Nearly two-thirds of parents said they spent more for the holidays last year than they should have, and one-third said they're willing to dip into their savings to cover the cost of holiday spending.
Christmas is just around the corner, and according to a new report, most parents will probably overspend on gifts for their kids.
Investment firm T. Rowe Price talked to 1,000 parents with kids between 8 and 14 years old last January for its Parents, Kids & Money Survey, and 62 percent of them agreed with the statement: "I spent more for my kids over the holidays than I should have."
OK, we get it. Been there, done that.
But here's the crazy part: 37 percent of parents said they were also willing to dip into their savings—either from their regular savings account, retirement savings, or their emergency funds—in order to cover all the holiday spending.
"Our long-term goals, such as retirement savings and having an emergency fund, should always take priority over anything that is presented with a bow and purchased during a Black Friday sale," said Stuart Ritter, a senior financial planner at T. Rowe Price, in a statement. "Kids will always have long wish lists, and it's good for them to know that there isn't enough money in the family budget to cover everything. Challenging them to prioritize their wants and make trade-offs is essential to helping them develop critical financial capabilities."
The survey also found that 30 percent of parents who do not regularly save for retirement do save regularly for holiday spending. Even more alarming? Twenty-eight percent of parents who save for holiday gift shopping don't put money away for their kids' college education!
As for the impact of all this spending, the survey found that 50 percent of the parents who overspent on the holidays end up arguing about money with their spouse, and have kids who say their parents worry about money. They are also more likely to say they make sacrifices to spend money on their kids.
On the flip side, parents who save for holiday spending throughout the year are more likely to have kids who say they are doing a good job teaching them about money and setting a good financial example.
T. Rowe Price encourages parents to invest in their kids' futures by talking to them about money. They've created MoneyConfidentKids.com as a resource for free online money-centric kids games, plus tips for parents on financial goal setting, spending versus saving, and investment diversification.