Family Finances & Holiday Money Conversations

The holidays are one of the happiest times of the year. The decor is out, cheer is in the air, parties abound, and you get to spend quality time with your family, exchanging gifts. But with all that holiday hustle and bustle, there comes a ton of stress.

An American Psychological Survey survey found that 44% of women and 31% of men experience greater stress amidst the holidays, citing overburdened schedules and lack of time to really relax. And on top of that, there are hefty financial concerns. 

A more recent survey by Credit Karma reveals that more than 1 in 4 Americans expect to go into debt this holiday season. More than 10% of respondents expect to take out a loan specifically for gift-related expenses, and nearly 25% of Americans who went into debt to pay for last year’s holiday season are still paying off that debt. And it’s not just gifts that are creating a burden. 20% of Americans surveyed say that holiday travel will contribute to their debt.

The holiday season is supposed to be about creating lasting memories with those you love, and financial worries are a definite hindrance to that. With so many people reporting financial concerns in these surveys, obviously everyone is in the same boat, and would probably be happy to get on the same page with others when it comes to spending. 

It’s time to stop struggling with unspoken expectations. Here’s how to have the awkward conversations that will stop financial stress from being part of the holiday season and affecting the family finances.

Clarify your values.

The first step to having a productive money conversation with others is to understand what you value. Some questions to ask yourself when it comes to the holidays are:

  1. What is actually meaningful for me during this season?
  2. Are there ways to celebrate the holidays with people I love that don’t involve spending money?
  3. How much can I realistically spend on gifts or parties?
  4. How much would I be comfortable spending on all of this?

You won’t have anything to discuss with others until you concretely know the answers to all these questions. Maybe you’ll even realize you haven’t been spending that much beyond your means this whole time, allowing you to quell any anxiety you have about what you’re buying. 

Once you have your values sorted out, you’ll actually have a position to compromise from, assuming others aren’t also on the same page as you. 

Have the dialogue.

“Money is still a very taboo subject to discuss in many social circles,” warns Leah Hadley, Founder of Moms Managing Money. “However, I encourage my clients to be honest.”

Because it can be such an uncomfortable topic to discuss, if you’re reading these words, you’ll probably have to be the one to broach the subject of holiday spending and family finances. However, there are plenty of ways to ensure the conversation goes smoothly.

Start the discussion in a setting that makes you feel comfortable.

Do you prefer to discuss topics intimately with someone else, or to get it out of the way in a big, all-hands-on-deck meeting? 

If you only have a few people to talk about holiday finances with, such as a spouse and a few extended family members, or you just like to connect with one person at a time when it comes to talking about something important, having a one-on-one conversation might be the best route to go.

However, if you have a large family, your holiday budget will impact a lot of people, so it would definitely be more efficient to call a family meeting. This will also give permission for everyone else in the meeting to be honest about how they feel. In a single person-to-person meeting, the other party may be caught off guard and want to please you. However, in a group setting where multiple people are able to express themselves, they might feel more empowered to clarify their own views and share them with the group, creating a real dialogue that gets things out in the open and everyone on the same page.

Have the discussion early. 

Some people get a jump on the holidays months in advance, so the longer you wait to talk about finances, the more jarring the discussion will be if it throws a wrench in anyone’s plans.

“I encourage all my clients to have a conversation about money, gift giving, and travel as soon as they can with their family,” says Emma Leigh Geiser, a money coach. “It's about managing expectations. There are less likely to be as many ruffled feathers when you say what you are planning to do and then follow through. It may be awkward at first, but often other family members are thankful because of their own financial challenges.”

Joe Bailey, a business development consultant at My Trading Skills, advises, “One needs to prepare their family members, especially their children, for any major changes before the holiday rolls in. Doing this early enough helps everyone keep their expectations in check once the holidays come.”

Suggest alternatives.

This is an especially useful tactic when trying to manage the expectations of kids. They may have their hearts set on a high-priced toy that’s incredibly trendy that year—all the other kids at school will have it. Unfortunately, if it’s far beyond your budget, it might not be worth all the financial stress to buy it. If this is the case, do some research to suggest comparable or related gifts that are more within your budget. Also, try to get them excited about something else entirely rather than focusing on what they can’t have. 

Break bread. 

“A spoonful of sugar helps the medicine go down,” is the age old advice for making something harsh taste better. A delicious, carb-full meal can be just as effective when it comes to discussing a potentially embarrassing subject. In the spirit of the holiday you’ll soon be celebrating, it’s best to discuss financial boundaries with your loved ones over a meal. 

Talk about the big picture. 

After discussing the topic with your family, you may find that you do have very different expectations when it comes to holiday spending and how it affects family finances.

When it comes to budgeting, it’s best to talk about what could be gained from adhering to one. If you are the one that is concerned about money, perhaps the cash saved from a more low-key holiday could go toward funding a better family vacation. Or if you’re the one who expects more lavish gifts, understanding the stress this might put on your loved ones could help you adjust your expectations for the betterment of the family finances.

Celebrate the holidays on your own terms. 

Holiday is a time of tradition, but the world is now vastly different than it was when you grew up and family finances is no exception to these changes. Whether it involves overzealous spending on gifts or going big on trees with blinding (and expensive) light displays, these traditions might be causing you more financial stress than they’re worth.

One of the beautiful things about having an open and honest discussion with your family about how much you want to spend and what you really expect when it comes to celebrating the season is that you will finally be free of illusions about what does and doesn’t matter.

Everyone in the family might feel the same way about expensive, outdated traditions. Similarly, from having an in-depth dialogue, you might uncover shared values that have been getting neglected in an effort to live up to the way you think it should be. 

Now you’ll have a chance to build new traditions—to celebrate the holidays the way you all actually want to. And that’s definitely something to celebrate.