Does this sound familiar to you? Your favorite aunt, grandma, or other relative couldn’t be with you for the holidays, so instead they sent a card. It’s a cute card with your favorite cartoon on it, but the real treasure is inside. You open the card to find money. Maybe it was just a few dollars, or a check for one hundred. Either way, you feel rich.

Now, it’s your children’s turn. If your family is sending them money for the holidays, this is a great learning opportunity about saving money and budgeting. Here’s an exercise you can do with your children this holiday if they get money from family and friends.
 

Make a List of Needs, Wants, and Nice to Haves

Likely, your child’s first instinct with the money is to spend it so they can buy those toys they didn’t get for the holidays. But instead, slow them down and help them make a list of what they could buy with the money.

A great way to do this is to make a list of needs, wants, and nice to have items with your child. Let them make a long list of items and then categorize each one as either a need, a want, or a nice to have. 

Needs should be things like clothes, food, or maybe stuff they need for school or home. Likely, this list will be very short, as you already provide for their needs.

Wants are things like toys, games, or maybe a fancy pair of sneakers. These are items they don’t need, but want. Likely, a majority of items your child comes up with will be on this list.

Nice to have are items your child doesn't feel a big want for, but they wouldn’t mind having. This could include toys they don’t feel very strongly for or maybe a movie they’ve been thinking of watching. 

After these lists have been completed, get general prices for each item. This is especially important for any expensive items on this list.
 

Choose the Most Important Items and Make a Budget

Now, ask your child to select the most important items. The first priority should be to fill all of their needs, if there are any, and then select which wants are the most important. 

From here, you can make a basic budget with your child. List how much money they currently have, then subtract what needs they have. What they have left is the money for their wants. 

Depending on the situation, they might be able to afford a few of their wants, but probably not all of them. This is when you have a chance to teach them about saving money towards a goal.
 

Teaching Saving Towards a Goal

Your child has a list of things they want, but not enough money to make it happen. We’ve all been in that situation before. They’ll need to save up for those items and you’ll need to teach them how.

After you’ve purchased the needs on their list, a good first step is to have a youth savings account for them to keep their leftover money. Pioneer’s Super Star Youth Savings account is a great fit for this. It’s a place to keep their money safe and tucked away, so they aren’t as tempted to spend it on things that aren’t part of their goal.

With a place to keep the money safe, your child now needs a plan on how to reach their saving goal. That means having a way to earn some money. This could include an allowance, doing extra work around the house for extra cash, or picking up some sort of job. That, combined with the gift money, and they’ll eventually reach their savings goal!
 

Make a Long-Term Budget with your Child

If your child is regularly earning money, it might be worth setting up a long term budget for them. That way, they can start saving up for big life goals, like going to college or buying their first car. 

A great way to break up the money coming in is to have money they can spend right away, money saved for a goal, and money set aside for the future. For example, if your child earns $12 a week, the budget could be $4 for spending, $4 for a goal, and $4 for the future. 

For help with teaching this long-term budget concept, Pioneer has partnered with Junior Achievement of Idaho on this video and worksheet to help your children learn more!

Open a Super Star Youth Savings Account