Gift Budgeting for Kids

How to ensure your children don’t bust your holiday budget.

The holidays are the most expensive time of the year for most households – especially those with children. From long lists to Santa for expensive gadgets they want, to no sense of price tag when it comes to buying gifts themselves, children make it easy to overspend on holiday gifts. It’s up to parents to find creative ways to get kids to stick to a budget on gifts they want to give, as well as set reasonable limits on gift lists for the kids themselves.

The information below is designed to help you get your children on board with the budget you set for holiday spending. If you’re struggling with debt ahead of the holidays – or you end up with a debt hangover due to holiday overspending – we can help. Contact Consolidated Credit today at or complete an online application to request a confidential debt and budget evaluation from a certified credit counselor at no charge.

Setting reasonable expectations for gift lists

The biggest way your children lead to overspending at the holidays is usually through their personal gift lists. Young kids generally have no concept of how much things cost and even teens may not know how much of a burden expensive toys can be on your budget.

Although you want to give your kids everything they want to make every holiday special, it’s not doing anyone in the family any favors if you wind up struggling with debt problems. So you need to set some limits on gifts. There are several ways you can do this that are outlined below. Choose the one that will work for your family and tweak it for your situation as needed:

  • Set a dollar limit on the entire list. This is where you allocate a certain portion of your budget for each person’s gifts. So each person in the family has a set dollar limit for their gift list. Essentially, you tell your kids something like, “All the gifts that you want on your list should total up to no more than $XXX.”
  • Set a dollar limit on individual gifts. Another way to limit overspending is to set limits on individual gifts. Your children can ask for things as long as the price tag of said items is no more than $XXX. Of course, they would only get a few of the items from their list, but this prevents big-ticket asks like laptops and the latest game consoles.
  • One big gift with little extras. With this method you allow each child to ask for one big gift that can be up $XXX. Everything else on their list would be little things that are under a certain small dollar amount.
  • Secret Santa. If you’re on a really tight budget and can’t afford multiple gifts for everyone, do a Secret Santa swap where each person buys one great present (set a dollar amount) for one other person in the family.

All of the above methods also help teach your children some good financial lessons. They learn to look at prices when shopping and can even learn how to comparison shop online to find the gift they really want in a way that fits the dollar limits you set. And of course, it reinforces the lesson that money doesn’t grow on trees and even Mom and Dad have to stick to a budget.

Including kids in gift shopping

The second way kids contribute to issues with overspending comes with buying gifts for other people, including you. Again, most children don’t really know the value of a dollar – which conversely means that they have little concept of the burden that expensive items put on your budget. So you need to get them on board with budgeting on gifts for you and the rest of the family.

The method you use to do this may depend on which gift giving method you chose from the list above. Keeping kids on budget is easier if everyone in the family (including you) have a set gift list. If you put items on the list that you know the family can afford, then you’re less likely to face issues with overspending.

There is one method for gift budgeting that we really like for kids because it teaches them how they will need to budget for the holidays once they’re adults. It also helps limit giving gifts to everyone they know, which can lead to overspending, too.

  1. Set a dollar amount that’s the total they have to spend on all gifts.
  2. All of the people they want to give gifts to must fit within that budget.
  3. They also have to plan ahead for things like sales tax so it fits within the set amount.

The graphic below shows an example of a budget that you help them create for gifts to the family and their friends. To make this list, help them comparison shop online to identify good stores to shop at. You can also see taxes included at the top.

An example of how to help kids budget for holiday gifts

Teaching the value of personal creations

One good way to keep kids on budget when it comes to giving gifts to parents and relatives is to teach them to use their talents to make truly personal gifts for the ones they love. From writing personal poetry or a song and creating handmade gift cards, to technology-based creations like digital photos with personalized messages or a music playlist of songs that remind them of you, there are plenty of gifts that kids can make that mean the world without costing you big.

Handmade gifting tends to be more personal – and more special for adults to receive! It also helps teach your children that the best things in life are rarely material and that giving something personal of themselves is often more meaningful. It also encourages their creativity and teaches them the value of their own natural talents.

Imparting the value of giving back

One more important lesson you can use at the holidays to teach your children is the value of giving back. From giving time to making charitable donations, you there are plenty of opportunities to show your children that giving back is often much more rewarding than receiving.

The following ideas can help teach the value of charity at the holidays:

  • Substitute a stocking stuffer or smaller gift on every family member’s gift list with a donation to a charity. Either let your children choose the charity or choose one that’s in line with their personal interests, so for instance for an animal lover you can make a donation to the ASPCA or local animal shelter in your area.
  • Lead by example and forego gifts on your own list for donations. Your children emulate behaviors they see in you. Take a few gifts off your own list and switch them out for charities you’d like for your kids to donate to on your behalf.
  • Institute a family charity day. Giving money is great, but often local charity organizations need volunteers and your time even more than they need your money. Make volunteering a family event on a day during your children’s winter break from school. Find a local charity and work as a family to make a difference in your community.