Teaching Kids to Budget for the Holidays
Budgeting is a key component for handling finances. Many people think about budgeting during the holiday season when deciding on gifts, travel and holiday feasts. This is a great time to introduce your kids to the idea of budgeting and why it’s an important life skill. Here is an idea to start the learning:
We encourage young kids to save for 3 things – Spend, Save and Give – typically using 3 labelled jars. The “spend” money is for them to buy whatever they want, the “save” money is to use later and the “give” money is to share. A common breakdown is 50-30-20. (50% Spend / 30% Save / 20% Give)
If kids are buying gifts for others, they can take that money from the “Give” jar. This is the start of understanding how to budget. It helps them visualize the need to keep within their limits. When the Give jar is empty, there is no more money to spend on gifts. If they have bank accounts and debit cards and money is less visible, help them to divide out their balances so they understand how to keep within their means.
So what happens when kids want to Give more than is available in that jar? Well, they can take extra from the Spend jar to buy gifts but let them know that choice could have after-effects. If they don’t mind, then let them shuffle. It’s all part of learning. Take pride in their big hearts.
Holidays are a great time to start building smart budgeting habits. The trick is to keep it going! You want them to learn this valuable skill now and use it all year long. Happy holidays everyone!