There’s no denying the holiday shopping season is expensive. The National Retail Federation (NRF) reported Americans spent almost $700 billion on holiday shopping last year.
If you’re like many parents, your children will be with you when you do your shopping. This presents a perfect opportunity to teach your kids basic financial lessons, from budgeting to weighting prices. Here are some things to keep in mind.
Include kids in your budgeting process
We often think children can’t understand how money works. Sure, your six-year-old may not be able to teach advanced financial topics to their three-year-old sibling, but managing a Christmas budget isn’t an advanced financial topic. In fact, it can be done quite simply.
Here are some ways you can introduce budgeting to them:
- Shop only with cash: Your child will see cash physically disappear when you purchase something — as opposed to a credit card —which will help them understand the “cost” of the purchase decision (if you aren’t sure how to go cash-only, here are some tips).
- Explain who you are buying for: Tell them the total the number of people you are buying gifts for, so they understand how you are dividing up your holiday fund.
- Explain why you can’t splurge: While it might be fun to get an expensive gift, explain that it will leave less money to spend on everything else. Overspending means you may be unable to go on that family vacation, or even cover basic needs like groceries, which can put you into debt.
These discussions can be a foundation for developing financial literacy in your children — you can discuss your monthly budget with them as well, so they can not only see how you manage annual events like Christmas, but also day-to-day expenses.
Write a list of wants & needs
Have your child write out a wishlist and go through it with them, deciding which items are wants and which are needs. Explain the distinction between the two and explain how to prioritize needs over wants while still maintaining a balance. Have older kids? Talk with them about the things they need for college and how to avoid the things they don’t — like this one big ticket item dorm rooms don’t need anymore.
Use the holiday season as a time to teach
We aren’t born with expert money skills, but the Christmas season is an easy way for your child to learn basic financial literacy skills. Once you’ve taught them the basics, give them their own control over purchasing a gift for a friend or family member. You’ll be surprised how quickly they can master the skill of financial literacy.
For more, here are 50 easy — and fun— ways to teach your kids about money.
This article originally appeared on Policygenius and syndicated by MediaFeed.org.
Featured Image Credit: AleksandarNakic.
