The Birthday Budget

How Much Money Should I Spend On My Kid’s Birthday?

There’s no right answer, but there are wrong ones.

by Dave Baldwin
Originally Published: 
Child with  birthday cake.  Polaroid photo.
ArtMarie/E+/Getty Images

We’re in the midst of a birthday arms race. Parents are constantly battling to see who can throw the most elaborate bash for their kids. And we’re not just talking about celebrities like DJ Khaled, who bought his 1-year-old a customized miniature Rolls-Royce, either. We’re talking about seemingly ordinary parents going absolutely batsh*t crazy to ensure the bouncy castle at their kid’s soiree is bigger than the house behind which it’s inflated.

But who can afford it all? The presents, the party, the gifts for all the parties your kid gets invited to ⏤ as if the cost of raising a child wasn’t high enough, the cost of birthdays alone requires a separate line item in the family budget. Which raises the more important question: How much should you actually be spending on your child’s birthday? On the party? On the gift? And on their friends’ gifts, when they get invited to parties? What’s even reasonable anymore?

The answers are all over the place. For your kid’s party, many experts still recommended the “Age Plus One” rule for number of guests (so if your kid is turning four, they can invite five guests) and parents seem to fall anywhere from $100 to $500. More barebones parties ring up between $50 and $100, which almost seems unreasonable considering even the most basic of party supplies are going to run you at least $50. Obviously, the child’s age makes a difference too, with some parents willing to blow it out for milestone years. For presents, the number again varied from as little as $25 all the way up to $100, on average. Although a survey of 2,000 British parents last year found that they spent an average of $450 per party and $250 on presents. Which is insane, honestly. And what about presents for your kid’s friends? Turns out that was the easiest number to agree upon, with most folks spending between $15 and $30 for every party they attend.

The truth, of course, is that it’s a trick question — there’s no real answer. How much you should spend on your child’s birthday is based entirely on your individual financial situation. It’s as simple as that. Nothing else matters. But since “spend whatever you can afford” is deeply unsatisfying advice ⏤ and since we don’t know your accountant ⏤ we reached out to Robin Taub, CPA, CA, a financial planner and author of the book A Parent’s Guide to Raising Money-Smart Kids, and Daniel Senning, the great-great-grandson of Emily Post and a co-author of Emily Post’s Etiquette, 19th edition, for some guidelines parents could follow. In terms of dollar amounts, they had nothing. But they did offer some for some good rules of thumb to help ensure you don’t break the bank on a child’s party and/or spoil your toddler so much they’re expecting a trip to space for their Sweet 16.

Make a Budget And Stick To It

Sure, the Kirkwoods had a bouncy castle and a damn petting zoo. But you need to resist the urge to best the last party your kid attended. “You don’t have to rent a clown or a bouncy house or a pony to have a good party,” says Senning. “If those things are going to be memorable and you want to do it, that’s fine, but there are less expensive ways to make a memorable party.” The most important rule is to make a realistic budget and stick to it. And not just a budget for your own kids’ birthdays. If you’re throwing a party for your child, you’re also no doubt attending a lot of them. Figure out how much on average you can afford to spend on gifts and parties and add a birthday savings fund into your monthly budget.

Spend What Feels Comfortable

Once you’ve set a budget, you have some parameters. “Now think about your kid, the guest of honor, and what’s really going to make them happy,” Senning says. “And spend as much as makes them and you feel good.” Maybe gifts are less important to your child than having all of their friends from school attend. In which case, you allocate more toward the party and less to their gifts. You can also make it a “no-gifts” party to take the pressure off other parents and ensure that more of their classmates show up. And remember, just because you’ve set aside a certain amount for presents or a party doesn’t mean you have to blow it all.

Keep the Gifts Within Reason

This one has more to do with giving gifts to other kids, but don’t go too expensive unless you’re confident everybody else is too. “You don’t want to make other people feel awkward or spoil a kid,” Senning says, “by giving them something out of proportion with the gifts they’re getting from other family and friends.” If there’s any question in your mind, ask the parents throwing the party whether they are planning to do gifts and if so, are there any parameters. You never know, they may say, “Please feel free to bring something but we don’t do video games that aren’t rated for kids or we don’t do soft plastic toys or whatever.”

Use Birthdays As a Financial Teaching Moment

An older kid’s birthday is actually a good time to teach them about money and financial goal setting, says Taub, especially if there’s a big-ticket item they’ve been coveting. If it’s really expensive, you can promise to buy it for their birthday but work out an arrangement where they come up with half the money or collectively pool their other gifts towards it. “There are ways to tie in setting goals, delayed gratification, financial matching,” says Taub. “All those things you want your kids to experience in terms of saving toward financial goals, you can kind of use that with their birthday.”

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