As a parent, and now as a grandparent, the holidays still hold a familiar challenge--I work to make sure that I create a special experience that 'counts.'  The holidays always seem to be a good catalyst for breaking things down, slowing things down, and really placing the focus on family.  It is experiences like this that make our children the adults they will become. Their foundation for defining the quality of life is built during childhood.  My children now have families of their own and I often reflect on what values I wish I had instilled while they were young; but I also take great pleasure in seeing where my husband and I were successful. 

One area that I wish that I had spent some time is financial literacy. Back when I was raising my own family, things were not so tough. My husband and I had a good life and I was extremely fortunate to be able to provide a very comfortable life for my children. Today the state of our economy is placing a strain on young families (well, to be fair, everyone) and this includes my own children and their families. I now think back to what I could or should have done that would have provided them with the financial skills to weather this economic storm. I realize that a great deal of this is out of the control of parents, but building a sound financial skill set for our children should be a priority and a goal, no matter what the current economic times may be.

With this in mind, what better time to start educating your children about money than the holiday season? It may be the best "gift" you ever give them.  It is challenging to teach our children solid money management skills when we parents and grandparents are not practicing them ourselves. So as we approach the holidays with the pressure to make it special and make it count, look at it as an opportunity to educate not just your kids, but yourself at the same time.

Five Tips for Teaching Your Kids about Money

Take a new approach to Christmas lists. There is a difference between what you want and what you need. Help your children identify their "wants" and "needs" on their Christmas or holiday gift list.  Take this opportunity to teach them the difference between wants and needs (realizing that more often than not this time of year is all about the want).

Choose a charity for giving.  You should set up a jar, or something similar, in a central area of your house for charity. Everyone in the family should be working to contribute. Once the holidays draw near you can use that money to purchase something for the charity or just donate the entire amount. Make sure your children have a very active role in this process; let them choose the charity, go with you to pick out the gift, and also accompany you when you present the gift to the charity.

Remember that saving is a learned skill.  The two things every child should have by age 5: a piggy bank and a savings account. Use the New Year as a way to teach them the value of saving. At the beginning of each New Year, let your child take the contents of that piggy bank and deposit it into their very own savings account. But be sure to let them keep out a percentage of the money if they want to, so they can buy something for themselves. If you never allow them to take money out of a savings account they will not want to save. With the younger ones, teach them about putting their coins in a piggy bank. Periodically empty their piggy bank with them and let them learn to roll their coins in coin wrappers.

Help children establish financial goals. If you haven't set a goal then you cannot reach a goal. Toys or games they want can become a lesson on setting a goal and working to attain it. This can work even with the younger set; just be mindful to keep the goal and the associated time frame to a period that works with your child's age. Littler ones would benefit from a week of saving to purchase a little item at a grocery store, for example. Your older ones can do a long haul and save up for a new video game.  As the New Year approaches, now is a great time to sit down and discuss your children's financial goals for the coming year.

Talk about Budgets. The holidays offer a great way to teach your children about budgeting. Involve your children in the gift purchasing process. Give them a budget to work with and then help them figure out what they can buy for the people on their holiday gift lists. This list would likely include special friends at school, teachers, care givers, and related. These people matter to your child and having to budget out one lump sum is a valuable learning experience.

I hope this gives some of you a different way to focus when it comes to the holidays and presents. I wish I had done a better job to educate my children about money when they were young. I realize now that I also have a lot to learn, but it is never too late to learn. So I continue on my journey to becoming a frugal widow. How about you?  What steps have you taken to teach your kids the value of a dollar? How have the financial times changed your holiday spending?

Related Posts:

Debt is Not Genetic

Keeping the Focus on Meaning for Upcoming Holidays

Helping Kids Start a Business

Judy Kline

Judy is retired and recently widowed. She is a contributing author for the Retired & Widowed blog where she shares what she has learned about living on a fixed retirement income as a widow. Judy is an amateur photographer and has nine grandchildren. Compensated CareOne Blogger

 To follow us click here