Say “no” to overpriced birthday parties!
Ah, summertime is here and we are wrapping up our summer plans. During the summer our son, Arthur will turn 8. Fun times for him, stress for me as I try to play the best party ever. As I search for places in Seattle to host the party, I am shocked at the price and value that is being offered. Yes the events look fun: Lego fun, laser tag, indoor skydiving, but the price is average $300 for one hour. WHAT!! And, this does not include all the plastic crappy gifts one must buy for all the kids coming, the cake, pizza, ice cream. To add to this stress, each parent of the guests now has to go out and find something that does not look cheap, but not crazy expensive because they have 12 more parties to go to that year. Ugh! This does not sound fun, so why do it?
Once I am done adding up the total cost of everything, we are looking at over $600 for one hour. Is there anyone out there who is with me in thinking this is just a bit crazy? Now, don’t get me wrong, I want to make Arthur’s birthday super special for him, but I think what I am doing is just throwing money and hoping some happy memories stick to him after the day is over.
Have no fear, I may have some ideas that help your stress, your wallet and your child’s financial future.
Who is the party for - Sometimes it feels like I am throwing to impress other parents. That I need to keep up with other parties I have seen or my son will feel left out. But honestly that is just in my mind and a huge societal pressure that I should ignore. What I should (and now do) focus on is what my son wants. This year I know all he wants is to have the chance to play video games. So I will find an arcade, invite a few of his good friends, give them money to play with and off they go for a great time. I will grab a pizza (Costco sells them cheap and good), make a cake and sit outside on a blanket after the video game money runs out. The point is to make it simple and focus on pure enjoyment.
No physical gifts & smaller parties! Have you ever seen your child quickly ignore gifts from parties only a week after the event? Or perhaps they feel overwhelmed with all the kids at their party? Yes! Here are two ways to make things simple
Have a Fiver Party - When your child is young (1-6 years old) you may have lots of guests at the party as the child has not established many deep friendships. Instead of having each guest bring a physical gift, have them bring a $5 dollar bill. This eliminates unwanted toys, stress for your guests in choosing the right gift, and provides a lot of money for your child in which they can choose what they want. Example: 15 guests * $5 = $75. Cool huh!
Gift Cards - As kids get older you may think about limiting the amount of kids coming to the party. It is totally fine not to invite everyone in the class. Just a few good friends going to the movie with popcorn and drinks may be just the right event. Ask friends to bring gift cards with a $20 limit. This, again removes the stress of the gift givers and reduces waste of unwanted junk.
Teach Savings and the power of interest! After the party our boys pass over their money to me! Hahahah (evil laugh). I “put” it in their bank. Really it goes into our bank account but they have an excel sheet that tracks their savings.
Money makes money - Each month I apply an interest to their savings. Under $100 gets a 10% PER MONTH return. Yes this is high, but it shows how interest can affect their total balance and encourage more savings. Over $100 it drops to 5% and perhaps once over $300 I will drop again. But we are not there yet. So far our boys each have a total of over $100.
No impulse buys - If they decide on buying something I put a 3 day “think time” before they can access their money. This gives them time to resist impulse buys and builds good spending habits. So far 2 out of 3 times our boys have changed their minds about what they wanted and have not chosen to spend their money. They did finally make a final decision on some remote control cars.
Now here comes the cool part! Last year we had a birthday party for Arthur at the public city splash park, with pizza, home-made cake, water rockets for party favors, and even beer for the parents and we spent around $150. So now what do I do with the money I have saved from not buying that $600 party? Invest it, of course! Arthur is 8 so if he invests that $600 per year, money not spent on over-priced birthday parties, at a 5% return at the age of 50 he can have a good nest egg of $88K. He can have one heck of a 50th birthday party with that!
Wait, there is more. Uncle Sam allows Arthur to invest any earned income from yard work, baby sitting, reading tutoring up to 6K per year in a Kids ROTH. (Learn a bit more here!) As long as he has earned it, it can be invested in his Roth. So he could earn it, spend it and I could put, say, the $600 I did not spend on that party into his Roth. If “he” invests the full 6K per year, he would have $885K by the time he is 50! Now that can’t allow one to retire at 50, but I bet with all his saving skills learned since childhood, this $800K will just be one of the buckets of cash he can pull from.
Ok, ok I am not a financial advisor, but I am a budget enthusiast and this is a pretty good birthday gift!
Summery:
You don’t need to book a fancy kids place to make your kid’s birthday special. Instead focus on simple joys and invest the cost avoidance in your child’s name in a “Kids ROTH IRA” They will be truly happy about that compounded interest once they turn 50!
Give and ask for cash gifts. You can these dollars into something your kid really want and put less plastic into the world by avoiding unwanted physical gifts.
Hi! Welcome to my blog. This is an account of our journey to FIWO (financially independent, work optional) and tips and hacks we have learned to get us there faster and be kinder to the environment. If you just joined us, please start from the first post on this journey: Is A Life Without a 9-5 Job Possible for Me. Disclaimer: This article is most suitable for an US audience. Also before you ask big birthdays like quinceañeras or sweet 16 should also be focused on to reduce spend, but that is a topic left to a future post.
