The holidays are just around the corner.  While you may not yet be decorating your house or buying gifts, there is one thing you need to do – plan your holiday budget.

Why a Budget for the holidays?

Having a holiday budget ensures you don’t go crazy overspending and end up regretting it.  It is easy to try to ignore your limits to get someone that one gift you know they’ll love.

But, the truth is you don’t want to do that for two reasons:  1) you can’t afford to and 2) your children are watching.

Do kids need one too?

Kids are sponges.  They see and absorb everything around them.

Chances are you’ve experienced it first-hand by hearing your child repeat an inappropriate word or phrase.  (Or, maybe that is just me 😉 ).

You teach your children everything they need to know from how to eat, to tying their shoes, to driving.  As a parent, you also make sure they learn how to manage money.

The holidays provide a great learning opportunity to teach our kids how to budget their money.

Helping your kids create their budget is pretty simple.  And, having a roadmap to know what to spend is going to help ensure they too, know exactly where they are spending and don’t spend too much of their own (or your) money.

Create a gift list

No. Not a list for your kids to write down what they want. They need to create a list of those people they want to buy gifts for this year.

Tell them to include everyone they want; teachers, coaches, family, and friends.  Don’t leave anyone off the list.

Assign gift costs

The next step is to ask your kids how much they want to spend on each person they listed.  Don’t tell them any limits at this point.  Let them do what they wish.

Total the spending

Once the list is done, calculate the total so they can see how much money they will spend.

At this moment, there is a good chance your child’s eyes will get wide or their jaw falls open with shock.  They may even shed some tears.

Let them know that you aren’t done. You are getting started.

Figure out how much they have to spend

Now that they see what they want to do, share with them how much they should spend.

That may mean an overall limit of $50 this year for all gifts. Only you and your child know how much they should be willing to spend on presents.

Make budget adjustments

Once they know how much they have available to spend, they will need to do one of three things:

1. Reduce the spending per gift
2. Change the gift to a “free” item
3. Remove people from the list

First, have them look at the amount they wanted to spend on each gift.  Have them lower the amount per person to see if they can reduce the total amount spent to all within their limits.

If they can do that – great!  They are done.

However, if they are still over the budget, they may want to try another option – change them from buying a gift to something else.

If you plan to do any type of holiday baking, maybe they can do that instead. Bake bread or cookies for a coach.  Even a handmade card is a gift a teacher would love rather than 20 “apple-themed” gifts.

The final thing they may need to do is reduce the number of people on the list. It may be tough but kids will see that we can’t always do everything we want.

While we may want to buy gifts for 20 people, the budget simply does not allow for that.  Kids need to understand this concept.

Applying the budget

Once you have the budget in place, the next step will be putting it into practice. The simplest way to do this with kids is with cash envelopes.

Review the list with your child.  Have them write the name of each person on the list on an envelope.

Then, add the amount they have to spend for that person into each.  When they go to the store to shop, they will be able to see how much they can spend on each person by looking in the envelope.

If they have $20 and the gift is $19.84, you will have to remind them that they have sales tax to pay so they have to find something that costs less.

You need to use a budget for the holidays – your kids should too!


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