Plan Ahead for Smart Spending

While Thanksgiving is a day to rest and be thankful for all we have, the very next morning millions of us will wake up before dawn to begin furiously preparing for the remainder of the holiday season. The turkey coma has worn off and the Black Friday craze has begun!  However, Black Friday can be about more than searching out the perfect deal or the best present – it can be an opportunity to teach the entire family about wise holiday spending.

The holidays are a great time to talk to kids about money and gift giving – they have an emotional interest! By involving them from a young age in the holiday planning and budgeting, they will have a great foundation for doing their own holiday spending when the time comes.

To help you get started, T. Rowe Price has developed tips for families to share about smart spending for Black Friday, and in turn, smart spending for the whole holiday season.

• Make your list, but assign each person a dollar value instead of an item.  That way you won't feel compelled to purchase a specific item on your list if it turns out to be more expensive than expected. Chances are that by remaining open-minded, you can find a great gift for someone without exceeding your dollar limit.

• Don't feel like the amount you spend is a direct reflection of how much you care about your loved one. They will never know exactly what you spent on them, and there is no need to feel self-conscious about it.

• Explain to your kids where the money being spent for gifts is coming from. Talk to them about how you work the expense of the holidays into your annual spending – a separate savings account to help you save throughout the year, etc.

• Look into layaway or other programs that allow you to make interest free payments for a big-ticket item. Doing a little research before you begin shopping will help point you to stores that offer interest free layaway and have the products you’re looking for.

• Get creative! Suggest doing a family “Secret Santa” in order to avoid buying numerous gifts. By assigning each child just one sibling or cousin to buy for, as well as a dollar amount they cannot exceed, it becomes easier for everyone in the family to get involved in the holidays.  Or, suggest the family pitches in for an event or item instead of purchasing gifts, to emphasize the importance of family time.  For example, offer to pay for a plane ticket for a loved one to visit, or a Wii console for the family game night.

After the Black Friday buzz has worn off, you can continue money conversations with your kids well into the holiday season. To help make this easier, T. Rowe Price has created the Family Financial Hub where parents can find tools and resources, including a free activity book with puzzles, games, and activities to teach financial lessons in a fun way.  Kids can also go directly to The Great Piggy Bank Adventure®, an online board game developed in collaboration with Walt Disney Parks and Resorts Online.

This Black Friday, talk with your kids about making lists, pitching in, and all of the other tactics you follow when buying holiday gifts. By using T. Rowe Price’s tips, you can be better positioned to make it through the 2012 holiday season without going into the red, and while providing your children with valuable money lessons that will last all year long.

T. Rowe Price and Disney Enterprises, Inc., are not affiliated companies.

Stuart Ritter, CFP®, is a T. Rowe Price financial planner and expert in family financial education. He is a father of three young kids.

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