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How to save on kids' birthday celebrations

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© Andrew Olney / Digital Vision / Thinkstock © Andrew Olney / Digital Vision / Thinkstock


By Andrew Housser


These days, it is becoming ever more expensive to raise a child to adulthood. In fact, the U.S. government estimates that it now costs $245,000 to raise a child to age 18, a price tag that has continued to increase since prior to the crash that started the Great Recession in 2008.

Some of the expenses that go into that total are necessary. Others are indulgences, such as over-the-top birthday parties for kids of all ages. A survey found that 70 percent of parents spent more than $300 on a birthday celebration for their child in 2013. More than one in seven spent more than $1,000. Given that the median income among households with children in 2013 was about $60,000, it’s highly likely that some families put that birthday expense on a credit card. But there are better ways to celebrate than to go into debt. Here are some ways to have a fun, fiscally smart celebration.

1. Do not try to keep up with the Joneses.
Some economists speculate that spending on children’s birthday parties and other events is escalating as more middle-class families attempt to keep up with extravagant spending by wealthy families. Clearly, what is affordable for a wealthy family may not be so for a family with average income.

2. Establish a birthday budget.
Determine what is realistic to spend on a birthday for your budget. If you have time to plan, divide the cost for all of your family’s birthday celebrations by 12, and set aside that amount each month in a dedicated saving account. Then, when the big day rolls around, you already will have saved enough to cover the event.

3. Solicit buy-in from children.
Consider giving older kids a say in how you spend their birthday budgets. Allowing them to weigh in on whether they receive a gift with a higher price tag, splurge on dinner out with the family, or spend it all on an hour with friends is one step toward helping them understand how to set financial priorities. As they grow up, explain to them that you are choosing not to spend money that you do not have, or that you are choosing to invest money in lasting ways instead of overspending on one day.

4. Set expectations.
Explain to your family what level of celebration you are planning for birthdays, and why. This will help, especially with younger children, to avoid their telling friends to expect something you will not be delivering. Also explain, if applicable, that the money you are saving will help the whole family afford your next vacation, summer camp, or other goal – and that is part of budgeting. 

5. Get everyone involved.
A do-it-yourself celebration can be as fun as any extravaganza, and often more memorable. Help your children come up with a manageable idea of how they would like to celebrate. A slumber party, movie night at home, game of football in the park, or a hike with friends can be fun and festive. A creative child might enjoy choosing and theme and creating decorations, either with family or with friends. Asking family or friends to pitch in – even with entertainment, if they have skills such as face painting or in playing/organizing sports – can save significantly and make memories, too.

6. Be careful where you shop.
While charming boutiques, clever craft stores and party emporiums are alluring, the danger lies in their temptation. It is all too easy to find yourself throwing a whole line of themed party favors into your cart. Instead, visit a dollar or discount store for plates, napkins, streamers and other party supplies.

7. Keep options simple.
Usually, the fewer the choices, the more cost-effective. One or two types of soda, one type of cake and a party at a non-meal time (to avoid serving a whole meal) can save hundreds of dollars, as well as time. Electronic invitations are usually free, and simplify the RSVP process.

Above all, remember that birthday celebrations are meant to be times to appreciate the friends and family in your life, not to impress others. Especially, then, they should be a time of fun and joy – not times you remember because you were paying off the bills for months to come.

 

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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