The holidays are a time of joy, giving and celebration, but they can also be a perfect opportunity to teach your kids about budgeting and financial responsibility. Consider giving your kids a budget and a shopping list as a bonus gift this holiday season to help them learn a valuable life lesson.

How to Help Kids Budget for the Holidays

Receiving gifts is always fun but giving can be just as exciting. A simple way to give your children a financial lesson this holiday season is to have them budget for the gifts they want to buy for friends and loved ones. Following is a step-by-step guide on how to help your kids learn how to budget during the holidays:

  1. Start with a conversation — Begin by having an open and age-appropriate conversation with your kids about money. Explain why you give to others during the holidays and how to determine how much to spend on the gifts you buy.
  2. Make a List — Ask your kids to choose two to three people for whom they would like to buy gifts. Encourage them to think about what each person likes and consider both store-bought and homemade gift options. This will help them plan their spending while also teaching them to be thoughtful in their gift-giving.
  3. Set a Budget — Involve your kids in creating a budget for their holiday shopping. Discuss the total amount of money they can spend. If they have an allowance or an after-school job, it should come from their personal savings, but stress that they shouldn’t use all of their savings. You can also allocate a specific amount you’re willing to provide. It can be as low as $10-20 per gift. Encourage your kids to be creative in finding ways to make the most of their budget.
  4. Create a Shopping Plan — Go to the store and look online for ideas. If they have a specific gift in mind, show them how to research prices online or in stores to find the best deal. This can be an interactive and educational way to practice critical thinking skills. Assign them the task of choosing items that combined do not go over their total budget.
  5. Stick to the Plan — Once your kids have created their shopping plan, it’s time to go shopping. You can make it fun by looking for deals on Black Friday or Cyber Monday. That way, they can purchase the gifts they want to give while also saving money. It’s important, however, to stick to the general plan. Don’t let them get mesmerized by deals on items that may not be as good a fit for their recipients or that could overextend their budgets.

Next Steps

After the holidays, sit down with your kids to reflect on their experience. Discuss what went well and what they learned. Talk about making this an annual exercise and how they can improve next year. This helps them develop a growth mindset and understand that financial skills are built over time. As your kids become more experienced, consider including food and decoration budgets in future exercises.

This message is brought to you by Iowa State Bank, Algona, in partnership with the Iowa Bankers Association.