As financial educators, a big question we get from parents is about kids and money. How do I talk to my kids about money and instil good financial habits for life?
My answer always includes ideas on situations they will face or money factors for the time of year. Make the conversation you have relevant to their currently reality, or experiences they may have in the future. The holiday season can be a great backdrop for helping you start the conversation on saving, budgeting, spending, charity and credit. Even if you do not give gifts at Christmas, you cannot miss the advertising, spending and extravagance of the holidays.
Here are some things you can do in theory or practice to teach your child about holiday spending. Try all of the steps, or incorporate one or two based the age and attention span of your child.
- Make a list (check it twice 😊) of the people they would like to buy for, and what they would like to buy. Ask your child, why would you like to buy the item for the person? Why do you think they will like it?
- Write down what they would expect each item on that list to cost. This can be completed by searching on-line or going to a store.
- Determine their holiday spending budget; how much do they have to spend? For instance, will they save up their allowance?
- Add up both the cost of the listed items and the budget amount. Ask your child, do they match? Is your holiday spending more than you have? Will you have money left over?
- Pick a cause. Have them donate their time, a toy, cash, toiletries, clothes, food etc. Not all donations will cost money, talk about options and which ones may suit your child best.
The question may come up about what to do if you do not have the money for the holidays, your child may even ask to borrow from you or borrow from future allowances. Whether you decide to or not, have the conversation about what borrowing means, and how they will pay back the money. You can make up a payment schedule and discuss what having less money may look like, when you are trying to pay back money that you owe.
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Developing good money habits young will go a long way. A parent’s job is to guide their children into making good financial decisions based on the current circumstances.
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We would love to hear some of your ideas! Tweet us using the hashtag #MoneyTalk and let us know what has worked for you!
Submitted by: Tamara Kelly, Credit Counselling Services of Atlantic Canada