5 Ways to Teach Children About Finance This Holiday Season

By Amy Irvine, Savvy Ladies Helpline Volunteer

“It’s the most wonderful time of the year.” Have you started to hear that song on the radio or in stores yet? If not, it’s coming! We love the song, but the reality is that this time of year causes a great deal of stress too. So how can you focus on savings, investing, and use this time of the year to teach financial lessons about giving and growing assets to your children? The Rooted Planning Group got together to provide the following ideas for you to consider and share:

1.Teach Them That Money is Earned

The holiday season is the perfect time to start new traditions. For Ann Arceo, a chore chart and an allowance is a great way to teach her little ones that money is earned through hard work: “We use a chore chart and stickers to pay out their allowance each week so they start to understand that money is earned, not just given to you. They get stickers for chores such as making their bed and making sure the playroom is picked up at the end of the day.” Helping kids, even the youngest ones, understand that money doesn’t grow on trees can be done in a playful and fun way.

2.Instill Saving, Giving and Mindful Spending Habits

With older kids coming back home for winter break, it can be a good time to have conversations that promote financial literacy. For Kerrie Beene, “There are so many lessons to learn about money over the years as your child grows up. With mine being teenagers now, they are having to learn to manage their money while away. Teaching them to think through what all they will need to purchase and the time frame is very important because when they are away, mom or dad will not be there to rescue them if they run out of money.”

Healthy money habits can be taught to younger kids as well. Ann helps her young kids learn basic financial skills by splitting their allowance using 3 jars: one for spending, one for giving, and one for saving: “We have them pay for certain treats with the spending jar, and they have also brought money from the giving jar to the food bank and to support other causes.”

3.Get Them Involved In Decision-making

If you’re planning to travel during the holidays, this is a great opportunity to teach your kids how to make smart money decisions. As Becky Eason suggests, When planning a family trip, get your kids involved in the planning process. Some ways to get them involved can be having them help pick out a hotel by comparing the costs of different options and looking up coupon codes to find the best price. If you’re driving to your destination involve them in estimating your gas costs based on your distance, average cost of fuel and miles per gallon for your vehicle. If you’re flying you could have them look at airline tickets to find the best rate. This could also teach them how airlines work in case they have to book a flight when they are older.”

4.Teach Them How to Use Credit and Debit Cards

According to a 2019 survey by WalletHub, 1 in 10 college students believe credit cards are free money. Introducing kids to credit and debit cards at a young age is a surefire way to promote their financial literacy. Kate Welker suggests to teach your children that when you use a debit or credit card to pay for items or withdraw money from the ATM, that takes actual money from your bank account that you had to put in there. When they see a cash transaction, that’s real money and a real connection, the plastic card doesn’t make the same connection for them.“

With all the shopping that goes into the holidays, comes a great opportunity to shed light on a very common misconception. “When I explained this to my children and further explained credit and interest charges, they were absolutely astonished. I’ve spoken with other parents who had the same realization when kids made comments about things being free when you used a card or that the box at the bank just handed out money. That was a great learning lesson as a parent, it is important to talk about how we deposit money into the bank and when we use a card to pay for something the money gets taken out of that account.”, shares Kate.

5.Trade Stockings For Stocks

Opening a 529 plan and funding it on special occasions is a great way to teach kids how to grow money. “We don’t have children, but we have lots of nephews and nieces. Over the years, we’ve always added to their 529 plans for their birthdays and holidays and provided them with a copy of the statement.”, says Amy Irvine, founder of The Rooted Planning Group. These tax-deferred plans have been recently expanded to cover K-12 education and apprenticeships, and any withdrawals that are used for education expenses are tax free.

Giving stocks as gifts is also a powerful way to teach children how to build wealth. That’s another way Amy is helping her nieces and nephews’ become financially literate: “When they turn ‘double digits’ (10), they then get to pick a stock worth $50 to buy. Each year we review their current stocks and discuss their new stock pick. As they’ve witnessed the accounts grow, they get more excited each year. With my oldest nephew, we’ve even started talking about saving for retirement when he gets a job (and he hasn’t even graduated from high school yet!).”

While these concepts might be harder to grasp for younger children, it’s crucial to start getting older children familiarized with investing basics so that it won’t be an intimidating subject in the future. As Kerrie Beene points out, “It is important to start introducing terms as they age. We began discussing the power of compounding interest when they were young teenagers and introduced stocks later in their teenage years.”


How are you planning to teach financial literacy to your children this holiday season? Do you have financial questions yourself? Contact the Savvy Ladies Financial Helpline to get free and confidential financial mentoring from an expert.


5 Ways to Teach Children About Finance This Holiday SeasonAmy Irvine, CFP®, EA, MPAS, CCFC, is the Founder and Owner of Rooted Planning Group, a planning group made up of 5 financial planners and 2 part-time staff members. She holds a Master’s Degree in financial planning and is a Certified Financial PlannerTM, Enrolled Agent, Certified College Financial Consultant, and a Financial Wellness Coach with over 26 years of financial planning and industry experience.

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