As parents, every situation presents an educational opportunity. This certainly includes the holiday season! Even amid the adult stresses the holidays can bring, it’s still an ideal time to teach our children about money. It enriches their understanding of finances, especially as money deliberations are common during this period.
Why, you may ask? Because this is when the wish-lists burgeon with desired gifts, often exceeding the limits of feasibility. As responsible guides for our young ones, we need to manage these expectations and ensure that they remain grounded in reality.
1. NEEDS VS WANTS
A fundamental life lesson involves distinguishing between needs and wants. This isn’t just applicable to children but to us, adults as well. We all covet several items, yet it doesn’t necessarily translate to an essential requirement. Sometimes, our desires can exceed our financial capability.
This season makes a perfect time to teach our children this crucial distinction. I emphasize the basic human necessities, which are:
– Sufficient food for sustenance
– Adequate shelter equipped with basic amenities
– Proper clothing for protection against weather conditions
– Clean air for good health
– Enough sleep, something which is often underrated by many individuals
Despite this crystal-clear segregation, our offspring may not easily accept these categories. However, their arguments are not strong when compared to the fact these five elements are essentials for human survival. Everything else is a ‘want’, an often disheartening realization.
For example, the necessity of ‘shelter’ could span from a reasonably priced house to a luxurious mansion. While everybody requires shelter, nobody necessitates a million-dollar house. Beyond a certain point, a house transcends from being a ‘need’ to a ‘want’. By stressing this distinction, we can help children understand and manage their own desires, while teaching them the real value of money.
2. BUDGETING
Teaching budgeting is an integral part of our child-rearing curriculum. We don’t miss a chance to instruct our children from various angles on this topic. For instance, by explaining the cost of gifts and elaborating on our feasible budget, we get them involved in the process. We limit our family gift to $120 and individual gifts to $30 per child. Though this amount may sound small, it’s adequate considering the sea of gifts they receive from other family members and their already abundant belongings.
3. NEGOTIATION
This year, our two oldest kids wanted an Xbox One S, a gaming system well above our anticipated budget. To accommodate this, they proposed an ingenious plan involving bartering their old, unused belongings. They managed to make up the shortfall after selling these items. I agreed, but under one condition – they had to get rid of some of the other gaming systems they already had to make room for this new device. They agreed, and thus began an exercise in negotiation, sacrifice, and effort.
4. SELLING THINGS
We decided to sell two of our three PlayStations and several other electronics. Splitting the items based on where they would fetch the best price, whether on Game Stop, Amazon Trade-In, or Craigslist, they managed to earn over $200. This excess amount not only sufficed for the family gift but also reduced the overall holiday expenditure.
Instilling these everyday lessons in children is a daily challenge. The holiday season offers a unique platform for teaching the practical aspects of needs versus wants, budgeting, and negotiation. Allowing children to participate in budget decisions not only helps manage their expectations but can also reduce potential disappointments.
The principles of resourceful thinking and making compromises for sought-after items will set them up for success in their personal and professional lives. We can only hope that these lessons, taught during the holidays, will resonate with them throughout their lives.
How do you teach your kids about finances during holidays? Has it become easier or more challenging to manage their holiday desires as they grow older? Let’s discuss!
