Spending tips from financial experts
Stories of frivolous holiday shopping make financial advisers cringe.
"I am very concerned that well-intentioned parents are establishing bad financial habits for themselves and for their children," says Carolyn Oberfeld, a certified financial planner with Superior Financial Group in Minnetonka.
"Trying to teach kids not to want 'the latest thing' is not easy in a commercialized world," Oberfeld says. "Parents often get sucked into feeling like they need to give their kids more even when they can't afford it. That is why the average household in the U.S. has over $10,000 in credit card debt."
Jeff Jarnes, a fellow parent and a financial adviser with Fortune Financial in Minnetonka, agreed. "It's important to teach kids they can't just have it all, (that) there's not an automatic entitlement."
These are their tips on reasonable spending this holiday season:
· Make the child contribute to a big purchase in some way, by raising one-third of the price, doing extra chores or earning good grades.
· Combine a birthday and holiday for a large gift or use money from multiple relatives so children learn big-ticket items don't come easily.
· Require the child to demonstrate proficiency in a gadget before buying it.
· Consider the likely applications of an electronic. Will it serve practical functions? Is it prone to become an addiction or a distraction from homework?
· Force the child to wait for a lower-priced, superior version. Help them recognize the rapid-release cycle of electronics.
· Demonstrate other valuable uses of money besides tantalizing toys. Announce that gifts will be smaller this year because the family is saving for a trip to Europe or donating to a charity.
· Talk to an electronics employee where you're shopping. Describe how your child will use an item and then ask if there's a more apt product.
"Children learn by example," Oberfeld says. "Whether it's by doing extra chores or saving up gift money and allowance money to help with the cost, waiting for the price of technology to go down or by compromising on something less expensive, these are all valuable long-term life lessons that can be wrapped up in a pretty Christmas bow."