The Holidays are the perfect time to start teaching kids about money!
Scrolling through the Christmas wish lists this year could have parents and Santa in sticker shock. Inflation and supply chain issues aside, seeing a request for an outrageously priced pair of sneakers or expensive gaming system is a good sign it’s time to talk money with the kids. The entire holiday season is filled with many opportunities to discuss money. Take budgeting for gifts, as a starting point.
The best thing to do with kids of all ages is to set expectations.
One suggestion is to have a set number of presents each child will receive. Even with toddlers who can’t comprehend the value of a dollar, this teaches about limits and budgets. Since my kids were toddlers, regardless of how many total presents they got, each year they looked forward to getting one Big gift. When they were little, it wasn’t so much about what the Big gift cost, as much as what they could tangibly see as the Big gift. This was the Thomas the Train set that was running Christmas morning, and the jumbo teddy bear that was literally larger than life. As my kids got older, they understood that as their one Big gift got more expensive, they would receive fewer gifts overall and some much more practical than others. For example the year my son got a new game console, Santa had batteries wrapped in his stocking for the controllers. (If you have gamers in your life, you know how quickly they burn through the batteries, which isn’t inexpensive!)
Getting kids involved in the gift GIVING side of the equation presents another opportunity to discuss budget. Include kids in the shopping process so they see what things actually cost, including the additional expense of wrapping paper and tags. Gift wrap really adds up!
Giving the gift of time is meaningful to adults, and affordable for kids.
One of my all-time favorite gifts from my daughter was a homemade coupon for help around the house! If you have teenagers, consider including them in a gift exchange that incorporates drawing names. Teenagers want to feel included, and being “assigned” to buy for an adult is a great way to get them engaged. I recommend setting a dollar limit for this specific type of exchange to ensure your teen doesn’t feel pressured to spend more than necessary. Children that never learn financial limits turn into adults that spend beyond their means.
The holiday season is the perfect time of year to encourage saving.
I love giving piggy banks as gifts and always include a starting fund. Regardless of how much cash I stuff into the bank before wrapping, I never forget to include some coins so the recipient gets the joy of “hearing” their savings! Maybe your kids are already asking for money for Christmas. If so, help them set a financial goal so they understand the intention of saving. I like to offer my own “match” program with my kids. This gives them extra incentive not to spend their savings too hastily. For example, at the end of each month, I offer a pre-determined dollar amount that I will contribute if their balance meets a minimum. Much like earning interest in the bank, keep in mind kids just like adults aren’t too motivated to earn a small percentage.
Give the gift of stock in a company that is of significance to them.
Do they love cartoons, video games, a special toy? Having ownership in a company a child is interested in can be a fun way to learn about investing and can be accomplished many ways including making a contribution to a child’s college savings account or giving a physical stock certificate.
Another opportunity to teach kids about money at the holidays is with charitable giving.
Like many households, we’ve incorporated philanthropy into our holiday traditions and my kids look forward to this every year. In the early years, the topic was part of a dinner table discussion, typically shortly after Thanksgiving. I set a budget (initially $100 as a family) and told the kids it was up to them to decide how to spend the money and to whom to give it to. One year, they decided to divide it into $5 gift cards and pass them out throughout December as Random Acts of Kindness. My daughter still remembers the cold and snowy morning she had me pull over so she could give one of the coffee shop gift cards to the school crossing guard. I’m not sure which one of them had the bigger smile. Another year, the kids decided to break the total amount into 4 gift cards, one for each member of our family to give away. After much discussion, they came to the conclusion they wanted to make a bigger impact to less people. And I’ll never forget the time we were out for a casual dinner and received top class service from our waitress. We hadn’t even had the formal discussion yet about our annual giving tradition, and the unanimous decision was made to leave a significant tip on a relatively small dinner bill. We left the restaurant quickly before she could see the signed bill, which was yet another great lesson on giving: Give with no expectation of receiving [even a thank you] in return.
Don’t overlook the opportunity to include your family in chartable activities that you may already be taking part in. Busy adults sometimes give of their time or money and don’t consider including their family in their philanthropic activity. What better way to give than to give and serve as a family?
Do you serve on the board for a non-profit organization?
Is your office holding a donation drive?
Does your employer provide a matching grant?
There are many great lessons to teach around giving, and depending on the age of your kids, you may dive deeper into discussions around establishing a sense of purpose, gratitude, and sharing your success. Some of my favorite quotes on this topic that can springboard into a further conversation include:
“We make a living by what we get. We make a life by what we give.” – Winston Churchill
“Think of giving not as a duty, but as a privilege.” – John D. Rockefeller Jr.
“The meaning of life is to find your gift. The purpose of life is to give it away.” – Pablo Picasso
Whether it’s learning to save, setting a budget on spending, or starting a tradition of giving, don’t miss the opportunity to talk to the kids in your life about money this holiday season. The lessons you teach them, and more importantly the behavior you model, will have a lasting impact on their financial future.