Whether you’re a can’t-get-enough-of-Christmas person or a dedicated Festivus fan, you might be surprised to learn that the holidays are actually a perfect time to teach kids about money and personal finances.
The season is full of teachable moments you can use to help kids understand the concept of wants vs. needs, how to budget, and more. Here are some ideas for using the holidays to teach kids about money.
The 4-Gift Rule
Kids understand from an early age that the holiday season is a time of excess. The idea that ‘more is better’ when it comes to gifts is pervasive. If you’d like to curb that kid consumerism and keep gift-giving expectations reasonable, try the 4-Gift Rule, which gives kids the opportunity to ask for gifts in four specific categories:
- Something I Want
- Something I Need
- Something to Wear
- Something to Read
Limiting gifts to four categories definitely saves money and time. And it also helps kids focus on and understand the concept of wants vs. needs. They can still create a wish list with multiple items in each category, but with the understanding they will receive one thing per category, rather than all of them.
Budgeting for Gifts
Kids love to buy gifts for others, which is a perfect way to introduce the concept of budgeting. First, decide on a total amount to spend. It can be money they’ve saved, money you give them or both. Then sit down and write out a list of the people they need to buy gifts for. Spend some time together researching prices and comparison shopping online. Then help kids make the best purchasing decisions based on the budget.
‘Tis Better to Give…
Why not use the holiday season to teach kids about helping those in need and becoming involved in the community? It helps to take the focus off wanting and puts it on giving instead. There are always plenty of opportunities for giving back this time of year, including: faith-based efforts, adopt-a-family programs, packing meal boxes at a local food bank and more.
Using Gifts Wisely
If your kids receive cash gifts and gift cards, help them plan how to use them. Talk about the pros and cons of saving them for later vs using them right away. Ask if they have goals they’d like to work toward and if those gifts can help them get there. Ask them how they think they’ll feel if they use those gifts to buy something temporary, like candy. And if they think they’ll feel differently if they save the money or use it to get something longer lasting. Having casual conversations about these ideas is an easy, relatable way to introduce essential financial concepts.
Expressing Gratitude
Have your kids ever written an old-school thank you note? If not, give it a try this year and have them write thank you notes for the holiday gifts they receive. At the very least, remind them to text, email or video chat their thanks to family members and friends for their generosity. It’s important for kids to recognize that gifts are something special, and not something that’s owed to them.
