Kids and Money

5 Holiday Spending Lessons for Kids

The holidays can bring out the best in all of us. After all, it’s a time of giving — as we think about family, friends and those who are less fortunate. While it can also be a time when we might fret over budgets and cash flow, with some planning, it doesn’t have to be a stressful season. And this can be a valuable lesson for kids and teens. So as you plan your own holiday spending this year, take advantage of this time to teach your kids about money, too. Here are a few things to keep in mind.

1. Start with a holiday spending budget. The amount of money your child has to spend will likely depend on his or her age. Older teenagers may have part-time jobs. Meanwhile, younger kids may have to rely on an allowance for household chores, or you might choose to give them cash for their holiday spending. Start by taking a look at how much money your child has and then help them decide on a reasonable budget for holiday gifts.

Mom watches while her daughter puts money in a piggy bank.2. Make a list. Once your child has an idea of how much money they’re able to spend, help them decide whom they want to buy presents for. Maybe that includes siblings, parents, grandparents, and other family or friends. Then, set a dollar amount for each person and look at the total. Be careful not to let kids go beyond their budget. Budgeting requires difficult choices, so help them understand their options: reducing the number of people on the list or reducing the dollar amount per person.

3. Don’t forget charity. This is an opportune time to teach kids about the importance of charity in holiday spending budgets. It’s a time to remind kids that some children may not receive any presents during the holidays — or even have a holiday meal. Help kids identify one cause they want to donate to, even if it’s just a few dollars that they’re able to give. You can even help motivate them by offering to match their donation.

4. Begin planning early and get creative. Some of the best gifts don’t cost much. Help kids brainstorm more creative gifts that aren’t purchased in the store, such as special music playlists, baked goods, or homemade crafts. You can also help kids identify gift ideas that utilize their special talents like music, poetry, or art.

5. Go comparison shopping. Whether you’re looking online or in a store, help your child see any price differences on the items they’re looking for. This way, they can make informed decisions.

Once they’ve been through the holiday spending crunch once, kids will start to understand the financial pressure that can come with this annual spend. When the holidays pass, it can present an opportunity to talk to kids about setting aside money every month for the holidays. After all, this lesson really isn’t just about holiday spending. Skills learned here will help shape your child’s attitude toward spending throughout the year and as they get older and begin to make more money decisions on their own. (See “Kids and money: 8 tips to help your children become more money-savvy” for tips on helping your kids become financially responsible.)

Making the most of gifts.

When Grandma sends $25, it can take all the willpower a child has to not spend it. While the holidays are a great time to teach kids about spending wisely, they can also be an ideal time to teach kids about saving money.

As kids start totaling their holiday haul, they’re more likely to be thinking about video games and toys than savings accounts and dividends. But before they hit the mall, you can remind them that they can actually have more money later if they stash that cash. An online dividend calculator is a great tool to show them what their money can be worth over time. For more on teaching kids about saving, see “Kids and money: A 5-step plan to teach kids about budgeting, earning, and saving.”

It’s your turn. How do YOU teach your kids about spending and saving during the holidays? If you don’t have a plan, get started today by downloading our free Kids and Money Discussion Guide and Budget Worksheet!

Kids and Money 101


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Author SAC FCU Managing Editor

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