Is Christmas Gift Giving Damaging your Kids?
Are you damaging your kids by giving them everything that they want for Christmas? A T. Rowe Price survey says that if you get your kids everything on their list for Christmas that you could be doing more bad than good.
This CNBC article says that the problem comes on twofold:
"First, many gift-happy parents take drastic measures to make their kids' holiday wishes come true, with 59 percent saying they spent more than they should have and 48 percent taking on debt. One in 10 of those dipped into their emergency funds to cover purchases, while 7 percent have taken a payday loan and 4 percent have withdrawn from retirement savings."
Those choices can have far-reaching financial consequences.
Second, experts say kids who get everything on their holiday wish lists may develop poor money habits themselves. Among those indulgent parents in the T. Rowe Price survey, 69 percent report that they've been unsuccessful in getting their kids to save money instead of spending it right away." financial planner at T. Rowe Price, said kids who get everything they want for the holidays are missing out on a chance to practice aspects of money management.
The article makes another point that if they child is getting everything they want for Christmas then they don't get the opportunity to prioritize their wants and that this bleeds into their ability to manage money. It is a value issue.
A professor emeritus of marketing and psychology at Golden Gate University in San Francisco had this to say:
"It's beneficial for kids to learn about disappointment at a young age. Kids who get everything they want can quickly adjust to that reality, which can lead to bigger and bigger expectations."
"This creates adults who can't handle not getting what they want," she said. "They're not resourceful about budgeting. They haven't built up resistance around disappointment and so they might go into credit card debt, for example, because they think they're entitled to everything."
What is my take?
You aren't going to damage your kids if you give them everything on your list. Money habits aren't developed because of one day of the year. Now having said that, a constant development of an entitlement attitude and giving into a child's desires 365 days of the year most likely will create some long-lasting issues.
Although I think that they article is a little overly dramatic and sensational about the effects of Christmas gift giving, it probably makes sense not to give them everything on their list. I would also let the family Christmas budget drive those decisions and teach kids that how you prioritize money at Christmas and the other 364 days of the year is important.
For instance, buying everything on a Christmas list as a priority over saving for college is probably not a great lesson to teach your child. The key is to model, communicate, and teach good positive money habits and look for the opportunity to do so. Christmas could be one of those times.