Short-term effects

Tipping your budget just a bit every once in a while isn’t a disaster. You can plan to spend less the next month or pay off your debt with an expected surplus of funds. But the spending hangover some parents can face from their holiday shopping is too large to be easily forgotten.

Over half the parents surveyed will pay for their holiday gifts with credit cards. Just 61% of them plan to pay off their spending within three months, and 16% say they will pay it off over the course of six months or more. That’s half a year spent catching up on holiday spending!

Think carefully this shopping season before you drop another item into your cart. Is this gift really worth trimming your budget for the next three — or six — months?

Long-lasting effects

Even more alarming than paying off holiday debt for half a year is the one-quarter of the parents who have taken extreme measures to fund their purchases: Eleven percent have used money from their retirement accounts, 14% have taken funds out of their emergency savings and 11% have taken out a payday loan.

While their kids may be delighted with their loot, parents can be paying for it for longer than they think.

Taking $500 out of a 401(k) at age 35 translates into giving up $6,000 that was earmarked for retirement. Parents are forking out additional taxes and penalties to gain access to the money, and are also losing the opportunity for that money to grow.

Your kids may be thrilled that you’re thinking of the here and now, but you’ll pay the price for living in the moment sometime in the future. Make sure each purchase is justified and worth paying off over the long term.

Life Lessons

There’s nothing quite as exciting as unwrapping a present. There’s the thrill of the unknown, of guessing what lies under the colorful wrapping paper, and the delight you feel when the surprise is something you’ve been hoping to receive.

And this thrill is intensified in children. Kids wait all year for that moment of ripping open their gifts, and as their parents, you want to make them happy. This is why 60% of the parents surveyed claimed they will try to check off every single item on their child’s wish list.

But giving in to all their demands does nobody any favors.

Aside from the financial drain, purchasing every gift your kids have their hearts set on teaches them a host of lessons they’re better off without. Childhood is the time to create lifetime habits and mindsets. Do you really want your kids thinking they can always have everything they want? Do you want them to feel that everything they own must always be the best and most expensive?

Of course, this doesn’t mean skipping all or most of the items on your kids’ lists. But try to trim down where possible. Whether it’s a new toy, electronic device or even their own car, teaching your kids to be happy with a cheaper version, or to forgo one or more items on the list, will be a lesson they will carry for life.

This holiday season, teach your kids that true happiness can’t be bought.

Be proactive

You can beat the budget-busting this season by saving up for the holiday season throughout the year. While it may be too late for this year, it’s never too early to start thinking about next season! Just a little bit of money put aside each month can take you through the holiday season without any long-lasting scars. Sign up for a holiday club account at Eagle Community CU if you haven’t already done so.

Be an informed shopper this holiday season, and your decisions will pay off in more ways than one.

Your Turn: How will you fund your holiday spending? Do you plan to buy your kids everything on their lists? Why or why not?