November 18, 2019
How to broach the annual hot-button topic of spending money during the holidays with your kids.
‘Tis the season … to talk about money. It may seem contradictory to think about discussing financial literacy with children during the holidays, but the time of shopping, list-making, and gift-giving provides many opportunities for children to learn some important skills and lessons.
Money is a source of stress for many people; parents may inadvertently avoid discussions on this topic, but financial literacy is important. As you and your family are both giving and receiving this holiday season, here are some tips to boost understanding and help communicating about this topic with your children.
Start Early
Like many important issues, you will need to approach the subject more than once, and in different ways as your child grows. Even though money is an abstract concept for preschoolers, they can help count and sort coins (with supervision), put loose change in a glass jar and watch it accumulate, and talk with you about what you will do with the money when the jar is full. The end of the year might be a good time to add it all up and donate it or buy a special gift for someone outside the family.
Budget Lessons
Around age 6 or 7, children can understand the concept of money well enough to begin an allowance. Some parents use allowance to teach delayed gratification and charitable giving by insisting that children divide their allowance into three parts: a third for immediate spending; a third for saving for a long-term goal; and a third for donating to a cause or organization of the child’s choice. Alternatively, children might be encouraged to make or buy a small gift for a special person in their life during the holidays.
It is important to be clear what your child’s allowance financial responsibilities are: a young child might be expected to buy his own candy or treats with his allowance, but an older child who receives a larger amount might be expected to purchase his own clothes or pay for entertainment.
Children will sometimes spend their allowance impulsively, and may end up with “buyer’s remorse.” This valuable lesson, however, is not effective if mom or dad frequently rescues a child from their own mistakes by giving them more money before the next allowance is due.
Communication
Most parents’ favorite adage to repeat to their children about money is that “it doesn’t grow on trees,” but we need to go a little deeper than that. Teach young children to care for toys, clothes, and property carefully because they are not always easily replaced. Children and teens may sometimes take certain expensive items for granted (tablets and smartphones, anyone?), and the cost should not be hidden from them.
Rather than always telling children, “We can’t afford that,” consider explaining, “We are saving for some other things right now. We have to make choices.” Distinguishing between needs and wants is valuable as well. Saying, “I really like these shoes, but I don’t really need a new pair right now” shows your child that making thoughtful decisions and prioritizing is important.
These kinds of conversations about making spending and saving decisions can help guide your child’s future financial habits.
Lisa Phillips, a licensed social worker and parent educator at The Parenting Center at Children’s Hospital, is a contributor to the award-winning “Parenting Corner” column. She can be reached at 504.896.9591; chnola.org/parentingcenter.