The holiday season is especially fun for kids, but it also provides parents a great opportunity to teach their little ones important lessons about money. What are the best ways mom and dad can do this without their children losing interest?
Here are 5 tips to help parents better explain money to their kids this time of year:
– Invest any money they are gifted: When your children receive checks from relatives far away or if you decide to gift your children money as a holiday present, don’t just put it away in a savings account that will yield practically no interest. Teach them to invest their money so it can work for them. Show them the different places they can put that money, the potential for growth and risk for loss.
– Let them get involved with budgeting: As you do your holiday shopping this year, involve your kids. Let them see how money works, how you create and stick to a budget. Explain to them the benefits of a budget, and how it prevents you from overspending. Be frank with them and show them that if you go over a budget, it impacts other important things that require money.
– Explain wants vs. needs: The holiday season is a great time to explain to your kids the difference between wants and needs. For example: they might want a Play Station 5, a new iPad or that new bicycle. Let them know a need is something like clothes, food, a place to call home and a bed to sleep. Explain that there’s nothing wrong with “want” gifts, but that needs always supersede wants.
– Teach them to think before spending: One of the biggest reasons so many people struggle with money is because they don’t think before they spend. That’s even more so during the holidays because Madison Avenue does a good job of convincing us of all the things we supposedly need to buy. Teach your kids to stick to logic when it comes to spending this time of year, and to leave their emotions on the shelf.
– Teach them it’s better to give: Most children love waking up on Christmas morning to open up all those gifts under the Christmas tree. Use the holiday season to also teach your kids the importance of giving. Explain to them how it’s nice to help others in general, but especially this time of year. One of the greatest lessons you can share with your children is purchasing a gift for a child who wouldn’t otherwise receive one this holiday season.
About the Author
Steve Siebold is a Certified Financial Educator (CFEd) and author of the book “How Money Works,” which is written on a level that even children can understand the basics of money. www.howmoneyworks.com