These 4 Financial Lessons Are the Best Gift You Can Give Your Kids

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They’re better than any toy or video game you’ll put under your tree. 

It’s common for parents to wind up frenzied during the holiday season, and for good reason. We all want to make the holidays as magical for our children as possible. That means creating a festive atmosphere, buying the right holiday foods, and purchasing the best gifts.

The latter can be challenging, though. For one thing, supply chain issues still persist to some degree, so you may have struggled to check all of those must-have items off your list this year. And also, inflation has made everything so gosh-darn expensive. So even if you managed to find that gaming system your son wanted or those sneakers your daughter wanted, the cost might’ve forced you to say no.

But rather than get worked up over the gifts you did or didn’t give your kids this year, a good place to focus your energy is personal finance — specifically, personal finance lessons you can teach your kids. These four in particular are among the greatest gifts you can actually give them.

1. Always have savings to fall back on

Life has a way of surprising us — and not always in a positive manner. That’s why it’s so important to have an emergency fund. Teach your children to always keep money in a savings account for a rainy day. If they receive cash gifts during the holidays, encourage them to bank that money for a time in the future when they might really need it.

2. Always pay credit cards off in full

Your kids may be used to seeing you swipe a credit card at the supermarket or pharmacy. But make sure they understand that a credit card isn’t a free pass to spend as you please. Rather, it’s a running tab of the money you owe. And you should make a point to stress to your children that paying off credit cards in full every month is really the best route to take.

3. Never take on a loan you’re not sure you can afford

It’s common for people to take out loans to finance things like home purchases, vehicles, and property renovations. But it’s never a good idea to take out a loan whose payments are a stretch. Teach your children about the importance of keeping debt to a manageable level so they don’t make the mistake of getting in over their heads as adults.

4. Don’t underestimate the importance of budgeting

Following a budget is one of the best ways to track spending and make the most of a limited income. While your kids may not need to budget for expenses now, it wouldn’t hurt to walk them through your household budget (either with real or fake numbers, depending on their ages and your comfort zone) so they can see what it’s like to set limits for different spending categories.

It’s natural to want to get your kids holiday gifts they’ll be thrilled with. But remember, teaching them to be financially independent and savvy is an even more important gift, so it’s one thing you shouldn’t skimp on if your children are old enough to understand the aforementioned concepts.

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