Christmas DebtWith the holidays upon us, parents are making a list and checking it twice. And that list seems to be getting longer … while the bank account gets smaller.

That often happens when kids catch an acute case of FOMO during the holiday season. The “Fear of Missing Out” includes not getting some of the gifts they want, or the latest, cool things their friends are receiving.   

So mom and dad go way over the family budget. They hit the credit cards, and the holiday bills climb. After all, overspending on gifts and beginning the New Year with added debt is as much a holiday tradition as mistletoe and stockings hung by the chimney with care.   

“Many adults annually prove they have not learned their lesson, and it’s an expensive one that keeps adding up,” says Jeff Dixson, a financial educator and author of Winning The Retirement Game.

“Discipline is a prerequisite for financial stability, and this kind of chronic overspending of money they don’t really have certainly doesn’t bode well for a family budget, let alone a retirement plan. But habits can change, and the sooner the better.”

Dixson offers four tips for how to keep holiday shopping reasonable and avoid excessive debt:

•    Look at the big picture. Credit card use means putting off paying for something you didn’t have the money for. So forecast what that mounting credit card bill will add to your regular monthly expenses. “The long-term pain isn’t worth the short-term gain of getting the kids everything they wanted and more,” Dixson says. “Seeing their smiles on Christmas morning is nice, but you also have to see on paper the money crunch ahead; that can act as a deterrent.”  

•    Use one card. If you must use a credit card, Dixson says, put the rest of your cards aside and use the one with the lowest interest rate. This also makes it easier to track your spending. “If the one card is included in your budget, fine, but remember you’re paying interest each month,” Dixson says. “You need to impose a holiday limit on the card.”Christmas Debt

•    Make a real budget. It’s the easiest thing to do before all the shopping. Set up a budget each year as to what you can afford to spend (for example, $600 = $50 per month) and set this aside each month in order to have the money you expect to spend. But for many people it’s the hardest thing to execute when they’re out shopping. “They lose will power,” Dixson says. “It gets to be a little like gambling; you have to decide how much you can afford to lose, or how much you’ll go over without being totally stretched in January and beyond.”

•    Make it a teaching moment. The holidays are a great time to teach your kids about money, a lesson that could last a lifetime. It’s not a matter of being Scrooge; it’s about showing them money doesn’t grow on Christmas trees. Most families have budgets, and part of being responsible means not over-spending. “The greater good of the family is served rather than immediate gratification,” Dixson says. “They’ll learn something meaningful about money, appreciation and responsibility that will stay with them when they have families of their own.”

“If more parents could apply these forms of financial discipline during the holidays,” Dixson says, “it would greatly help them develop a long-term financial plan, as well as greatly help their kids.”