Teach Your Kids The Art Of Giving, And Budgeting, This Holiday Season

Girl with woman choosing Christmas gifts for family

The holidays are here, which means the start of family traditions, holiday parties and of course, presents. As kids begin their never-ending list of the gifts they want, and parents start the holiday shopping, the season is rife with opportunities to teach your kids about money.

As John Durrant, EVP, Retail & Direct Banking at Capital One explains, “At the end of the day, so much of financial health is a planning exercise. You plan how much money you have, how much you will earn and how much you will spend. Holidays are the ideal time to get really intentionally about planning with your kids.” To do this, he suggests helping your child create their own holiday gift-giving plan and budget.

Begin by working with them to create the list. Include who they want to buy gifts for, what they want to buy for each person and how much it will cost. The earlier you start planning the better. Once they have an idea of how much they want to spend, have them look at their total savings to see what’s available. Parents, tell your kids upfront how much money you are willing to give them for the gifts they buy (if any). For the younger kids, this will be more since they probably don’t have a lot saved.

Durrant explains that there are different levels of complexities and depth you can get into depending on the age of your kid.

For the youngest kids, creating this simple plan provides an opportunity to practice some basic math concepts, and learn the value of a dollar. Researching gift prices shows kids that you need money to buy gifts. As you research prices, point out how different items cost different amounts, and why that might be. Practice adding and subtracting with them by counting out cash and coins.

At the tween level, teach the value of earning and saving money by creating a plan to ensure they have enough money to buy everything on their list. If they don’t have enough, help them identify ways they can earn money between now and then. For the younger kids this may be extra chores around the house or odd jobs around the neighborhood. Older kids can pickup extra babysitting jobs or increase their part-time hours.

For teens, look at the long-term big picture. How much money do they want to spend in total? How much money will they have left after the holidays? Take a look at how this will impact their savings. If they have money in an interest-bearing account, that means they will have less money that earns interest. Help them calculate how this will affect their total return.

How much money you have, earn and plan to spend are the basics behind every budget, and an important skill all need to be financially healthy. Durrant points out an added, and equally important, benefit to creating a gift-giving budget with your kids. “Kids are in receiving mode during the holidays. This is an opportunity to shift the focus to giving – which is what the holidays should be mostly about anyway.”

[“source=forbes”]