Holiday Budgeting:
What Kids Need to Know

Holiday budgeting - sometimes those two words don't seem to belong together. We're surrounded by messages from retailers about Christmas sales and Christmas buying - but not so much about Christmas budgeting.

Still, this is a great time of year to teach kids about spending and budgeting. In fact, it can be one of the best because it is a short time frame with very specific goals. And, it also helps kids learn that spending and budgeting during the holidays is important - just as it is in other times of the year.

One of the best ways for kids to learn is from watching others and seeing examples. Parents can be one of the best examples no matter what age the kids are. This is true even if you aren't used to having a holiday budget or holiday spending plan. You can learn together...so let's get started!

• Names of family members and friends who will get gifts. If it can include the specific gift, that's even better.
• Activities such as traveling to Grandma's house or attending the neighborhood open house.
• Christmas tree and decorations. This is especially true if you buy a real tree each year.
• Any special charitable donations made during the holiday season. This could be contributing a new toy to Toys for Tots, adopting a family in need or contributing to a local food bank. For national organizations especially, it can be a good idea to check out the charity rating before donating.

Once you have the list, you need to add costs to each item. This is a very important part of letting kids know that even Christmas comes with a price tag. All lines get an amount equal to what you are willing to spend.

Putting a holiday spending limit on each person at the start will help down the road. This will help you not fall into the trap of figuring out the perfect present for cousin Pearl only to find out that it is double what you wanted to spend. So, first figure out how much you can or want to spend and then determine the best present for the money.

Add up all the lines to come to the total. How does it compare with your original Christmas budgeting total and the overall family budget?

Challenge yourself and the kids to think of ways to cut 10% (or your own number) out of the holiday spending list without changing who is getting presents or what you are doing over the holidays. Make it a game by looking at the Sunday paper or online for the best deals. This is also a great introduction to shopping for all other times of the year.

The earlier you can start this plan, the easier holiday budgeting will be. It provides opportunities to teach kids as you shop. It helps them see - in a very short period of time - how important it is to manage money to able to buy items that are needed or wanted. And that is an example that makes sense all year-round.