Tell kids the truth - the crunch stole Christmas
Families are missing a golden opportunity to explain the financial facts of life to children this Christmas, according to new research from uSwitch.com. Despite the fact that 56% of people will be buying less presents, 45% will be cutting back on food and drink and gadgets are off the shopping list to be replaced by traditional children's games, only a third of adults (32%) who are cutting back on children's Christmas presents this year intend to explain the real reason why.
Most people are tightening their belts substantially this year. Over three quarters (78%) will be hunting among the bargain and sale items and one in ten (12%) will be making home-made gifts. Present-buying budgets will be tighter for 47%, while the list of people to buy for will be shorter for a further 23%. Over half (52%) of people plan to spend up to £300 on presents, with one in ten of these (11%) spending under £100. But in terms of cutbacks, 63% will be spending up to £200 less on gifts compared with last year, while almost two in ten (18%) will be spending £200 - £300 less on gifts this year.
Because of this squeeze, and to help manage expectations and budgets, four in ten people (40%) are agreeing upper spending limits with family and friends. But this practical approach and level of openness about family finances doesn't extend to children. Only a third of people who are cutting back on children's presents intend to be honest and explain to the child exactly why.
In fact, rather than take the opportunity to talk about the financial facts of life many are simply hoping that children won't notice. Over a quarter (27%) of those who are spending less on children's presents this year just hope to get away with it - even though the chances of children not noticing are quite slim. A more bullish two in ten (20%) won't explain the cutbacks because as far as they are concerned children should just appreciate the fact that they even have a present at all.
Of course, in an ideal world anyone should be grateful to be given a gift, no matter how small. But in reality, by taking the opportunity to talk to children about money and budgets, adults are giving children a far greater gift - they are helping to equip them for the future. Financial education is vital and it begins at home. It could help them to avoid common financial pitfalls, such as allowing Christmas spending to put a strain on finances. And this is very necessary. Even this year, with so many households cutting back, the financial impact of Christmas will see four in ten people (40%) struggling through the start of 2010. The New Year will be very tight for a third (33%), but 7% are going to find it difficult to pay their household bills.
Ann Robinson, Director of Consumer Policy at uSwitch.com, says: "People still intend to enjoy Christmas, but in a more simple and honest way than perhaps we have seen over the last decade. Crucially, many households have heeded the lessons of the last year and have scrimped and saved, set budgets and agreed spending with friends and family. This kind of pre-planning is essential if you want to avoid financial strain in the New Year as the bills come in.
"Yet despite this, four in ten people are still going to experience some financial worry next year as a result of Christmas. And that's why it's so important that children understand the concept of cutting back too - explaining what a tighter family budget can mean and getting children involved is a vital part of their development. Shielding them from the impact of the recession this Christmas or just hoping they won't notice is not doing them any favours - understanding money, budgets and spending will set them up for the future. By taking the opportunity to explain why Santa isn't being so lavish today, you could be helping them avoid their own financial pitfalls tomorrow."