On the surface, it's tough to say mom and dad are squandering their savings on their children.
It's a harsh charge, until you peel some layers and check key facts and figures -- numbers that make the case for "wasteful" spending by parents on their offspring.
T.Rowe Price has the evidence, in a new release out this week on parents' spending habits:
- 46% of parents have gone into debt to pay for something their kids wanted.
- 57% of kids agree with the statement, "I expect my parents to buy me what I want."
- 58% of parents agree with the statement, "I worry that I spoil my kids."
- 55% of parents have used their emergency funds to cover non-emergencies, including day-to-day expenses (24%), paying off debt (22%), kids' education (20%), and daycare/childcare (13%).
- 41% of parents spent $200 or more on their child's birthday presents in the past 12 months.
Parents, no doubt, are well-intended in family spending areas, but that attitude is hurting their long-term savings.
For example, according to the T.Rowe Price survey, 67% of parents said that saving for their kids' college education was more important than saving for retirement.
Family finance experts aren't sure that all that spending is strictly wasteful, but any spending that leads to debt can't be categorized as "healthy" spending, either.
"I wouldn't use the word 'wasting'; however, I do notice that parents are spending more on children's financial wants and falling into debt," notes Leslie Tayne, a New York-based finance and debt attorney, and author of Life & Debt.
"As a single parent myself, I'm very honest with my children when it comes to our financial situation," she said. "It's important to communicate your children not only about 'needs' versus 'wants' but also what you can and cannot afford. Their needs to be a financial limit set to avoid falling into debt because of your child's wants."
One big red flag on family spending? If your retirement savings are waning, it could be because you're lavishing the kids with swag they really don't need.
"You should be able to still contribute to your retirement savings while supporting your children's needs and wants," Tayne adds. "Once this gets out of hand, you need to immediately re-evaluate your budget."