Holiday Cash and Kids

How do you turn that $25 holiday check from grandma into a financial lesson without taking any fun out of the season (and generating a lot of eye-rolling and moaning)? 

Here's an idea inspired by Nathan Dungan and his company, Share, Save, Spend, whose curriculum helps people figure out how to balance saving and giving with our limitless desire for more new stuff. You can guess where I'm going with this.

Cash gifts put parents and children at odds. A well-meaning mom or dad wants to teach the value of saving for a rainy day, but the kids want to buy the latest iGizmo. If the parents rule, the children resent the forced lesson. If the children rule, the parents feel guilty for missing a teaching opportunity.

You can try approaching your kids by combining your goals. Tell them they can buy whatever they want with some of the money as long as they save some and donate some. You'll demonstrate the basic money management skill of balancing today's wants with tomorrow's needs, all while offering a good lesson in generosity.

As the parent, you choose the proportions that go to each goal. Consider some of these notions for tailoring the idea to children of different ages.

Your kids probably don't need help deciding how to spend their money. Young ones will need help figuring out whether their budget fits their desires. Help them choose something within their means. For children of all ages, you'll demonstrate a better lesson by resisting the urge to throw in a few extra dollars if their budget runs short.

Don't steer your children's spending decisions. You might know they will quickly lose interest in this year's must-have-toy, but they don't. They're just starting to accumulate those regrettable experiences that eventually teach us how to spot a bad buy.

You can't go wrong with a piggy bank of some kind to teach saving to young children. They can heft the money, rattle it around, count it when they get bored, and see it pile up over time. Slightly older children may be impressed by a trip to the bank to set up their own savings accounts.

If you have 'tweens and teens who aren't impressed by anything, consider helping them establish an account at an online bank. They will benefit from generally higher interest rates that will expand their savings faster than brick-and-mortar banks, and you'll look a little technologically savvy. Right now, you'll find rates above 4% at the online affiliates of Capital One (NYSE: COF  ) , HSBC (NYSE: HBC  ) , and ING (NYSE: ING  ) .

If you have a budding entrepreneur in your household, introduce the idea of stock ownership. They can start out right here at Teens & Their Money, where they can learn the basics of investing and be inspired by other teens.

This may be the hardest part to tailor to the littler ones, but most kids do understand how a gift helps someone in need. Help your child pick a cause they can relate to. If they're into animals, consider your city's zoo. If they love bugs, they could help protect the rainforest.

Older children and teens are learning more and more about injustice. Here's a chance for them to explore some organizations working against it. Charity Navigator directs you to groups that will put their donations to good use.

Looking for more ways to teach children money management?

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