This holiday season, help your kids build solid money habits

Teddy bear and piggy bank

The holiday season provides plenty of opportunities to talk with kids about money, like when you go shopping or when your children receive gifts. No matter what age, kids learn from watching their parents and absorb what they see and hear around them. Your words and actions are opportunities to share money lessons. These opportunities can add up to help your kids build successful financial futures.

Here’s how you can tackle a few common holiday scenarios—and help your child build money skills along the way.

Scenario 1: Your child asks for a very expensive gift

You might not want to reveal the dollars and cents that you plan to spend on gifts for your family. That’s okay. For one thing, young children don’t naturally think about how much things cost. That means they may not be able to determine if toys or the latest tech gadgets are unrealistic for your family’s budget. Pre-k age kids especially are still learning what money is and how it works. 

What to do:

For your young children, this is an opportunity to talk about prices and how much things cost. If you’re not inclined to get the gift at all, don’t hesitate to simply say no and mean it. If you’re inclined to get the gift eventually, you might talk about ways to plan ahead for something important. Talk about why you’d need to think carefully about the gift, especially if there are things that are required to go with it, such as:

  • More clothes or accessories for a doll or action figure
  • Storage space for a game or larger toy
  • Batteries or additional devices needed for electronic toys 

Also take some time to explain money basics. This could mean identifying coins, or pointing out differences in things that are free (playing with a friend) and things that cost money (buying ice cream). 

For older children, discuss making tradeoffs and setting priorities. Maybe they would prefer to receive a single gift, rather than a few smaller ones. Maybe they could think carefully about how much they would use or enjoy the gift over time, compared to an alternative that’s more budget friendly. Maybe they would like to save up and contribute toward the thing they want, or anything that goes with it. You could talk about values, like fairness among siblings and family members, or other ways your family observes the holidays in addition to gift giving. 

Scenario 2: Your child asks for a long list of gifts

Your kids are still learning about the world around them and may be influenced by peers and other factors. As a result, your child might have a long holiday wish-list of gifts that doesn’t match your family budget or your values. 

What to do: 

For young children, the holidays can deliver lots of challenges to their patience. At this stage, children are just starting to develop the abilities to stay focused in spite of distractions and impulses. All the goodies and temptations around them can build up a long list of “I wants,” and one holiday season might not be enough to help your child to develop beyond this behavior. But if you display patience yourself, you could help them take a step forward. If you choose to set an expectation for a special gift, treat, event, or visit, then when you follow through you also provide a good lesson. One way to help children avoid impulses is by demonstrating that waiting can pay off.

For your preteens, this is also a good time to reinforce what is important in your family about holidays and gift giving. Maybe you: 

  • Value the traditions of the holidays
  • Like the way that gift-giving allows you to show consideration for other people 
  • Like including people you don’t interact with often during the year 
  • Have a family tradition of helping those in need 

Help your preteen understand why you celebrate the holidays in your family’s unique way—and even if they don’t show it immediately, they’ll absorb lessons that help build on their values.

Scenario 3: Your child wants to buy gifts for friends or family

If your kids would like to give gifts to loved ones or their friends, it’s a great opportunity to start to build strong money habits. 

What to do:

For younger kids, the creativity and persistence involved in making a gift is important. Believe it or not, coming up with an idea and seeing it all the way through to completion is part of the building blocks that can help children have a strong financial future. Think about all the skills involved, such as:

  • Coming up with an idea
  • Planning ahead for the supplies they’ll need 
  • Working through any troubles or surprises
  • Seeing their completed gift

If those activities don’t sound like your kids, they could get some of the same skills in planning and completing a task by helping out with holiday cooking or cleaning.

If your kids are a bit older, let them in on your holiday planning so they see how you make decisions. Start by having them make a list, which demonstrates how to plan ahead—a key skill in successful money management. Then, you can set a budget together. Through budgeting, they’ll practice even more positive habits, like sticking to a plan and saving to meet a goal. 

They can also start to recognize that gifts to others don’t always come in a box. Maybe a gift to a grandparent or relative could be a pledge to help them with their new smartphone, or organize old photos into a digital album. A gift to a younger sibling or relative could be teaching something they’re skilled at, like sports or music or hobbies. 

Scenario 4: Your older child finds a deal that seems too good to be true

As your kids get older, they might start doing some shopping on their own, either online or in stores. All through the holiday season, they’ll probably spot ads on TV, the Internet, and billboards talking about big discounts, special offers, prizes, and rewards.

What to do: 

You can use the holidays to talk about how to evaluate ads and offers. Kids might not recognize that "free" online offers can be scams to get people to spend money without realizing it. Or, they may want to add something small to what you’re already buying. But, if you explain how those purchases add up and could start to affect your budget, they’ll better understand the importance of thinking twice before buying or clicking.

You can talk about your own personal rules of thumb for shopping, saving, and spending. Maybe you use discount prices to try out new things, or maybe you only look for brands and products you trust. Giving preteens your rules of the road can help them steer their own way in the future.

Looking for other ways to talk to your kids about money?

Share your strengths

Even if you don’t think of yourself as a money expert, you have skills that you already use to navigate your financial life. Things you do naturally may be strengths you can share with your kids. You can use your abilities to share valuable money lessons with your kids.

Explain as you go

Next time you’re at the store with your kids, try something new: Think out loud and talk through what you’re doing. This helps your children see how you think about spending and helps them understand your decisions. Here are three steps to turn your next shopping trip into a chance for your children to build their money skills.

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