Managing Holiday Gift Expectations with Your Kids

November 20, 2023

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It’s that time of year again! The season is upon us and we’re about to start shopping for holiday gifts for our kids.

Yes, we want to see their faces lit up with joy when they get that new toy they’ve always wanted, but we also want to make sure we’re not going into major credit card debt to get those smiles.

With the “perfect” gifts, you and your kids may be smiling in December, but come March when you’re still paying down that debt … you won’t be smiling anymore.

According to LendingTree, shoppers in the US racked up an average of $1,549 of debt during the holidays last year and 20% of those surveyed expected it would take at least 5 months to pay it back.

These frightening statistics don’t mean we shouldn’t buy anything for our kids. It just means we should do it responsibly.

Here are 5 strategies for getting through the holidays debt-free and managing your kid’s holiday gift expectations in the process.

1. Develop a Holiday Budget

By developing a realistic budget for how much you can afford for the holidays today, you’ll be saving yourself a world of heartache in the future.

Utilize a convenient family budget app … or simply write it out on a piece of paper. Here’s what you should include:

  • People you’re considering buying for
  • How much you’d like to spend on each person
  • Your total projected spending for the holidays

Then ask yourself honestly, “Can we afford to pay this amount in November and December?”

  • NOT THIS: “Can I afford it if I put it on the credit card?”
  • INSTEAD THIS: “Can I afford it and will I pay my credit card off in the same month?

If your honest answer to this is “no”, then lower the amount of money for each of the people you want to buy for … including the kids! Once you find that appropriate number. You’ve got your budget.

Related Article: How to Create a Money Date with Your Spouse

2. Speak to the Kids About Your Budget

According to a research study at Purdue University, as early as 3 years old, your kids can grasp the concept of money. By age 7, their habits for money are pretty set.

Given this, our kids at a very young age are mentally prepared for you to tell them what your budget is for the holidays. This can become a tradition and an excellent learning opportunity for them.

Here’s a sample conversation I had with my daughter when she was 6 years old …

Andy:  Hi Zoey. This year, Mommy and Daddy have $50 to spend on you for Christmas. When you’re thinking of your favorite toys and games this year, we need to make sure they are all $50 or less.

Zoey: Okay Dad. How do I know if what I want is $50?

Andy:  Great question! We can make a list together of your favorite things and then we’ll look up the prices online. If the total list is more than $50, that’s okay. We need to put a star next to your very favorite ones so we’ll know which are the most important ones. Cool?

Zoey:  Cool.

Yes, limits can be cool!

Now, if Santa is part of your holiday celebration, you can have the same conversation, but tell your child that Santa has the $50 budget.

Setting expectations early will help our children understand that there are limits. The credit card that we use is not an endless money machine.

3. Get Creative

Let’s say you’ve analyzed that holiday budget of yours and there is NO WAY you can afford $50 per kid without going into debt.

There are limits to everyone’s budget so don’t feel discouraged. Instead, get creative.

Every so often, my family goes to thrift stores to find hidden treasures. Instead of going to Target on Black Friday, we go to Salvation Army or Goodwill. There are great deals on toys, clothes, and games.

One of the best gifts we got for our daughter was a magic trick kit for $3. She loved playing with it for years!

Zoey and Her New Magic Kit
Zoey and Her Magic Kit

Also, there are some amazing homemade gifts you can make that won’t break the bank as well. A homemade gift can sometimes be more memorable and heartfelt than something that comes out of a plastic box.

4. Break the Habit Today

Let’s say your kids are older than 7 and they are used to the big holiday with dozens of gifts that put you into credit card debt each year. There is no time like the present to change your holiday buying habits.

Sit your family down, put away the devices, and tell them that you are making a change this holiday season. Explain that you’re ready to do something incredible for your family like get out of debt completely … and with that change comes some sacrifices.

Be honest with them about the stress that comes from having debt in your life. You’ll be surprised how a family can rally around a mission like debt freedom. Those are the memories and family traditions that last forever. Interest in the latest video game or toy fades fast.

These serious but important conversations may be a pivotal moment in your kid’s memory. Your daughter will look back and say, “I remember when my Mom told me we were done with debt. We had to scale back a bit during the holidays a few times, but it wasn’t that bad at all. I’m proud to have helped her get there.”

5. Sell the Old to Get the New

Let’s say the kids aren’t having it. They want their new toys and they are livid that you’re not giving in.

Take that anger and fire and put it to work.

If they want a bunch of new toys, then as a family, sell some of their current toys. By enlisting your children in on the solution two things will happen:

  • They will help you.
  • They will decide that it’s not really worth the hassle.

Let’s say they are into it. Have each of your kids gather 10 toys, clothes, video games, dolls, board games, or really anything they don’t use anymore that can be sold.

Post them on eBay, Craigslist, Facebook Marketplace or DeCluttr.

You’ll be surprised at how much money you can make from selling the stuff lying around your house! Your kids will be surprised too.

This will help them learn a new skill and help them fund their new holiday toy collection. At least they’ll appreciate the process it takes to earn money!

Final Thoughts on Managing Holiday Gift Expectations For Your Kids

Whatever you decide, realize that the newest toy doesn’t define your worthiness as a parent. It’s the lessons and skills you impart to your children that really matter.

If you're looking to help your children build wealth and happiness long-term, please check out my free video resource called the 60/40 Generational Wealth Plan. The video outlines how I plan to make my kid a millionaire (who is happy, caring, and generous).

How are you managing gift expectations with your kids this holiday season?

Please let us know in the comments below.

 Frugal Christmas. Frugal holidays. #Christmas #holidays #money #personalfinances #gifts

Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.


  • Our family loves to travel and we have spoken to the kids about trading off gifts around the holidays for a better travel experience. They understand that they may not get as many gifts on Christmas morning, but that they then get to enjoy the travel experience all throughout the year.

    • Excellent! I would much rather have an incredible trip over more “stuff”. Experiences over stuff in my opinion.

  • Great tips! Because we know the grandparents are on fixed income, we also remind the kids that anything on their wishlist should be $30 or less with at least a few things under $15.

    • These conversations will help your kids understand the realities of money very early in their life. Way to go!


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