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Give Money for Christmas

christmas-moneyGive Money for Christmas

Whatever your age, Christmas is a stressful time of year, and much of the stress is caused by financial pressure. It seems rather silly that so much precious money is spent on gifts that may not give lasting pleasure, if any at all. Economists would argue that spending money on gifts for others does not give the most satisfaction (or utility, in economic jargon) per dollar spent. That’s because it’s not easy to judge how much the other person will appreciate the gift.  Despite that, we still give gifts as an expression of love, gratitude or concern for someone’s wellbeing. Yet there are lots of reasons it’s good to give money instead of, or as well as gifts.

To start with, there are plenty of people who could do with a bit of extra cash at Christmas to pay for necessities rather than luxuries. For students with low incomes and big debts, elderly people struggling to pay their bills, and children who are saving for something they really want, money is a welcome gift. You can use a gift of money as a way of teaching children about money; that is, explaining to them the need to set aside money for later, or to save for a goal. You could even give a small investment of shares or a managed fund to teach children how investment markets work.

Giving money doesn’t have to be boring. Check online for creative ways to give money. There are plenty of ideas for how to use notes and coins to make decorative gifts, such a money bouquet, a money Christmas tree, or a box of money ‘chocolates’.

Christmas is a time to think about giving to those who are most in need. Include a charity on your Christmas list to spread the good cheer!

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Money for Christmas

Money for Christmas

Giving money to kids for Christmas might seem like an easy escape from choosing a gift but in fact it can be a great way to teach kids important lessons about money and life.

If your kids receive money from you or from others at Christmas encourage them to make a wish list before they spend it. Against each item on the wish list, write the approximate cost and add up the total cost. The first lesson for kids to learn is that you can’t have everything you want with the money you have available and it is necessary to decide on the most important priorities.

The next discussion to have is about money and time. There are two important lessons on this topic. Firstly, kids need to understand that money can only be spent once; either now or later.  Budgeting to have money available over a period of time is a key financial skill. Secondly, if you choose to spend your money later, you can earn interest on it in the mean time and have more to spend. Teach your kids about the power of compound interest, to show them how much their money can grow the longer it is invested.

As well as spending and saving there are other options for your kids to learn about. Investing in a business can be a great way to multiply your money, or lose it depending on how well the business does. Encourage your kids to think about how they could use their money to set up simple business – perhaps buying unwanted gifts and selling them for a profit! Last, but not least, talk to your kids about the importance of helping others who are less fortunate. Giving to others is a great way to realize just how wealthy you really are.

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