Should I make my kid pay for the gifts she gives to other people?
Questions about kids and money keeping you up at night? This series answers them so you can get some sleep.
When holidays and birthday parties roll around, how should you and your kid handle the question of how to pay for gifts? Like many areas of family finance, one size does not fit all—the answer depends on your family’s budget and your kid’s age, among other factors.
It’s probably not practical to expect young children to pay for other people’s gifts out of their own small allowance (if they get one) or money they’ve received themselves as gifts. But as your kid gets older and heads to middle school, it can make sense to expect her to pay for, say, a friend’s birthday gift.
It’ll mean so much more to your kid to give that gift, and she’ll weigh the choices involved in the gift-shopping experience differently. If you’re giving her an allowance, feel free, if your circumstances allow, to ramp up the weekly allotment so that it’s sufficient to cover the occasional gift. Remind her to save some of that allowance money so she’ll have enough, when the time comes, to get her friends the things she wants to give them.
The holidays—so many gifts, in such a short time—may tempt your kid to overspend, or to feel like she’s falling short if she can’t afford to get everyone on her list an expensive present.
Instead, tell her to get creative!
Grandma (and Grandpa, Aunt, and Uncle) will probably value an afternoon outing with her more than any purchased gift. Your kid can make an “IOU a Day Together” certificate that Grandma can redeem at will. She can give a few dollars to an organization that she knows a friend or loved one cares about, in that person’s name, choosing whatever amount she can afford.
Homemade gifts beat store-bought, especially when a bit of care and creativity go into them.
If your kid does want to purchase gifts for some folks on her list, encourage her to put a modest cap on per-person spending, perhaps equal to her age. When you go present shopping together, use the opportunity to teach her other valuable money lessons.
Point out gimmicky holiday “specials” and sentimental sales pitches that may lure her into paying more than she should or buying something she doesn’t want to give. Encourage your kid to comparison-shop for an item she’s interested in at several stores before plunking down the money. Oh, and if you’re helping her with the purchase, make a point of refusing those inevitable store credit card offers. Their interest rates are usually through the roof.
Finally, remember that our kids are constantly taking mental notes on our own spending habits. If we always overextend ourselves to get our loved ones (including our children) lavish gifts, they may feel that to demonstrate true generosity of spirit, they must do the same. Practice what you preach, and you’ll raise a thoughtful gift giver.
Got more questions about how you should handle kids & money issues? Send ’em in! Watch this space!