The Money, Honey: Four Ways To Gift Your Kids Financial Responsibility This Holiday Season
The holidays are upon us, and if you are a parent you are likely stressing over finding the perfect gifts for your children. Well rest a little easier because I have a gift-giving plan that will make the holiday season a little simpler for you while at the same time provide some valuable financial lessons for your children and they won’t even know it!
The most satisfied people are the ones that give the most. You have probably heard the saying that it is better to give than to receive. There is logic behind that. The positive feelings you experience when you give last much longer than the temporary high you get when you spend your money on yourself. Giving develops discipline and an awareness of others’ misfortune that helps keep you focused on what is truly important, which can have a profound impact on finances as well as every other aspect of your life. Help your child learn this by making a donation in your child’s name to a charity of their own choosing.
As a parent myself, I understand the temptation to take the path of least resistance and allow my children to spend too much time playing video games or watching television. Though some children will not immediately see this as a good thing, a good old-fashioned book is a great way to ease a little moderation into their electronic habit. If you need help picking one out, go to your local library and spend a few minutes talking to the librarian about your child to get some great recommendations. It has been shown that reading can greatly improve vocabulary, communication skills, creativity, concentration, focus and memory. All this will help your child do better in school which can mean financial awards to help them pay for college, better performance in college, and better job opportunities and job performance, all of which are linked to better financial health for both the parent and the child. As a side note, starving authors like me greatly appreciate the support!
It is a great idea to get your child something they want. Notice I didn’t say get them everything they want. I don’t think any parent wants to disappoint their children but one of the most valuable lessons you can teach them is that they will never have everything they want. Too many people try to tie in happiness with having things. The financial lesson you are teaching your children is that happiness does not have to depend on things that can’t love you back.
There are only a few things people really need: food, shelter, transportation and clothing. Many grown-ups still have a difficult time distinguishing between ‘wants’ and ‘needs’, and for children the difference is usually nonexistent. Everything is a need! The earlier your children learn the fallacy of this thinking, the better off both of you will be financially. The first thing you need to do is pick one of the four categories of needs and decide on a gift that falls within that category. For instance, you might select transportation, wanting to give your child a bike for Christmas so that they no longer have to walk to school. Once you have the gift in mind, decide how much you want to spend on that gift. You will give your child a gift card or cash in this amount and your child will be responsible for purchasing the gift themselves after Christmas. They must follow three simple rules: 1) they must use the funds to purchase the gift you selected, 2) they cannot go over budget and 3) they can keep half of any savings to spend as they wish but must add the rest to their charitable gift. The lesson here is that it is very easy to spend other people’s money, but when you have to spend your own, you will make different decisions. Most kids do not grasp the concept of money management and it is better that they learn this at an early age when the consequences of bad decisions are not as painful.
Instead of wasting time, fighting crowds, and spending way too much money at the mall on a bunch of stuff that will end up broken, lost or thrown away, come up with your own family tradition that can put meaning into the season and give your children something they can really cherish and will benefit them for years to come!
Steve Repak, CFP® is the author of Dollars & Uncommon Sense: Basic Training For Your Money, For more information, please visit www.DollarsAndUncommonSense.com.