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How to explain Santa's budget to your kids

Money Producer Stephen Hoffman and Baby Miles

Tess Vigeland: It is not the holiday season until you've heard this clip one... million... times.

Ralphie's mom: Ralphie, what would you like for Christmas?

Adult Ralphie: Horrified. I hurt myself! Blurt it out!

Ralphie: I want a Red Ryder carbine action two-hundred shot range model air rifle.

I hope I'm not spoiling the surprise here, but Ralphie gets one! He asks, he gets! That's not always how it works, though. Sometimes the kids need to hear that Santa is on a budget. And here to help us with the best way to deliver that message is Michelle Singletary, personal finance columnist for the Washington Post.

Michelle, this can be a little difficult to explain, right?

Michelle Singletary: It is difficult. I mean, we know that lots of people are undermeployed or part-time workers. And so there's lots of pressure to make sure you don't overspend. But when you got those little people looking up at you with those little eyes...

Vigeland: Awwwwww.

Singletary: It's really difficult to say, "Baby, I can't get you what you want." But the thing of the matter is you have to remember as a parent that you can see beyond that. You know that it's more important that you make sure you don't overspend, so you have money for bills, so you can keep the lights on, you can save and create that cushion.

Vigeland: So the key there really, it sounds like is making this not a conversation that just happens at the holidays.

Singletary: Exactly right.

Vigeland: Well, you know, one thing I wanted to do, because, quite frankly, this is not something I have to deal with at my household. All of my kids, you know, if they have wet food on Christmas morning, they are perfectly happy. But one of our producers, Stephen Hoffman, has a brand new baby. So I've asked him to join us in the studio. Hey Stephen.

Stephen Hoffman: Hey, how are you doing?

Singletary: Hi Stephen! How are you? Congratulations on the baby.

Hoffman: Thank you, thank you.

Vigeland: Stephen, we wanted to bring you in and put you in front of the microphone for the first time to talk about your concerns, because you actually brought this up this week: Even though little Miles isn't exactly asking you for anything yet, right?

Hoffman: Right. The only thing he's asking for is "bluh?" He's a year, but working on this show for five years, I've learned that it's important to get ahead. So I was just looking at him the other day and he had these big eyes, like you were saying, and looked up at me and I thought to myself, "How am I ever gonna tell this little guy, 'I don't have the money for what you think you're gonna get.'" Like there's this idea of "CHRISTMAS!!" -- and what reality is "...christmas."

Singletary: Right. It's true. And it's good that you're starting early. Parents always ask me, "When do you start telling your kids about money." And I say the moment they start asking for stuff, that's when you start having the conversations. The key is to remember that they live in the moment; you do not.

Hoffman: And I actually remember a story I've heard about you, a funny tip that you gave people about gift giving that involved re-wrapping gifts?

Vigeland: Like re-wrapping old stuff?

Singletary: Oh my gosh, absolutely! I'm sure little Miles has a bin of toys at this point. And there's a top player that he plays with. Now, in the middle and the bottom are toys he never plays with, never gonna see again! Take the top layer off, dig underneath and wrap it up and put 'em under the tree. Never know the difference.

Hoffman: You know what's funny about that story is I remember when I heard it, it wasn't really well received by people. They were like, "Oh my God! That's the most horrible thing I've ever heard!" But now, I have a feeling more people are thinking about it and saying, "Hm... This sounds like a good idea."

Vigeland: Absolutely. So Stephen, what do you think?

Hoffman: Well, you know, I was thinking while listening to you, it sounds like what you're talking about is setting limits and setting an expectation. So are there some ways to think about setting the expectations and the limits right from the get-go?

Singletary: Yeah. You know, there's this great word. I'll tell you, it is the most powerful word in the English language: No.

Vigeland: And it's only two letters!

Hoffman: And it's the same in Spanish.

Singletary: And it's the same in Spanish. What we do is, like I said, we would do a list and we would go through it and I go, "No, no, no, OK, maybe, no, no." And we make it a family thing. And it's not so intense. I mean, they groan and moan and talk about us behind our back, you know, this is why I lock my bedroom door at night.

Hoffman: You lock your bedroom door at night? To keep them away?

Singletary: I do. 'Cause they will smother me in my sleep. But you know, again, here's the key: If the rest of the year, you've shown them how much you love them, by doing family things throughout the year, then you have reasons why you can't overspend. Don't just say, "We can't afford it." Say, "You know what, I wanna send you to college without any debt. And in order to do that, I can't buy you all these things that you want, that honestly, you probably aren't gonna play with later." This is why we aren't overspending, because we have certain values in our family.

Vigeland: All right. So Stephen, you have your marching orders. Can you use that two-letter word?

Hoffman: Yes. No. Yes. Wait, no. Yes!

Singletary: No! No! Just say no!

Vigeland: You know what? It works with my kids too! Believe it or not.

Hoffman: I'm actually just going to try it now with my wife. I don't know how successful that's going to be... "No! We're not going out!"

Vigeland: Good luck with that.

Hoffman: Yeah, exactly.

Vigeland: Hey, thanks so much Michelle. It's been fun.

Singletary: Oh, you're so welcome.

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
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When talking about how to explain money during Christmas, I think about how my parents did this. I suggest parents use this explanation for kids who still believe. They explained to us early on how Santa used to make toys for all the good kids a long time ago. However, because of how many kids there are now in the world, Santa can't make toys for every one of them, so he outsources. That's the reason why you can look in catalogs for stuff to get for Christmas. Now remember, because of the sheer number of children there are now, Santa has a budgeted amount for each child. So we had to write down where the toy was that we liked, how much it cost and point out if and what type of batteries were needed. Batteries are not free, even for Santa. The cost of batteries were included in Santa's budget. This is only one of many reasons why my family is debt free and I teach Math and Personal Finance to high school students.

Although they were past the Santa age, we always told our teenage kids that the reason we lived on a budget all year around, including Christmas, was because we didn't want to live with them when we got old. They agreed that would not be their choice either!

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