5 Ways to Put Santa on a Budget

Holiday spending can easily get out of control. These tricks will help.

Every year when I update this popular column, I have another success story to tell of a parent who has managed to get holiday spending under control. This year's tale comes from a mom who wanted to tame her extended family's "somewhat ridiculous" tradition of requiring everyone to give gifts to all the children younger than 13.

She finally talked them out of the tradition, she says, "by laying down the law." "I'm pretty much the only one capable now of hosting the family Christmas gathering," she writes. "Because I have a newborn, I told everyone they'd have to do things my way if they wanted me to host. One of the things I requested was that the kids draw names among themselves and give one gift apiece. And I got no arguments from anyone. Yay! I won!"

I bet all of her relatives breathed a collective sigh of relief that someone had finally stepped up and called a halt to the madness. If your family similarly suffers from gift addiction and you'd like to break the habit, I'm happy to stage an intervention with my best advice on putting Santa on a budget:

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Don't feel obliged to buy your children everything they want (or feel guilty if you can't afford something because you're worried about your finances). If a toy or gift isn't in the cards, let the kids know upfront. They'll go along with your rules and your wishes as long as you make them clear and stick to them. If they have to go without -- or pay for something on their own -- it not only helps your pocketbook, but it also helps them develop a sense of personal responsibility.

Use wish lists to your advantage. Children need to learn to make choices, and what better tool to teach them than their annual holiday wish list? Once they've made their list, have them pare it down to, say, the top five things they want most. Or give them a dollar amount that they can't exceed.

Get Santa on your side. Tell your kids that Santa faces high demand with limited resources, so he needs a budget, too. Or come up with another creative comeback when kids hit you with the line, "I'll just ask Santa for it." Tell them that you and Santa are a team, and he's not about to go against your wishes by bringing a gift that you think is too expensive, too dangerous or not in sync with your family's values.

Pay with cash. That's one way to make sure Santa doesn't go overboard. Not only does paying with cash put an automatic cap on spending, but it also has a psychological effect: Brain research shows that it's actually more painful to buy with cash than with plastic.

In the same vein, one reader recommends giving kids gift cards. "Give them a set amount that you can afford and that limits how much they can spend. Beats all the holiday fuss -- lines, what to buy, size, etc."

It also has the advantage of giving children a lesson in money management. And I can attest that kids really do like gift cards; in my experience, they're less likely than adults to let them gather dust. (Hint: Web sites such as GiftCardGranny.com and PlasticJungle.com sell gift cards from popular retailers at discounts to their face value.)

Move beyond money by encouraging your kids to consider alternative holiday gifts. You (and they) could give thoughtful presents of time or service -- such as taking over a sibling's chores for a month, or giving Mom and Dad a tutorial in using their new smart phones.

And there's a bonus: Those kinds of personal gifts are a good hands-on way to teach kids the joy of giving. More on that in my next column.

P.S. Feel free to share your own strategies for putting Santa on a budget in the comment box below.

Janet Bodnar

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.