budgeting for kids

Finding the perfect gift to light up someone’s face is one of the joys of the holiday shopping season. It’s also a great opportunity to teach kids about the importance of giving.

But as we race through the shopping aisles, filling our carts and pulling out our cards at the register, what lessons are we teaching them about money?

You might think your child is too young to understand the complexities of money, but you might be surprised. Kids as young as three years old can learn the basics like spending and saving.

It’s never too early to begin teaching them fundamental lessons such as:

Saving money brings a future reward.
There’s never enough money to buy everything you want.
Sometimes you have to wait before buying something you want.
Spending less on some things means you have more money for others.
Keeping track of your money gives you security and freedom.

Holiday gift-giving

In the midst of the holiday shopping frenzy, when you’re rushing to check off as many items from your list as possible, it’s easy to send kids mixed messages about money. It’s also an excellent time to start teaching them lifelong money managing habits.

Spend, save, share.

One of the simplest ways to teach kids about budgeting and saving is to use the spend, save, share model. Make three jars: one to spend right away, one to save for the future and one to share with others. Determine how much of your child’s money should be given for each jar. For example, 40 percent for spending, 50 percent for saving and 10 percent to give to help people or causes your child cares about. When your child receives holiday gift money, help them divide it between the three jars—and spend time talking about the importance of each.

Saving for a gift.

Teach Kids the spirit of giving and the great joy and pride in giving gifts they bought with their own money. Holiday gift giving offers the perfect opportunity to teach your child about saving for short-term goals. Set an achievable budget and help your child set aside a portion of his or her allowance each week to buy a gift for someone special. As the savings jar fills up, your child can use the “Gift money” to choose gifts for family, friends or a favorite teacher at our School Holiday Shop.

Setting a shopping budget.

If you’re shopping on a budget this holiday season, talk with your child about setting dollar limit for each person and ask for their help to stick to it. Let younger kids help select from options within the price range, while older kids can help keep track of how much you’ve spent so far. Discuss the tradeoffs you have to make to stay within your budget—for example, “if we buy this, we can’t buy that.”