With all the toys, gadgets, and games your kids may receive this holiday, there's always that one relative—or five—that will gift them a fistful of cash.
And while the holidays can be a hectic and busy time of the year, it can also be the perfect opportunity to teach kids about how to manage that money and prepare for the future.
According to a 2017 study by TD, 94 per cent of Canadian parents consider themselves the biggest influence in the development of their child's money management skills. But nearly a third of these respondents (31 per cent) also say they find lessons around developing healthy financial habits hard to bring up.
So, how can you leverage the festive season to teach your kids valuable lessons around saving, spending and giving back? Here are three money management lessons to unwrap in order to help:
Save a percentage
Add up all the cash gifts your child receives and discuss how much of this as a percentage to save with them. Whether you choose 30 per cent, 40 per cent, or even 50 – saving a portion each time they receive a monetary gift can help kids understand that saving money is a priority, and a building block of financial health.
It may be useful to make the act of saving more visual. For instance, grab an empty jar or piggy bank, and drop in the holiday cash. When your child receives money for special occasions—such as birthdays—add that savings percentage into the jar or piggy bank as well. This way, your child can begin to understand how money accumulates when it's saved, rather than spent.
To further instill the habit of saving, consider depositing accumulated funds into the child's own savings account. Your child can begin to see how their money will grow and how it can be used toward short-term goals, or toward longer-term goals such as future university, college, or other plans.
When kids do spend, it's important to encourage them to spend smarter. While you may want to give your child the freedom to buy what they really want with the money they receive during the holidays, you can still to use the opportunity to help them understand price comparison.
If your child points out something they'd like to purchase, show them how to price compare: suggest looking out for upcoming sales for that item, deals at another retailer so they can save more, and so forth.
Get kids into the spirit of giving and consider encouraging them to donate to a charity or cause, an act that can also serve as a reminder that the holidays are a time for giving as well as receiving.
While there is no specific amount that one must donate, consider applying the percentage approach here as well. Your child may gain a valuable lesson beyond how to manage money and learn about the importance of sharing and helping those in need.
For additional tips on how to help kids develop healthy financial habits, visit the TD Smart Money Parental Toolkit – an online resource for parents to browse by a child's age, and learn out about developmental money milestones for each age group.