SURVEY FINDINGS
- Getting everything takes priority over budgeting: 53% of parents agree with the statement, "I try to get everything on my kids’ lists, no matter how much it costs." Men are also more likely than women to try to get everything on their kids' lists (60% vs. 45%). Additionally, 58% of parents agree with the statement, "I never stick to my holiday spending budget."
- So it's no wonder there’s remorse: 64% of parents agree with the statement, "I spent more over the holidays than I should have."
- A quarter of parents are on the naughty list for how they funded holiday spending: 25% of parents have at some point pulled from either their retirement account (11%) or emergency fund (14%) or taken a payday loan (11%) to cover holiday spending.
- But the majority of parents are on the nice list for holiday savings: 68% of parents save for the holidays throughout the year.
- And most parents who use credit cards for holiday spending pay them off quickly: 56% of parents use credit cards to pay for their holiday spending, and 61% of them pay off their holiday expenses in three months. A minority of them (16%) take longer than six months to pay off holiday credit card bills.
- Parents spend on kids' holiday gifts: The average amount spent on a child ages 8–14 was $422 (median: $300). 34% of parents spent $500 or more on their 8 to 14 year old child.
- Millennials are more likely to save for the holidays....and overspend: 83% of millennials save for the holidays throughout the year compared with 67% of Gen Xers and 50% of baby boomers. But they are also more likely to say that they never stick to a budget (69% of millennials vs. 58% of Gen Xers vs. 42% of baby boomers) and say that they try to buy everything on their kids’ lists no matter how much it costs (75% of millennials vs. 50% of Gen Xers vs. 33% of baby boomers).
- Kids are encouraged to be charitable: 87% of kids said that their parents encourage them to give toys or clothes, and 69% said their parents encourage them to give money.
*This example assumes a 7% rate of return and that the investor will retire at age 65. She pays a 10% early withdrawal penalty and 25% in income taxes on her 401(k) distribution. She requests a $770 disbursement to cover $500 in holiday spending. The $770 would have grown to $5,855.58 in 30 years.
ABOUT THE SURVEY
The eighth annual T. Rowe Price Parents, Kids & Money Survey, conducted by MetrixLab, Inc., aimed to understand the basic financial knowledge, attitudes, and behaviors of both parents of kids ages 8 to 14 and their kids ages 8 to 14. The survey was fielded from February 4, 2016 through February 11, 2016, with a sample size of 1,086 parents and 1,086 kids ages 8 to 14. The margin of error is +/-3 percentage points. All statistical testing done among subgroups (e.g., boys versus girls) is conducted at the 95% confidence level. Reporting includes only findings that are statistically significant at this level.
ABOUT T. ROWE PRICE
Founded in 1937, Baltimore-based T. Rowe Price (NASDAQ-GS: TROW) is a global investment management organization with $812.9 billion in assets under management as of September 30, 2016. The organization provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The company also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price’s disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. For more information, visit our Twitter, YouTube, LinkedIn, and Facebook sites.