will help them see how fortunate they are so they stop getting caught up in their peers gift frenzy. You can also making volunteering a regular part of their lives so they have a constant reminder of how fortunate they are.

Kay writes...

At my kids' school, gift-giving to teachers is excessive. Usually one parent will ask the others to pool money for a group gift...and it's usually more than I'd wanted to spend. How do I politely back out without embarrassing my kids?

Harrine? writes...

Hi Kay, I have heard about this many times and when I was in school I don't recall teachers expecting gifts. We gave an apple or orange and called it a day.

You may not want to do this but you can talk with the parent coordinator in charge of gift giving and let them know that the money requested is simply not in your budget. I would also ask them, Why do we give the teachers gifts or why is so much money spent on gifts? Do they expect the teachers to show favor to their students because they purchased an expensive gift?

A simple card or $20 gift card should suffice. Instead you can buy a gift for the teacher and have your kid give it to his/her teacher which shouldn't embarrass your kid because they are still giving a gift like everyone else. Don't let the pressure of other parents make you do something you don't feel comfortable with.

Sit down with your kid and let them know the reasons why you don't feel comfortable with the gift giving frenzy and help them to understand that some people are materialistic and place a lot of value on things. I don't know how old your kid is but a great book for smaller kids is, It's Not What You've Got by Wayne Dyer. A resource for older kids is Rich Dad Poor Dad for Teens by Robert Kiyosaki.

Eleanor writes...

My family stays pretty sane during the holiday shopping. It's the grandparents that are the problem! My mother-in-law's finances are in bad shape, yet she insists on buying our kids a truckload of presents. It's what our kids expect now. I think I can help the kids manage their expectations, but how can I gracefully get my mother-in-law to stop spending money she doesn't have on our kids' Christmas?

Harrine? writes...

Hi Eleanor, that is a great question. Remind grandma that you appreciate all she does for your children and love that she enjoys buying your children presents. Let her know that you have certain values and beliefs that you teach your children and her many presents for your children do not coincide with your beliefs.

You want your children to receive gifts but not at the expense of someone going into debt. You also don't want your children to have a false sense of reality by expecting that grandma will always buy them presents, one day grandma may run out of money and not be able to buy your children presents - how will grandma explain that to your children?

More importantly how will that make her grandchildren feel, they may equate the amount of gifts with how much grandma loves me and if we don't get a gift or get lots of gifts grandma may not love us as much.

Remind grandma that the most precious and valuable gift she can give your children is love.

Frugal Living writes...

I agree whole heartedly about not giving into puppy eyes... it will hurt them and you in the instant but long term will teach them a lot of value... And yes when they are old enough they should be encouraged to volunteer.

Excellent post.

Caroline writes...

I have a 2-yr-old in daycare and will be preschool starting next year (that is the system in France). We live modestly in a chic neighborhood and can already see what her future influences might be... We don't own a tv, so at least we don't have to worry about advertising influences (at least, not at home), but I don't doubt that we'll be faced with questions soon enough about who-has-what-and-why-can't-i. Thanks for your article, it will give me a base to use for when I find myself faced with these questions.

up2drive writes...

Nice post and tips, i have never put any attention on budget, thank u for this post.

Thank you for the tips, setting the budget during the holiday is a must, it is so easy to end up buying stuff that you don't need.

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