Happy kids, healthy budget – it is easier than you think this holiday season
By Wouter Fourie CFP®
FPI Financial Planner of the Year 2015/2016
With a short public school holiday before the last quarter and a Christmas holiday looming large, the time is ripe to teach your children the benefits of budgeting and spending their money wisely.
I can just hear your objections to the above statement: “It’s the holidays, can’t we relax a little without turning everything into a teaching opportunity?” or “Let the kids enjoy themselves. It’s been a long year and I want to spoil my family” or even “I don’t have any money for the holidays, so why bother!”.
While these concerns are valid, it shouldn’t necessarily be a problem. With a little bit of careful planning you can establish sound financial principals and have a wonderful and relaxing holiday - away or at home.
Keep in mind that the retail marketing machine kicks into its highest gear over Christmas and teaching your children responsible spending habits will save them from a lot of lifetime consumer debt.
Here are some tips for teaching your kids how to manage their finances over Christmas.
1. Have the talk
Communication is very important. Sit down with your brood and discuss the financial implications (and challenges!) of the Christmas holidays. Tell them that you want them to enjoy their time, while having enough money on hand for all the many expenses over this period.
2. Create a spending schedule
This is a wonderful practice that you should consider for any big project, holiday trip or life change. By breaking your expenses into a schedule (for food, fuel, accommodation, fun, Christmas gifts and other expenses) your children will better understand it when you discuss their spending money or when you say no to an ad hoc request that you really cannot afford.
You could use this practice to create a schedule for each child over the holiday, so that they know what they can spend and how much pocket money they have.
3. Create a budget
While this may sound a lot like the spending schedule discussed above, your budget should include your planned savings from now until the holiday and even beyond. It should also consider non-holiday related spending, such as your home loan and insurance payments that have to be made regardless of your holiday plans.
If anything, the practice of creating a budget is one of the best gifts that you can give your children.
While creating a budget is of paramount importance for your busy holiday season, you should also make sure that your personal financial administration is in order. This includes your will and testament, your household and vehicle insurance and a list of other items.
We will cover these in a dedicated article coming soon to www.ascor.co.za
4. Give your children an opportunity to earn extra money
In the preparation for your holiday, make a list of chores that your kids could do to earn a bit of extra cash. Washing the car or mowing the lawn will not only establish the link between hard work and reward, but it will make them less prone to spend their pocket money too fast or on things that they will later regret.
5. Take stock before the holiday
Spend some time with your kids in talking through the toys, electronics, clothes and other possessions that they already have. This will help them overcome that urgent need for more of everything that is so often created by the tsunami of marketing messages that will flood every screen over Christmas.
None of the practices mentioned above have to feel forced or have to spoil your holiday. On the contrary, having your finances and those of your children sorted out before you embark on your well-deserved holiday will remove a lot of possible conflict and unhappiness once you reach your destination.
Enjoy the last quarter, it promises to be a busy one!