Most parents wonder how much is too much to spend on Christmas gifts for their children.
Family holiday gatherings that include aunts, uncles, cousins, and grandparents can easily result in massive piles of gifts, even for children who are too young to really understand the concept of Christmas gift giving.
This year, two of the hottest gifts include two new game consoles: the PlayStation 4 ($400) and the Xbox One ($500).
Of course, many families will buy one of these game consoles for “the kids” rather than for each child, but that’s still a big chunk of money for a lot of families.
The Rebound Since the 2008 Recession
After the global recession that started in 2008, the combination of high unemployment and a devastated housing market caused people to spend a lot less at Christmas.
Gallup surveys said that Americans spent 29% less on 2008 Christmas gifts than in 2007.
While spending in the US has not yet topped 2007 spending levels, it has gone up from its low of $681.83 in 2009.
In 2012, the average family spent around $750 on holiday gifts, and spending is expected to be up again in 2013, as unemployment has eased and the housing and automobile markets have started recovering.
Holiday Spending in 2012
In 2012, gift cards were at the top of a lot of wish lists.
People like getting them because of their flexibility, and people like giving them because it’s a lot easier to buy a gift card than to fight other shoppers for popular items and Black Friday specials.
In 2012, people spent just over $400 on gifts for family, around $75 on gifts for friends, and closer to $25 on gifts for co-workers.
Close to 60% of consumers bought gifts for themselves in 2012, and the figure is expected to remain the same in 2013.
The most requested items for Christmas last year were gift cards, clothing, media (books, CDs, DVDs, video games), electronics, jewelry, home décor, and sporting goods.
Discover Card Polls Holiday Spending
Released at the end of October, Discover Card’s holiday spending survey found that the average family will be spending 20% more this Christmas than last, with the average family spending just over $1000.
This includes gifts and other things, like holiday food, clothing, and dining out.
Marketing professional Dave Brennan of the University of St. Thomas says regional holiday budgets may be up by less than 20% over 2012, because in some regions, the rebound from the recession came early, causing some regions to experience a bigger bump in holiday spending in 2012.
Brennan told CBS Minnesota, “We have lower unemployment, we have good paying jobs, and things are coming back a lot faster here than they have in other places.”
What the National Retail Federation Says
The National Retail Federation’s numbers are a bit less optimistic than those collected by the Discover Card survey.
The NRF survey says the average shopper will spend $737.95 on gifts, décor, greeting cards, and other holiday items. This is 2% less than in 2012.
This year, the NRF asked shoppers if the government shutdown and general Washington gridlock would affect their holiday spending, and 29% of respondents said that it was “somewhat or very likely to affect” holiday spending.
Fifty-one percent of consumers said the general state of the economy would affect holiday spending, with 79% expecting to spend less overall.
Overall holiday spending this year is expected to make $602.1 billion for retailers.
The Prowl’s Survey of Shopping Moms
Shopping experience website The Prowl conducted a survey of 511 mothers on 2013 holiday spending and made some interesting discoveries about how much moms are spending, and how they’re spending it.
Their survey found that mothers expect to spend $224 on average for gifts for each child, and almost exactly the same amount ($221) on gifts for their husband or partner.
Compared to last year, moms planned to spend roughly the same, with 55% saying they would spend “the same” as last year, 23% saying they would spend more, and 22% saying they would spend less than in 2012.
As for how they plan to shop, 49% of mothers surveyed said they would make purchases on mobile devices this year, either on a phone, tablet, or both.
Clearly, braving the Black Friday crowds is not for everyone.
If you’re conflicted about how much you spend during the holidays, you’re not alone. Keeping holiday spending reasonable may require steps like:
• Not buying “presents” for yourself
• Making a spending plan before shopping
• Giving group gifts
• Drawing names for gifts at large family gatherings
• Using cash rather than debit or credit cards for holiday shopping
No parent should spend more than they can afford at Christmas, whatever holiday advertisements and peers say.
Kids can be remarkably practical when it comes to holidays, and most understand that they can’t get everything they want. In fact, seeing altruistic behavior often influences even young kids.
Children in the early elementary grades can understand the basics of how budgets work, so there’s no reason your children have to grow up with a blind expectation of getting everything they want at Christmas time.
Teach this lesson early, and you can expect less holiday guilt and less of a January spending hangover in the years to come.
Mary Hiers is a personal finance writer who helps people earn more and spend less.