Raising financially aware kids during the holidays

Sahirenys Pierce for RYOT Studio
·7 min read

The holiday season is a great opportunity to teach your kids about being financially aware. You can do this through all kinds of family traditions: by sharing the gift of giving or by developing a budget for the holidays. These family traditions can benefit every family member—even kids. Being financially aware during the holidays is a tough topic for many parents to discuss with their kids. But it doesn't have to be if we just sprinkle some holiday spirit on top.

Why is it important to raise financially aware kids?

With holiday deals at every store, cash becoming more obsolete and technology making every purchase just a single click away, it’s important to set positive boundaries when managing our finances. Our kids are watching our every move and learn from observing our behaviors. That's why it's so important to create good money habits that flow with our daily routine, because these will be the money habits our kids will most likely take with them into adulthood. But good money habits aren't something you just talk about, you have to put them into play.

The holiday season is an excellent time to show your kids how to manage money and prioritize your family's values. The goal is to find little pockets of opportunity to teach your kids without making it too technical during a fun time of the year.

Use the holidays to create fun traditions around money

There are a ton of ways to create budget-friendly family traditions during the holidays. From making cookies to wearing matching cozy socks, the list can go on and on. During my family’s debt-free journey, we came up with some interesting ways to turn our budget cuts into family traditions. Even though we initially made these budget cuts to pay off debt, now that we’re debt-free these habits kinda stuck to us. So when the holidays come around, we have a bucket list of fun opportunities to teach our kids about money and how to be financially aware.

Use sinking funds to save

One of the best ways to get everyone excited about the holiday season is to hype them up as the holidays get closer. You can do this by starting a “sinking fund,” a separate fund where you set aside amounts of money over a period of time to achieve a final budgetary goal. You can use the time leading up to the holidays to teach children how to set funds aside - with their weekly allowance, for example. Then you can carry over the learnings by continuing conversations around sink funds throughout the year during your monthly family budget meetings where you openly discuss your financial responsibilities and family goals. You can even start the conversation early for next year! Your kids don’t have to sit in and get into the fine details of your budget every month. But you can get them involved with how much and how often you’re saving. This small habit shows your kids that you're saving for your family's wants and needs proactively and effectively.

A great way to visualize your budget is by creating a holiday-specific savings chart that the kids can color in and add stickers to. Every month that you save towards the holidays, your kids can color in a new section of the chart until the holiday is here. This teaches your kids that each section is worth X amount and they're consistently motivated to keep coloring in the sheet to achieve the goal.

Sahirenys Pierce and her daughter create a festive holiday fund chart.
Sahirenys Pierce and her daughter create a festive holiday fund chart.

Implement a secret Santa tradition

Secret Santa is the best hack for families to turn budget cuts into a family game. It brings a new level of mysteriousness and excitement into the holidays, because you don't know who has whom since it’s all a surprise. Doing a secret Santa is great for budgeting because you can all agree on the rules and the spending limit. But secret Santa doesn’t have to stop at home; it can be implemented between friends and co-workers. To keep things simple, you can either draw names out of a hat, bowl, or use a site like elfster.com.

Make it a tradition to pick your secret Santas ahead of time, like after Thanksgiving dinner. (It’s the perfect time to try new traditions since celebrations will already look different this year.) This way you get enough time to shop around for the best gifts and sales. Plus if you use sites like elfster, you're able to see what's on your family members’ wish lists. This can be a fun project for the kids to look up gifts for themselves and to consider gifts that others want and value.

Remember to budget for non-gifts

Outside of making a budget secret Santa, you need to budget for non-gifts like food, decor and supplies. Your budget may include making homemade ornaments, baking sugar cookies or sending out holiday cards. But this is also a good time to budget for items that need to be replaced. The best way to do this is to create a holiday checklist before setting a budget. You want to check if the holiday lights still work, or if you need batteries for any decorations or toys. To stay within your holiday budget, make sure you're being smart and cost-effective while not limiting quality. This could be buying batteries from Rayovac to help you save time and money, by getting you the performance you want at the price you need.

This is also a great way to teach your kids to be aware of the hidden costs of the holidays. Practice making a pre-budget list with your kids of items you need and items that need to be replaced.

Use ‘Add to Cart’ to help you budget

Comparison shopping has never been easier now that we can just add to the cart from the comfort of our home. That’s why it’s important to learn how to maximize the “Add to Cart” button to your benefit. Our kids might see us shopping online and think that it’s easy to just keep adding to the cart. But what we need to show them is how we’re comparing prices and still staying within budget. This also allows us to view how much the total is before checking out, which includes taxes and shipping. During this holiday season, online shopping can be more realistic due to the safety measures of the pandemic. It's important to curve bad online shopping habits and use the add to cart strategy to shop smarter.

A good exercise here is to let your kids compare two stores and practice adding items to the cart. They need to understand which items cost more, how taxes increase the price and that shipping isn’t always free. This will also teach kids to not procrastinate when ordering gifts online. You want to make sure that your order comes in on time and that you have enough money saved beforehand to take advantage of sales.

Sahirenys Pierce and daughter are almost done filling in their fund chart - and it looks as if they may have reached their goal!
Sahirenys Pierce and daughter are almost done filling in their fund chart - and it looks as if they may have reached their goal!

Choose quality over quantity

The last tip I would share with my kids during the holidays is that more isn’t always better. When it comes to quality and performance you want to give gifts that are worth it. Giving or receiving a lot of gifts that are poorly made can result in them just ending up in the landfill. Make sure you’re gifting quality toys and items that your loved ones will want to hold on to. But when it comes to purchases that don't limit the quality and performance of your gift, then go with the smart, cost-effective choice. There is a difference between cheap and frugal, which is a great lesson to learn when raising financially aware kids.

Parenting financially aware kids

Parenting can feel as if you're never doing enough and the holidays are no exception. Keep in mind that teaching your kids about money shouldn't feel like a chore but like a family routine. Making family traditions that create fun memories while teaching our kids to be financially aware is a parenting goal. These traditions can expand past the holidays and into everyday opportunities to teach your kids about money.

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