YOUR MONEY-Three ways to curb holiday spending

Thu Nov 12, 2015 9:00am EST
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(The writer is a Reuters contributor. The opinions expressed are his own.)

By Chris Taylor

NEW YORK Nov 12 (Reuters) - Ah, the holidays. A time to get together, celebrate with family and make questionable life choices.

Whether it is drinking way too much egg nog, or bringing up old resentments at the dinner table, something about the holidays switches off the usual filters in our brains.

But new survey data reveals the dumbest choice of all: Many of us are drawing down emergency funds, or even raiding retirement accounts, to pay holiday bills.

Some 62 percent of parents admit to spending more than they should over the holidays, according to the 2015 Parents, Kids & Money Survey by Baltimore-based money managers T. Rowe Price . To compound the hurt, 9 percent of parents are tapping emergency family cash to do so, and 7 percent are dipping into 401(k)s or IRAs.

Dads are the biggest culprit, with 11 percent admitting they dipped into emergency savings and retirement accounts to make it through the holidays. In comparison, only 6 percent of moms tapped emergency funds, and barely 3 percent made withdrawals from retirement funds.

"People feel like if they don't spend, spend, spend, it means they aren't doing anything," said Stuart Ritter, a senior financial planner with T. Rowe. "That 'all-or-nothing' mindset is used to rationalize buying more than they really should. As a result, a huge percentage of people say they end up overspending."

While every family's financial situation is unique, there are some tips everyone can use to keep out of spending trouble.   Continued...