The holiday season is synonymous with joy, festivities, and, for many, increased spending. Whether it’s purchasing gifts for loved ones or indulging in a sumptuous feast, the holidays often come with a hefty price tag. This can place considerable stress on family finances. But what if the holiday season was also a natural opportunity for imparting essential financial skills to our children?
As the holiday season approaches, parents may wonder how to best prepare their children for the inevitable spending that accompanies it. One solution is to focus on enhancing children’s financial literacy, equipping them to make prudent spending decisions. In this article, brought to you by TFNB Your Bank for Life, we’ll discuss two different approaches to achieving it: budgeting and charitable giving.
Budgeting for a Financially Savvy Holiday Season
The holiday season is a period when children and teenagers often receive financial gifts, allowances, or part-time job paychecks. However, without proper guidance, these holiday spending habits can set a precedent for financial behavior that continues into adulthood. It’s essential to help kids comprehend the distinction between needs and wants and instruct them on how to manage their finances astutely during the festive season.
The Holiday Budgeting Lesson
Many teenagers may be tempted to spend their holiday earnings recklessly, splurging on trends and treats. This presents a unique opportunity to teach them about budgeting and financial responsibility. The key lesson here is to instill in them an understanding of needs versus wants and how to plan for all of those post-holiday sales while staying within their means.
One effective budgeting method that can be introduced before the holidays is the 50-30-20 rule. This rule recommends allocating 50% of their funds to necessities, 30% to desires, and 20% to savings. TFNB offers a tutorial to assist teens and parents in implementing this budgeting method. Teaching teens to create a basic budget like this is a significant step toward achieving financial independence and managing their holiday spending judiciously.
Taking Action for a Financially Stress-Free Holiday
To put the lesson into practice, work with your teen to develop a holiday budget that clearly distinguishes between spending and saving. As part of this process, consider opening a personal savings account for them. TFNB provides a kid’s savings account designed for tweens and teens aged 17 or younger. Moreover, once they reach legal age, they can transfer their savings to high-yield savings accounts where their money can grow through interest. This is an ideal opportunity to educate them about the concept of compound interest.
Understanding where their holiday money is going is a fundamental aspect of money management skills. Encourage them to keep track of their holiday spending by using a budget-tracking app. Luckily, the TFNB app includes a built-in budget tracker, enabling them to conveniently monitor their holiday expenses and savings.
This holiday season, empower your kids to enjoy the festivities while also learning the importance of wise spending, budgeting, and saving for a financially stress-free holiday. This gift of financial wisdom will serve them well throughout their lives.
Charitable Giving During the Holidays
While it’s crucial to teach kids about managing their finances, the holiday season provides a prime opportunity to introduce them to the concept of charitable giving. This season is a time for generosity; a time to lend a helping hand to those in need. Involving your children in acts of kindness can be an invaluable life lesson.
Encourage your kids to allocate a portion of their holiday budget for charitable giving. This would skew the ratio we discussed above but you could still help your child figure in a percentage that works for charitable giving within the savings ratio. Engage in discussions about the significance of giving back to the community and the joy of making a positive impact on others’ lives. This imparts a valuable lesson in empathy and social responsibility that can have a lasting impact.
Here are a few ways you can help them get involved in charitable giving:
Choosing a Charity
Involve your children in the process of selecting a charity or cause to support. Research local Central Texas charities or identify organizations that align with your family’s values and interests. Discuss the impact their donation can have and allow them to have a say in where their contribution goes. This not only educates them about wise spending but also empowers them to effect positive change in the world. If you are looking for where to donate, here are some local nonprofit organizations — our Charity Champions — that are close to our hearts.
Volunteer Together
In addition to financial donations, consider volunteering as a family during the holiday season. Numerous charities and organizations welcome volunteers of all ages. This hands-on experience can help your children comprehend the practical side of charitable work and appreciate the value of dedicating their time and effort.
Setting an Example
Children often learn best by example. Lead the way by demonstrating your family’s commitment to charitable giving. Show them that you prioritize giving as a family value and engage them in discussions about why it matters. Sharing your personal experiences with charitable acts can be both inspiring and educational for your children.
Empowering Children for a Lifetime of Healthy Money Habits
Teaching children about wise budgeting and spending habits, and involving them in charitable giving during the holidays, lays the foundation for lifelong financial responsibility and fosters a strong sense of empathy. As they learn the value of managing their finances wisely and giving back to the community, they become better equipped to make informed, compassionate decisions throughout their lives.
TFNB Your Bank for Life — For Your Entire Family.
The holiday season is an ideal time to teach children how to manage their money wisely and instill the values of kindness and generosity. At TFNB Your Bank for Life, our team is here to support you and your family on this important life lesson.
Whether you’re ready to open a child’s savings account, or simply want to discuss your financial goals, our TFNB team members are here for you. Reach out today, and one of our friendly bankers will be happy to help.
If you have any questions or would like to know more about our banking solutions, contact us at 254-840-2836
