The holidays cause some anxiety in my house: My husband and I are both somewhat undisciplined in our spending, and previous Januaries have arrived with credit-card bills so disturbingly large that I've wondered if we were in the grip of some kind of eggnog-induced mania. This holiday season is different, however: Last January I vowed to get my financial life in order and teach my kids about sensible money management, and it's gone pretty well. For the first time, this Christmas we've actually budgeted a sensible amount for gifts and festivities.
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As my son is now seven and handling his pocket money (divided into spend, save and give jars) pretty well, I think it's time he can manage a small budget for the holiday gifts he'd like to give. He has nine people on his list, so we calculated a percentage of our own holiday budget that's his to direct. He now has $45 in an envelope marked "gifts"; I also stuck a piece of paper in there so he can make notes as he prices out possible presents.
Talk Values Before Numbers
A holiday budget for kids is a fine plan, says Ron Lieber, the author of The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money - and not just because it gives kids practise with arithmetic and resource management. "As with any spending exercise or discussion, this is an opportunity to reinforce your family's values," says Lieber. If you're a family that rejects consumerism and wants to encourage creativity, he suggests setting the value of the budget according to the type of gift. "You can say, 'You'll get the $45 if you want to buy gifts from the store, or we can give you $90 for materials for homemade gifts,'" he says. You're teaching your kids the nuts and bolts of managing money, sure, but the lesson comes with a certain dose of didacticism as well: In our family, we value the things we produce more than the things we consume.
Or if you want to encourage philanthropy over any kind of traditional gift-giving, Lieber recommends setting the number even higher: "'If you want to donate to a cause the recipient might approve of, we'll give you three times as much money [for the holiday budget]. The time you would have spent going to the store you can now use to think about the causes the recipient might support.'"
Another parameter: Let's say you'd like to encourage the giving of experiences rather than things. Lieber points out that you, the parent, can make any rules you want: "If one of the lessons you're trying to reinforce is the value of doing things rather than buying things, maybe you could make a rule in your house that every physical object you give has to come with a promise to that person that you're going to do something special together. Or you can make a rule that there will be no trinkets at all - every gift will be an 'experience' gift and not a product." Kids have to really think about the recipient's interests: What will be fun for us to do together? What will this person really appreciate doing with me?
Help Them Price Things and Prioritise
I wish had talked to Lieber before I gave my son his budget, because he is indeed thinking in terms of trinkets rather than the handmade crafts he's made in the past. But nonetheless, watching him puzzle through his decisions has been kind of sweet: When pricing out a wristwatch for his father, he said, "It's either good, but expensive, or bad, but cheap. Kind of like what you said to the guy [the contractor] about the kitchen cabinets."
And when faced with the possibility of the wristwatch for Daddy and handmade for everyone else, he revised his priorities, putting his brother, his cousin, and two little pals at the front of the budget line: He's getting Shopkins for his friend Sophie, because he's noticed those are her favourite toys, and a Transformer for his brother, who sends up a howl for "Heat Wave" every time we pass the toy store. His cousin is getting a pirate ship bath toy; I refrained from pointing out that 20-year-old second year university students don't really use bath toys any more. His friend Ike is getting a spy kit so they can play secret agents.
Those four things, he noted mournfully, have already taken up $30 of his budget, with five more people to go. Break out the crafts, I told him. This is, after all, an opportunity to reinforce our family's values - namely, that we don't go over budget. Not even when we're in an eggnog-induced mania.