Welcome to Issue #024 of The Money Messenger!
The Money Messenger brings you the latest on your kids and money.
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The Money Messenger
In This Issue
November is here - and so is the official start to many winter holidays. While the traditional shopping kick-off is the day after Thanksgiving, there are already plenty of Christmas items in stores in our area. And the Christmas music is playing non-stop on two different radio stations. This issue focuses on holiday spending and budgeting to help your kids and family enjoy the holidays in spirit as well as financially.
A reader's question on what options there are for helping kids understand holiday spending and how to manage it
Note from Jennifer
My yard is covered in more leaves than the trees and the days are getting much, much shorter. Between that and the Christmas ads (including that giant Toys R Us catalog in last week's paper), it feels like the winter holidays have already started. Good grief - the Halloween candy isn't even stale yet!
Having the holiday spending season start early can be both a great chance to save money and spend wisely - and to spend every day for the next two months. The challenge is trying to figure out which path you and your family are going to take. That's where this month's articles plus a free downloadable ebook that can help.
Grab some leftover Halloween candy, a mug of cider or some hot chocolate and enjoy!
Holiday Budgeting for the Family
When we think of teaching kids money skills, we may not think of holiday spending and budgeting. It might seem odd to think about holiday spending with kids - since it seems like a good chunk of the holiday budget can get spent on them. But there are plenty of other holiday spending decisions that they can be part of. Here are some ways to think about holiday spending and budgeting as a family.
- Brainstorm on all the holiday expenses that happen in the last two months of the year. It may not just be gifts. Are you traveling to see family? Do you host Thanksgiving with all the trimmings? Do you plan to make some extra donations to charity? Write it all down.
- Put a price tag on all those items you just listed. Just get close - and don't worry about cutting anything out just yet.
- Use your priced list to make a family budget that is just for the holidays. If you already have a family budget, this might be a little easier because you have a routine. This is where you look at how much things cost and how to pay for them. You may decide to put some on the credit cards or use layaway. How you manage the expenses is really up to you - the important is having a plan and not looking up to find yourself completely off track.
- Track what you are actually spending - and have the kids help. When you get to this part, the other steps you already took may start to seem easy. Tracking what you are spending can be tedious and hectic at the same time. It can be easy to get overwhelmed during (or even after) a day of holiday shopping when you've made great progress on your list. Writing down what you've spent next to what you thought you would spend is a key step to staying - or getting back - on track. Get the kids involved by having them be responsible for certain people or types of expenses. Have them keep the receipts and fill in that part of the holiday budget chart.
- Adjust and move on. If you spend more than you thought you would, it can be a little defeating. Don't let it be! If you figure out that you've spent a bit too much early on, you can take steps to make up for it in other areas. Even if you can't shift things around to make up for the extra money spent, you can use it as a reminder to stay on track with your other spending. Go through this exercise with your kids so that they can see how the budget gets updated. That can help them make a connection that all the money skills, tools and rules don't disappear during the holidays.
Find even more great tips on keeping holiday spending in check in this free downloadable ebooklet!
Helping Kids and Teens Understand Holiday Gift Costs
As kids grow into their preteen and teen years, it seems like their Christmas lists can get shorter - but more expensive. They may only want three things - but those three items are a new smart phone, a laptop and the latest gaming system (or Rock Band version).
For kids or teens that have been managing some of their own money, talking to them about their gift list and how that fits into family finances, can be a little easier. They may have a better idea and appreciation for how much things cost and how long it takes to earn or save the money to buy them. If your kids are too early in their money education to have this basis, there are still ways to help them connect day-to-day expenses with their holiday wish lists.
The tips below are some basic ideas to get you started. Change them up as you need to depending on your kids and their lists.
- Let them make their lists first. It is so tempting to try to guide and encourage kids to make a "reasonable" list - and not let them dream a little. That can spoil their fun - and take away a learning opportunity. You can suggest they include all types of things such as clothes, electronics and games.
- Once they have the list, help them look up the prices for each one. They may know the prices or at least have a good idea. Have them look it up anyway. If your teen's money management skills are a little more developed, they can be encouraged to do price comparisons between department stores, Amazon and eBay. They can write all the prices down so they can appreciate the differences (or lack of much comparison if it's a hot item).
- Have them add up how much it would cost to buy all the items on the list. This may cause them a bit of sticker shock depending on what their list has on it. Have them compare that total to what they would need to earn in allowances or through their babysitting jobs. Putting the costs of their wish list in money terms that are relevant to them can make a difference in how they think about their lists.
- Help them review the list again and prioritize the items on it. Have them choose their number one most wanted gift and put a "1" by it. Do the same thing for number 2, number 3, etc. until everything on the list has a number. Add up the cost of the top 5 items. These may be the most expensive - or not. Have them look at their list and show them how they may be able to get one expensive item - or five cheaper ones for the same cost.
- Encourage them to think about how they would view the list if it wasn't theirs. This one is a stretch. The goal is to have them think about buying the items on the list if it were someone else's. Would they think that the requests were too expensive? Would they struggle to buy even one item on the list? Or would they think that the list was a nice balance of expensive and less expensive items?
- Have them think about other people's budgets. This is similar to the tip above. While you don't want to get into a detailed discussion about other people's holiday budgets, kids and teens need to understand that most people have lots of others they buy for, and they are trying to spend their money wisely. As they get older and start buying more gifts on their own, this will be easier to understand. It can also help to have them involved in the family holiday budget - even if they are not contributing any money.
Use these pages to get started on all aspects of kids and money:
teaching children about money,
preteen money management or teen money management
Consider A Different Kind of Giving as a Holiday Spending Alternative
While the holiday season seems to get alot of attention for the sales and the spending, it is also a time in which many people give freely to others in need. It can be part of the holiday spirit for some as they want others to be part of that joy as well. It can also be that everyone (or almost everyone) feels more giving this time of year.
No matter what the reason, giving and volunteer opportunities multiply during the holiday season. That may make it a great time for you, your kids or your family to try something new in addition to your holiday routine. Here are some ideas to consider:
- Adopting a family or child in your local area. There are many organizations that help pair up people willing to buy Christmas gifts for families or kids who will likely not get any gifts without the generosity of strangers. You can usually find a program like this through your local Red Cross, community center or church.
- Make a family donation to another part of the world. Heifer Project International uses charitable giving to make a difference by using donated money to purchase livestock for families in developing countries. Those families use their livestock to become self-sustaining and help out their neighbors. In turn, they pass it on by helping another family get livestock. This can be an especially fun way to get kids involved since there are animals and you can make very small donations that really matter.
- Volunteer...to gift wrap, to serve a holiday meal, to sing carols... There are so many options to serve during this season when everyone wants to make sure that no one is left out. There are plenty of ways to join an organized group - or to visit a local nursing home on your own.
While there may be even more ways to give during the holiday season, it can also be more challenging to do so. Budgets are already tight with added expenses, and everyone seems to have less time. That's when taking a deep breath and finding ways to help others can matter even more. Plus, it's a good reminder for kids of what the holiday season is all about.
November 21st is National Family Volunteer Day. It's co-sponsored by Disney - and has the Incredibles as a great family example of working together. Why not give volunteering a try on that day?
Ask the Editor!
Here's where I answer your questions. Greg writes that his family hasn't done a holiday budget before but that they plan to start this year. His kids are 8 and 10, and he'd like to make sure they are involved in making the budget and sticking to it. Here's the advice:
Getting kids involved in the holiday spending and budgeting can be a great idea. It can also be a great idea that goes down the tubes pretty fast when things get hectic. The key is to keep it as simple as possible and to give each person specific areas of the budget to manage once the whole family has figured out the budget. Here are some kid-specific ideas:
- Give each kid an area to handle that they find interesting. Just like anything else, if they want to do it because it sounds fun or challenging (or weird), they will be more likely to do it and do it well. Heck, give everyone titles: Decorating Queen, Gift Wrap Guru, Christmas Dinner Diva to make it even more fun.
- Don't assign tasks that are over their heads. You may really, really want them to itemize every receipt into a nice, neat logbook you have created. But, that won't work for most 8 or 10 year old kids. What can they do - and still accomplish the tracking of what gets spent against the budget? Maybe it's writing it all in a notebook that is just for their job as the Gift Wrap Guru. Maybe they want to have a filing system for all receipts and a post-it that has a running tab on it. If they can develop their own methods and systems, they will be more likely to carry those into other parts fo the year for their own money.
- Have a weekly family meeting where everyone "presents" their results. This helps keep everyone - not just the kids! - on the same page and gives you a chance to see if the Decorating Queen is keeping the budget under control - or if that last pack of lights that Dad bought put them over the limit.
- Be careful not to blame them for spending too much - unless it really was only their spending that did it. At these younger ages, it's not as likely that the 8-year-old has spent too much money on Christmas dinner. That can change as kids grow into teens so this tip needs to vary depending on the child and their spending responsibilities.
- Have fun! It is still the holiday season. Don't suck the fun out of it by bogging down the kids with what can start to feel like a job or at least like homework.
Check out even more ideas on tracking holiday spending with this free ebook and Christmas budget tips at this page.
Coming soon...the next issue of The Money Messenger
December is a month of celebrations - Christmas, Hanukkah and Kwanzaa - as well as the month to start thinking about the new year. Next month's issue will look at both the year that has been - as well as some things to get ready for the new year. If you have questions you'd like to see addressed for that issue, just use the Contact Form or email me at email@example.com.
Talk to you soon!
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