Budget Lessons for Kids

Teach thoughtful spending this holiday season.

Budget Lessons for Kids

Image(s) licensed by Ingram Publishing


While waiting in long checkout lines with Christmas carols on repeat, have you ever worried whether your kids understand the true meaning of the holiday season? With endless commercials and gift lists a mile long, it may be hard to convey the idea that it is truly better to give than to receive.

Helping your kids prepare a budget for their own gift giving is a great opportunity to instill this important message. Buying for siblings, parents and friends offers lessons in money management and thoughtfulness.

Start saving

Kids are ready to start budgeting for holiday gifts once they are receiving an allowance and putting money into a “spending” jar.

A younger child could save up the equivalent of three to four weeks worth of his “spending” allowance to buy gifts if he starts now. (Older kids can understand the concept of saving throughout the year and should set a long-term goal early and work to meet it.)

With savings in hand, sit down and help your child to set a budget. Count out how much money has been saved and how many people there are to buy for. Then do the math together. Divide the money so that everybody gets an equal amount. To make it easy, your child could print out names, place them on the table, and put equal amounts of money under each one. Explain that if she wants to spend more on one person, she will need to move money from another person’s pile.

Next, spend some time thinking about what each person would probably like to receive. Review expressed wishes, hobbies, interests, and needs. The idea is to show kids how to choose a gift that will be appreciated, rather than one that has little or no meaning.

Look at costs

Check whether the gifts on his list match the budgeted amount. Go online together and find prices or take a trip to nearby shops. Write down the cost of each gift. If there’s not enough money to pay for it, you could brainstorm a less expensive gift idea.

Or you could opt for homemade gifts. For example, grandparents might love a 

hand-made card inviting them to a tea party or a gift certificate to redeem for help in the garden in the spring. This would work well for tweens and teens too. They could put a coupon for free services in their card, such as transferring CDs to electronic devices or scanning old photos onto memory sticks.

If your child wants to stick with her first gift idea, discuss ways to increase the budget. Can she do extra chores around the house to earn more money towards the gift? You could set up a job jar with various tasks and the amount you will pay for each one. Work out which jobs she would need to do to earn enough for the present(s).

Another option is for parent and child to contribute jointly to a gift. This gives a bit more flexibility in gift selection. You could match exactly what the child puts in or offer $10 or $20 to match his contribution.

Spreading the joy

The exercise of budgeting for the holidays will help show your child the value of money, how to earn it, and how to spend it wisely. It will help him understand that others have a budget too so he may not get everything on his list. And lastly, it will allow him to experience the joy we all feel when someone opens a present and shows obvious delight at the gift they have received.

Author: Christena Saunders

Christena Saunders is a mother of two who has worked in financial services for 12 years.

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