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Mother and daughter holiday shopping on a budget.

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Tips for Parents:  Holiday Budgets—A Learning Opportunity | PDF

Español/Spanish: Consejos para padres - Consejos para padres - El presupuesto navideño – Una oportunidad de aprendizaje

Teaching kids financial responsibility takes more than just one conversation.  Seize opportunities to discuss budgeting and credit with your kids as often as they come up.  And as you create a budget for Christmas, give kids a valuable lesson by letting them be part of the planning. 

Cash Only

Many people spend all year paying back what they borrowed to pay for the previous Christmas—usually at a high interest rate.  Have your family start the New Year off right by spending only what you have available in cash, after other bills have been paid.  Next year, if you’d like to have more to spend, start saving earlier in the year. 

Save, Gift, Spend

As your kids receive money from chores or gifts, have them divide it into three categories:

  1. Save.  Experts recommend that we save a minimum of 10%.  Help the kids set up a savings account at your local bank, and encourage them to tuck away at least 10% for long term savings.
  2. Gift.  Help your children decide on a percentage of their money they want to save for Christmas gifts, and gifts for birthdays and other occasions throughout the year.  This should also include a regular giving plan to the charitable organization of their choice.
  3. Spend.  After they’ve saved a portion of the money and put some aside for gifts, they should be allowed to spend the remainder.  This is an important opportunity for kids to learn to make responsible spending choices.  Monitor what they’re buying and discuss responsible spending.  If they spend too much on one thing and are later disappointed, use the opportunity to discuss what they’ve learned for next time. 

Making a List

Help your child write a list of all the people they want to buy a gift for.  Often, their generosity far exceeds their funds, so you may need to help them size down their list if it’s too long.

Then, have them allocate a certain amount for each person on their list.  Show them how to divide the cash they have by the number of people on their list to get an idea how much they can spend for each person.  They may want to spend more on some people than others. 

Smart Shopping

Teach kids ways to stretch their Christmas budget:

  • You might have them kick off their shopping by visiting a couple of thrift stores.  They may be able to find gifts in good condition for a fraction of the price.
  • Help them think of gifts they can make at home such as cookies, paper or dough ornaments, or beaded jewelry. 
  • Show them how to look in the newspaper for sales, coupons and other promotions.  You might also help them look on eBay or Amazon to find discounted items.
  • Visit the stores for the remaining items on the list.  Teach kids how to compare prices and quality.
  • Don’t forget after Christmas sales.  They may be able to pick up gifts for later in the year at very low, after Christmas prices.

For More Information:

PBS Kids Managing Money: Creating a Budget
Family Education’s Teach Kids About Buying on Credit

You may also find these related Tips for Parents helpful:

Tips for Parents: Educational Gifts

Tips for Parents: Setting Goals

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