Use Gift-Giving to Teach Children Financial Responsibility

orange clay piggy bank with smile

(Editor’s note: please enjoy this very wise article on teaching children wisdom and responsibility with finances.)

As a society, America is a consumerist culture, and we tend to spend more and save less than any other industrialized country on the planet. Instead of choosing a free option, we pay for a more convenient phone number lookup or spend upwards of $20 a day to grab morning coffee and eat out for lunch. Many of these consumerist values have been passed down to us from our own parents, and have left many with high amounts of credit card debt, thousands of dollars in student loans, and an expensive mortgage to boot.

To combat these poor financial habits passed down from generation to generation, many parents are now trying to teach their own children financial responsibility at a young age. Surprisingly enough, gift giving during the holiday season is a great way to teach such a lesson.

Kids come up with some pretty extravagant items to put on their holiday wish lists, especially since so many tech gadgets and devices have become so popular. Kids these days can be found asking for $300 gaming consoles, $400 flatscreen TVs, and $500 tablets – items that most parents couldn’t dream of affording this holiday season due to the economy. However, many parents are also guilty of completely spoiling their kids over the holidays by showering them with every gift they begged Santa for. To make sure that your kids are able to enjoy the holidays, but also get a full understanding and therefore a good financial lesson, consider doing the following this holiday season:

Don’t Spoil
Your 8 year old doesn’t need a 48 inch flat screen TV for their bedroom or a $500 tablet. These are items that they need to learn to save for. Sure, getting a child a larger item such as a bike is a good investment, but don’t strap yourself for cash by getting your child every item on their list. Because gifts brought by Santa are commonly associated with good behavior, it forces us to teach our children that they should reward themselves with material items from an early age – which can lead to poor spending habits down the road.

Instead of getting them everything off their list, selectively pick items from their list that will force them to be okay with one higher priced item over the other. Make sure that they understand that receiving a TV, computer, and new gaming system all in one holiday isn’t appropriate or financially acceptable or responsible. It is no indication of whether or not they are a bad kid, it is simply tied more to the dollar amount of the item and whether or not they truly need it.

Point Out Dollar Amounts
Most parents avoid discussing the costs of toys in front of their children because they want to keep the spirit of Santa alive. However, this is a great way to wind up with a disappointed child on Christmas morning who doesn’t understand why Santa didn’t bring the $300 gaming console. She will believe she should have gotten it for good behavior and will be wondering why Santa’s elves didn’t make it for her, not realizing that it didn’t wind up under the tree because it was unaffordable or simply too much.

Take the time to teach your kids how much these gifts really are, and what other things the money could be used for. Give them comparisons so they actually understand that an item is too much, or may not be appropriate for this year’s Christmas.

The holiday season is the time of year to spoil your kids a bit with goodies and gifts, but you don’t want to do it to such as degree that it only instills consumerism in them even further. To avoid poor spending habits, kids need to start learning financial responsibility and the value of a dollar at a young age. In fact, teaching responsible spending is much like teaching responsible eating habits – you have to start young or you could potentially start them on the path to terrible habits for life. So don’t be afraid to start teaching financial responsibility with Christmas, your kids will thank you for it later on.

Earnest Parenting: helping parents teach financial wisdom.

Image courtesy of babe_kl via Creative Commons license, some rights reserved.

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