Pattie Lovett-Reid: Why you shouldn't get everything on your child's wish list
You think you are being the best parent ever by getting everything on your child’s holiday wish list – but not so fast. Giving your child everything they ask for can lead to unintended consequences, according to a recent report from T. Rowe Price.
Children who get everything on their holiday wish lists are more likely to develop spendthrift habits, according to T. Rowe Price's 2018 Parents, Kids & Money Survey, which was conducted by Research Now. In other words, they tend to spend wastefully later in life, spend in a more extravagant way, and tend to be irresponsible with money.
Here are some of the holiday splurging highlights from the report, which surveyed 1,013 parents and 1,000 young adults between Jan. 16 and Jan 23 of this year.
- Forty-five per cent of parents said they try to get everything on their child’s wish list, no matter the cost.
- Parents who try to get everything on their child’s list are more likely to finance their holiday spending (51 per cent vs. 44 per cent) and say that they have gone into debt to pay for something their kids wanted (48 per cent vs. 26 per cent). They are also less likely to have retirement savings (42 per cent vs. 56 per cent) and more likely to currently have a payday loan (10 per cent vs. four per cent).
- When parents say they try to get everything on their child’s wish lists, they are also more likely to report that they’ve tried various ways to get their kids to save their money, instead of spending it right away (69 per cent vs. 51 per cent). They were also more likely to admit that their children spend their allowance as soon as they receive it (56 per cent vs. 38 per cent).
- Nearly half of parents use credit cards to finance holiday spending or have taken a payday loan to cover it (46 per cent).This includes 22 per cent of parents who continue to pay off credit card balances more than six months after the holidays.
- Some parents have even admitted to dipping into their emergency fund to cover holiday spending (10 per cent). Seven per cent said they have taken a payday loan, and four per cent have withdrawn from retirement savings.
- The majority of parents (59 per cent) admit they spent more on the holidays than they should have, with nearly half (48 per cent) saying they never stick to their spending budget.
This has to stop. Parents should not be going into debt during the holiday season. Having your child's expectations managed is a far greater outcome than a financial hangover once the bills start to roll in.
On so many levels, you are likely doing more harm than good.