Using Holiday Gift Shopping to Teach Kids Financial Lessons

Date November 21, 2014

The holiday season is a time of giving—and spending. That makes it a perfect time to teach your kids a lesson or two in smart finances.

Shoppers this year intend to spend an average of $804, up almost 5% from last year, the National Retail Federation says. As you begin to check names off your list, give kids a gift that’ll keep on giving with smart shopping lessons.

Holiday spending for kids

Here are four simple tips to help youngsters prepare to buy presents for family and friends and learn good holiday spending habits: 

1. Make a budget.

Help the kids decide how much money is available. For the younger ones, this might be an allowance or an allocation from mom and dad. Older kids might consider using their own earnings or savings. Once the amount available is determined, help your youngsters create a budget. Tech-savvy kids might employ the aid of a smartphone budgeting app or a computer program. And there’s always the pen and paper method.

2. Make a list.

Encourage kids to list all the people they want to buy gifts for. Using the budget, identify how much money can be allocated for each, and determine gifts priced at or below those amounts. That way you can show them how to balance a spending plan with available resources.

3. Spot the sales.

Keep an eye out for sales and deals, and don’t plan on buying everything all at once. Prices may fall for some items later in the season. Black Friday, as the day after Thanksgiving is known, and Cyber Monday of the following week can be great times to snag good deals. Show your kids how to research prices and availability of items before those days arrive. Coupons, rebates and other incentives are everywhere this time of year; just make sure to keep an eye out. 

4. Give back.

The holidays are a season of giving, so encourage your child to include a charitable gift in the budget. Explain the benefits of giving. Tell older kids how charitable giving can reduce their taxes if they earn enough money. is a great place to send kids to find a worthy cause or group, if they don’t have one in mind. The site rates charities based on their efficiency and use of donations. You might also suggest a local food bank, homeless shelter or animal rescue organization.

 Save the rest

Once the holidays are over and gifts have been exchanged, check back in with the little spenders. If they have any money left over or received cash gifts, encourage them to save it for the future. Many financial institutions have special savings accounts for youngsters.

Explain the benefits of putting money away so it can accumulate interest, perhaps even making saving a certain amount a resolution for the New Year. If your child already has a savings account, you could discuss setting a separate one up for holiday savings to fund next year’s gift list.



Cait Klein, NerdWallet

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