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Raising Generous Children

Developing Healthy Money Habits This Holiday Season

Last year, my kids had their first interaction with Legendary Santa. While they were captivated by all the wonder of the experience, their favorite activity (to my surprise) was visiting the Fawn Shop with their MaeMae and PaPa and purchasing gifts for my wife and me using their Fawn Bucks. They beamed when they handed us the bagged gifts that went under the tree until Christmas morning.

 A few months later, we learned just how much it meant to them when our three-year-old noticed the gift she had surprised Mommy with was now in a box of items destined for Goodwill. 

Did my preschooler think her gift wasn’t appreciated? Did she relate her Fawn Bucks to money? I can’t say for sure that she did, but she knew she had given up something that was hers (that Fawn Buck) to get a holiday gift for her mother.   

According to Habit Formation and Learning in Young Children by Dr. David Whitebread and Dr. Sue Bingham at University of Cambridge, children have already begun forming financial behaviors by the time they reach age seven. The good news is you don’t have to rush out to see Legendary Santa for a financial lesson this December, although the good folks with Legendary Santa and the Children’s Museum would appreciate your visit. You can begin lessons about money with your kids at home. 

For Preschoolers 

At this age, children are watching and imitating everything you do – good and bad! Let them join you as you buy and give gifts. Explain that you are going to pick out a gift for someone else, and let them see your excitement over finding the right gift. Have cash ready before you go shopping. Let your kids hold the money at the store or give it to them before you leave home and have them hand the money to the cashier. If you use real money, there will be change to count. Be forewarned, they will ask to keep it. You might reward them for helping you shop by letting them make a deposit into their piggy bank. 

For Early Elementary Schoolers

According to those researchers at Cambridge, once kids reach the early elementary years, they begin to understand that goods have value. This is also a time that lends itself well to letting your children make decisions. You can give them five dollars and tell them they can pick out and buy a gift for their sibling, parent, grandparent, or friend. Anytime the costs are controlled, you can create an experience that lets kids feel like they are making the decisions. They get to experience using what they perceive to be their own money to purchase an item for someone they care deeply about. 

If you have a large family with a lot of cousins or a friend group with little ones around the same age, you might consider having a gift exchange and using the shopping method above. 

For Children Receiving an Allowance 

I know allowance can be a divisive topic for parents and caregivers – when or if to start, receiving or earning, the list goes on. Regardless of your decisions on timing or approach (although I do advocate for starting early), you want to begin teaching kids about saving and giving as soon as possible.   

While there are many different strategies, one simple way is to have multiple jars (or piggybanks) for their allowance: a spending jar, a savings jar, and a giving jar. The holidays present a golden opportunity to initiate this idea because of the excitement they are already feeling about gift-giving and receiving. Have fun with it – decorate the jars and make a big deal about getting the money out of the giving jar when it’s time to take them on their gift-shopping trip.  

In no time at all, you’ll be moving on to budgeting conversations. What happens when they have a total of $20 dollars in their jar and they want to buy gifts for four people?

No matter which of these stages you may find yourself in, the key is to talk with your kids about saving, spending, and giving, and allow them to be part of the process. Your children are observing and learning financial habits, and the holiday season is the perfect time to make sure those habits are the right ones. 

And in case you’re wondering, that plaid ’Tis The Season plastic tumbler from the Legenday Santa Fawn Shop at CMoR did make its way back to our pantry this holiday season – much to the relief and joy of our daughter and her parents.

Mark Hipes is a financial advisor with Seven Hills Wealth Advisors, a private wealth advisory practice of Ameriprise Financial Services, LLC. During a 14-year career in higher education, Mark completed the CFP exam before transitioning into the role of advisor. Mark, his wife, and their two young children love living, working, and playing in RVA. Learn more about Mark’s services at Seven Hills Wealth Advisors.
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