Now that everyone is in full holiday mode, most of us are busy making plans and creating to do lists of what all we need to do in the next 30 days. If you have kids, using the holidays as a teachable financial moment should be on that list. There are several opportunities to help incorporate financial wisdom in our holiday traditions.
Why should parents use the holidays to teach smart financial habits?
Most of our holiday traditions are centered around what our families did at the holidays. Unfortunately for some this includes having poor financial habits during the holidays. Modeling the correct behavior all the time is important when teaching your kids to be money smart.
What is the number one habit that parents should avoid teaching their kids?
First and foremost it is doing all of their holiday shopping with credit card and racking up huge bills. This can lead children to believe that the holidays are all about spending and that happiness can only be found with spending a lot of money even if you don’t have it.
What is another holiday habit that should not be passed down to the kids?
One of the worst is to head out to shop without a well thought-out of list of who should be receiving gifts from you. This behavior leads to serious overspending on the holidays because we are shopping without a purpose.
What can kids learn from smart holiday financial habits?
That the holidays really require planning and gifting within your means. That they need to feel good about giving what they can afford to give and avoid giving more just to make an impression.
How do parents reinforce this concept with their kids?
By involving their kids at an early age in building shopping lists and budgets. When looking for gifts talk about the value the gift brings to the person receiving it not the cost of the gift. For example if uncle Joe really loves chocolate covered cashews, it is alright for that to be his gift because he will really want that instead of the $75 holiday sweater that he will never wear.
Should parents talk about the mistakes they have made?
Yes, telling your kids that you overspent on the holidays and the difficulties that overspending caused you for the next 12 months is a valuable learning lesson. Perhaps one your kids won’t have to learn themselves. Giving personal testimony to the troubles that bad financial habits can cause is a very powerful.