The Best Financial Gifts You Can Give Your Kids

financial gift

Whenever I read or post an article that suggests that someone cut down spending on their kids, I’m always amused (and amazed) by the outraged comments. If you dare to suggest to someone that is struggling that they cut down on the sports or extra curricular activities, take the kids out of private school, cancel a vacation to an expensive destination, or sell/stop buying toys, people freak out. “Don’t skimp on your kids! They’re only young once!” “Kids need experiences and sports or else they’ll be behind everyone else!” “It’s not Christmas if the kids don’t get a lot of gifts!” “Don’t take the kids out of private school; you’ll scar them for life.” And on and on it goes. People seem to think that doing the best you can for your kids means spending tons of money even if you can’t afford it.

I think this is the wrong thought process. The best gifts you can give your kids don’t come in the form of activities, toys, private schools, or vacations. Sure, these things are nice and can add to what a kid learns about the world. But they are not necessary. In times of struggle, necessities are more important. The best gifts you can give your kids are these three things:

A secure financial environment in which to grow up

Which is more important to a kid? To have a stable home with all necessities covered, or a fabulous vacation? Kids do best when they grow up in an environment that’s free of struggle and worry. They do best when they can stay in one place for a while and form friendships and ties to the community. A house where the parents are always fighting about money, where necessities aren’t covered so the parents can pay for vacations or expensive activities, or a household that gets uprooted regularly due to financial mismanagement are much harder on kids than simply telling them, “Hey, we can’t afford hockey/Disney World/the Xbox this year. Maybe next year.” If you think you’re scarring your kids by cutting back on luxury items, think about the damage that will be done if you don’t cut back and have to sell the house, move, pull them out of their community, or get divorced.

A secure and functional financial environment to learn from and model

The better you are at managing your finances, the more your kids will learn about financial management. If you say, “No,” when you have to and explain why, they won’t like it, of course, but they will learn. They will learn from and model what you do financially. If you’re racking up bills to give them things you can’t afford, the lesson they will learn is that they, too, can live above their means when the time comes. The better lessons for them to learn are that sometimes hard choices have to be made, money doesn’t just magically appear, and that you have to meet your obligations and pay for necessities first.

Your own security in your old age

If you spend recklessly while you and your kids are young, you’re likely jeopardizing your future wealth. One of the best gifts you can give your kids is your own financial security. You may want to give your kids lessons in everything and trips and toys, but what happens when everyone is older? Do you really want your kids to have to sacrifice their finances as adults to pay for what you wasted when they were young? Being young and just getting started is hard enough without having to bail out a parent who made foolish choices. Extras for your kids should only come after you’ve provided for your future. Otherwise, your kids might have a fabulous childhood, but come to hate your guts when they have to pay for your care out of their own pockets to the detriment of their own dreams.

Kids won’t like it when you cut back on their activities and things, especially if they’ve been living large to date. You’ll have to endure some backlash and pouting and probably some, “I hate you’s” and slammed doors. In the long run, however, it’s best for them to grow up in a household that lives within its means and functions well, even if that means that everyone doesn’t always get everything they want. If you can’t afford to give your kids everything and keep a stable financial household, the greater gift is stability.

(Photo courtesy of asenat29)

This entry was posted in Personal Finance, Relationships, Retirement and tagged , , , , , , , , . Bookmark the permalink.

10 Responses to The Best Financial Gifts You Can Give Your Kids

  1. Teresa says:

    At our house I live by “they don’t miss what they never had”!! My kids are happy and well adjusted, they don’t “expect” much from us and work for what they do want. I see spoiled brats all around us that think they “deserve” all the newest stuff, these kids will just turn into adults that think they can’t live without a houseful of crap!

  2. Jamie says:

    Wise words in this article. I know firsthand how hard it is to say no to kids (mine are 13, 10, and 9), but I so want them to understand the pitfalls of living beyond your means and accruing debt – as well as the deep, intrinsic joy that comes from living a simple life, filled with simple (affordable) pleasures. It’s so important to lead by example because they are watching everything we do – and the relationship they come to have with money will follow them all the days of their lives.

  3. benny says:

    It’s important to remember that love and security go a lot longer way than any present you buy. I think we all forget that far too often.

  4. Jai Catalano says:

    My 2yo son was hanging out with his grandfather today and he made my son pay the cashier the required amount at the store. My son then waited for the change and told him to count it. He has a quarter, dime, and 2 pennies. My son said 1 2 3 4. We have four grandpa. 🙂

  5. trish says:

    I’m sure that was the cutest thing ever!

  6. Minny says:

    I had a dire childhood and I know that the most important things you can give children are:

    Love and security in that love.

    Support and encouragement.

    Appart from the obvious necessities of life, everything else is useless without an abundance of these two things.

  7. Minny says:

    Sorry about the ‘appart’ instead of apart. My emotions run high when I think about these things!

  8. ThiNg says:

    I would trade EVERY gift, toy, lesson, or trip I EVER received to give my parents money during their retirement. Now, with 2 young kids of my own, I am giving my parents $10,000 a year (plus $60,000 downpayment on their house) to help them live.

    Stop being selfish (those gifts and toys are just your way of bribing them for not having time together) and REALLY put them first!

  9. Staz says:

    I agree 100%, the most important things you can give a child is your time and your love. Things like private schools and expensive toys are nice, but if money is an issue, you have to make sure they get food on the table

  10. jim says:

    Thanks for the great reply. I am close to retirement and have been struggling between fully funding my retirement versus paying for youngest kid’s grad school. Your comments really snapped me back into reality. He’ll be paying for it himself – and not at the expense of our retirement.

Leave a Reply

Your email address will not be published. Required fields are marked *