Teaching Kids to Budget During the Holidays

It’s never too early to start teaching kids money management skills. And the holidays are a wonderful time because you need to plan how much you will spend if you don’t want to be swimming in the red ink in January. An added bonus is that teaching your kids about budgeting will help you think through your budget and look for ways to spend smarter.

Even if your kids are still young enough to believe in Santa, they can still learn about how you set budgets for family and friends. You will just need to remember to add in a special line item for the Santa gifts that you keep hidden.

The discussions should go beyond just the actual present.  We may spend a lot on presents, but there are other money drains that we need to remember:

• Gifts. How much are you spending on immediate family? Extended family? Friends? Co-workers? Teachers?
• Supplies for making gifts
• Cards (with postage)
• Family Christmas letters
• Gift wrappings and bows and ribbons and tags
• Parties (hostess gifts don’t have to be expensive, but they should be factored in. And don’t forget if you need to buy special clothing.)
• The cost of bringing traditional family meals to gatherings

It’s also good to get your kids thinking about how they may be influenced by the media. A good opener is asking them what they received last Christmas. If they don’t remember, but you remember then begging for something, it could be a great way of exploring what is a real want and what is a media driven want.

• Discuss why advertisements target kids and encourage your kids to not believe everything they see when it comes to commercials.
• Let your kids know that local, green, and used items can be just as good as brand name items they see frequently in ads

How to Involve the Kids

Have your kids write out a list of everyone you want to give a gift to and the amount you want to spend per person. Now, you will need to stick to these amounts and not buy expensive gifts out of obligation or wanting to impress people.

Have money budgeted for charity or other donations like giving trees. In order to become generous adults, kids need to see generosity in action.

And work with your kids on creating homemade gifts. They could make cookies or cookie mixes in a jar. Planning ahead helps you to batch process gifts and could save money if you plan around sales. Often, flour and sugar are on sale this time of year, and you may be able to find canning jars in clearance since canning season is over.

Take the kids shopping with you so they can see how to look for the best price. Turn it into a game. Look for coupons. Compare prices.

And most importantly, keep a running tally of your spending to help everyone stay on the same page. If you overspend in one area, work together to find areas where you can adjust the budget. Sometimes, kids can come up with amazingly creative ideas that we haven’t thought of.