It is a minority of parents, but some go so far as to dip into their retirement accounts and rainy day funds to buy their children holiday presents, says T. Rowe Price in a warning issued Thursday.
Based on information gathered after the holidays last year, T. Rowe Price says 9 percent of parents used their emergency funds and 7 percent tapped retirement savings to buy kids presents. In a survey that sampled 1,000 parents with children 8 to 14 years old, 62 percent of parents admitted they spent more than they should have on their children.
Stuart Ritter, senior financial planner at T. Rowe Price, warns parents not to fall into the same trap this year.
“It’s always tempting to splurge around the holidays, but parents aren’t doing themselves or their kids any favors by overspending. We’re all inclined to be more generous this time of year, and it’s important to be mindful of the financial trade-offs we’re making and stick to a budget that aligns with our priorities,” Ritter says.
“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,” he adds.