By Shannon Ryan, CFP®
Your children will soon be gleefully opening their presents, and many will receive cash and gift certificates as part of their Christmas bounty. Once all the festivities come to a close, they’ll be eager to rush to the store and spend their windfall. While I certainly agree they should buy a highly coveted item or two, I would also encourage parents to use this opportunity to teach your children how to save, spend and share.
While I want my girls to know four quarters equal a dollar, it’s even more important to me that they know how to use those four quarters. I taught my daughters that every time they earn or receive money they have three decisions to make.
1. They can save it to purchase something later.
I ask my girls, “What’s worth saving your money for and not spending it right now?” This becomes their long-term save goal. It should be something your children truly desire and are highly motivated to achieve. In my book, The Heavy Purse, my girls are saving for a playful puppy and humongous dollhouse. They still continue to enthusiastically set aside money for their save goals.
Success Tip: Make sure their goals are realistic and obtainable. For example, a pony is not a realistic goal for most. But perhaps there’s a local place that offers horseback rides, which is a more reasonable goal.
2. They can spend it on something right now.
I ask my girls, “What’s something you want to spend your money on right now?” There’s generally no shortage of things they want right now. If your children have quite a few items they want, I would suggest you have them compare each item to another to find out which one they want the most.
Success Tip: Let your children know they don’t have to spend all their money immediately. Money smart kids always keep a few dollars in their spend jar, so they have money available when they find something they want later.
3. They can share it with someone they love.
I ask my girls, “Who’s someone you love with whom you want to share your money?” I believe sharing enriches our lives and want my girls to get in the habit of regularly sharing their money. They have used their money to buy cookies to share with their Grandpa and shared their money with a local animal shelter to help kittens waiting to be adopted.
Success Tip: If your children are new to sharing, make it fun and tangible. Don’t just send money to an animal shelter, but purchase items they need and deliver them to the shelter.
By slowing down and helping your children think about how they want to use their money, they’ll make decisions that align with their values and be on their way to becoming a money smart kid.
Shannon Ryan, CFP® is a Certified Financial Planner and a Mom on a mission to help busy parents teach their children simple, value-based principles that guide their money decisions and support their long-term financial well-being. Shannon wrote The Heavy Purse to help parents start money conversations with their children through a fun, bedtime story and developed companion workbooks to help deepen those conversations. Visit her website at TheHeavyPurse.com to learn more on how to raise Money Smart Kids.