Using Christmas Shopping to Teach Kids About Money

by Emily Guy Birken

When your children are small, maintaining the magic of Santa Claus can potentially throw a wrench in their financial education. Since “Santa” is bringing presents, then it can seem perfectly reasonable for them to ask for expensive gifts. They may understand that Mom and Dad aren’t made of money, but Santa ought to be.

But no matter how old your child is, or whether they still believe in Santa, it is possible to use the Christmas season and shopping for presents as an opportunity to teach them about money. Here are some ways you can make sure your kids survive the holidays without a case of the “gimmes!”—and with some new understanding of finances:

Wants vs. Needs is a perfect holiday lesson

use Christmas shopping to teach children about money.

Ask your children to help you create a gift buying budget.

Understanding the difference between a want and a need can be difficult for young children (and some adults). Wanting something can feel so very intense that it can be hard to stop and evaluate whether the item is really a necessary addition to your life.

One fabulous suggestion from Susan Beacham, financial literacy expert, is to have your kids ask for three wants and three needs for the holidays. For younger kids, this pared down wants/needs list can be sent to “Santa Claus,” while older kids can talk to you about what they need versus what they want for the holidays. With all kids, you can discuss how you can determine if something is a want or a need, and how both needs and wants can make for fantastic gifts.

Have your kids help with gift budgeting

Even if Santa is still visiting your kids, they do recognize that Mom and Dad spend their own money on gifts for aunts, uncles, cousins, grandparents, and friends. This is a great time to include them in your budgeting decisions. Tell them how much you can afford to spend on each person, and have them help you think of gifts within your price range.

If you do your shopping in the mall or other brick-and-mortar stores, bring cash to spend. Not only will this save you from the potential credit card hangover in January, but it also gives your child an opportunity to see money disappear as it is spent—and to practice money and math skills like figuring out how much change you will receive and paying with exact change.

Give to charity

Donating to a toy drive is one of the most lasting lessons you can give to your children during the holidays. Children will often pick out a toy that they themselves really want, and will have a great time wrapping the present before giving it away. This will help them to understand the importance of giving to charity—because a toy they really like is much more tangible for young kids than giving money away would be. In addition, including your charitable giving in your holiday budgeting is an important lesson for children about how to use their money.

The Bottom Line

Just watching the news coverage of Black Friday can make you feel like the Christmas season is all about consumption. But it’s really a great opportunity to help kids (and adults!) remember how much they have in their lives and to learn responsible money skills. Start young, and your kids will grow up understanding that it’s not necessary to spend a lot of money to have a Merry Christmas.

Photo credit: Alan Cleaver

Published or updated November 27, 2012.
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