Oh, the holidays. It’s the most wonderful time of the year — to spend all your money. Of course, that’s not how you want it to go. You want to set a budget and stick to it. At least, you want to try hard to make sure you do. Whether you’re learning to do it yourself or you’ve already mastered it, it’s a great idea to help your children learn as well. Follow these tips to teach your kids about managing money this holiday season.   

1. Have the Discussion 

Pretty much everything you do with your kids should start with a conversation. Children, and adults for that matter, tend to learn new material better when you lay a proper foundation. In many cases, that means talking to your young person about what’s coming. This approach is especially useful when it comes to financial literacy for kids. Learning to manage money is not always easy, so set expectations well in advance.  

Ease your kids into a conversation about financial literacy this holiday season by opening up the topic at a good time for you both. You’ll want to be rested and ready to have a casual but critical talk about money. Mention the coming holidays and your wish for your kids to enjoy getting gifts for their friends and loved ones. Assure your kids that you want to set them up for success by establishing a budget and planning for reasonable spending. Then, schedule a time to sit with your kid and get started.  

2. Look at Funds and Establish a Budget 

When the scheduled time arrives, have your kid bring their piggy bank, purse, or savings account balance to the table. Bring paper and a pencil and sit together to review your child’s funds and establish a budget for the holidays. At this point, you will also want to decide if you plan to contribute to your kid’s budget. Say, for example, that you want your child to buy gifts for the other parent, siblings, or grandparents. You might want to pitch in for a nice gift “from your child.”  

Now is when you’ll discuss budgeting with your kid. Talk to them about wanting to have money left over after the holidays for other spending. Remind them that “it’s the thought that counts” and that gifts don’t have to be expensive. Together, you can come up with a total amount that makes sense for you and your kids. Finally, assure your kids that they will feel incredibly successful after sticking to a budget.  

3. Make a List and Determine Spending Amounts 

Now that you’ve established a budget, you’ll want to make a list of people your child wants to give gifts to. Be sure to include everyone, from parents and other family members to friends and neighbors. Talk with your kids about how it can feel overwhelming having so many people to give to. Reassure your child that not everyone on the list requires a giant, expensive gift.  

Then, break the budget down into spending amounts. You can set smaller amounts for people with whom your child is less familiar, like neighbors. You’ll likely want to set higher amounts, and perhaps contribute yourself, for immediate family members. This list, complete with amounts, will help you open up the next part of this lesson — the value of labor.  

4. Teach Kids Life Skills and the Value of Labor  

If your kid gets disheartened or frustrated that they don’t have lots of money to spend on gifts, use this as an opportunity. You can now discuss the value of labor; teach your kids that making gifts can be just as powerful as spending money. Give them options for different types of handmade gifts that can be special for loved ones.  

This lesson is also an opportunity to teach life skills and maximize family time. You can bake cookies together, teaching your kids to follow a recipe and measure ingredients. You can make ornaments or paint pottery. You can even build birdhouses together. Each of these handmade gifts comes from the heart, is personal, offers a chance to bond, and likely saves your kid money! 

5. Have Kids Purchase, Wrap, and Deliver Gifts 

Finally, with the money they will spend, take your kids to physically buy the gifts themselves. Have them bring their cash or bank card, work their way through the list, and keep track of their spending. Shopping together is another great way to bond, and you can share your budget and list with your kid. This way, they’ll see you modeling the behavior you’re teaching them.  

Once you’re done shopping, have your kids wrap their gifts and deliver them. Allow them to do an imperfect job at wrapping, putting their personal spin on decorating. When it’s time to give the gifts, encourage them to create handmade cards or tags with their signatures. The holiday season is a glorious time to instill the joy of giving, and the earlier you start, the better.  

When the gift-giving is over, and you’re home again, rested and relaxed, reflect together on your child’s accomplishments. Praise their learning processes, making specific points about their ability to budget and buy appropriately. Reward your kids with a nice hot chocolate and a fun holiday movie — another chance to bond. This experience is one they will remember for a lifetime, and it can be a fun and loving one. Financial literacy is an important skill to teach kids, and the holidays are a joyful time to do it.