The latest video game console, child-sized oven or interactive stuffed critter might be the hottest holiday gifts for your kids or grandkids this year, but when it comes to lifelong memories, such material gifts often get forgotten.
If you’re looking for a memorable child’s gift that will keep on giving, why not give the gift of financial literacy by giving something like a classic board game such as Monopoly? It will be appreciated not only today, but also years down the road.
The key to giving financial gifts is to make them fun, says Gordon Pape, co-author (with his daughter, Deborah Kerbel) of Money Savvy Kids: The best ways to teach your children about money for a strong financial future.
Here are some tips for financial literacy gift-giving during the holiday season:
Kids aged 5 and under: Give books
According to Pape, there are plenty of great reads for kids five and under who are just starting to formulate a concept of money. Among them are The Berenstain Bears’ Dollars and Sense, by Stan and Jan Berenstain, in which Mama gives her cubs an allowance and guides them through the consequences of impulse spending.
Another book for teaching kids about money is Benny’s Pennies, by Pat Brisson. In story and in rhyme, the book is about Benny, a small boy, who uses five different pennies to buy gifts that are meaningful to him -- a rose for his mother, a cookie for his brother, a paper hat for his sister, and so on.
For die-hard Dr. Seuss fans, there’s One Cent, Two Cents, Old Cent, New Cent: All about Money, by Bonnie Worth, in which the Cat in the Hat explains the history of money and how coins are minted.
Kids aged 7 to 12: Give games
Board games such as Monopoly provide great doorways into the discussion of money, says Pape. “They provide teachable moments, where kids learn about taking risks in finance, even if it’s with play money. They also learn that sitting on the most cash doesn’t mean you’ll win the game and that taking risks and trading pays off for all the players involved.”
For older kids in this group, between the ages of nine and 11, you might consider a more complicated board game such as Settlers of Catan, which involves building colonies, cities and roads by obtaining and trading resources and materials such as brick, lumber, wool, grain and ore.
“This game doesn’t involve money, but it does involve resources and teaches kids how to be strategic with the materials they are building with,” says Pape.
Tweens or teens: Give an allowance on plastic
An allowance on a reloadable, prepaid card [available from banks and other card issuers] makes a great gift and teaches kids financial responsibility, says Manisha Thakor of MoneyZen Wealth Management. “You can give them a prepaid card with an extremely limited amount on it,” she says. Unlike traditional credit cards, prepaid cards offer access to cash that already belongs to the cardholder, rather than allowing the cardholder to borrow money for purchases -- but they can be used like credit cards in the sense that you don’t have to carry around wads of cash in your pocket.
The prepaid card will teach them the connection between plastic and physical cash at an early age. It will also teach them budgeting. For example, if a teen tries to splurge, he or she may find they hit their credit limit too soon. Many preloaded cards charge monthly, activation and/or transaction fees, and some have usage restrictions, so shop around for the best features.
Kids of any age: Give age-appropriate movies
Especially if they are tied to financial concepts, says Pape. For example, he gave his grandson a DVD of the movie Moneyball, which follows the Oakland Athletics baseball team’s strategy of using economics to recruit B-list players, with winning results.
“My grandson, who loves baseball, was fascinated by the concept of baseball players being valued in terms of dollars paid for bases earned,” says Pape. “The key is to keep learning about money fun, so kids don’t feel like they are learning at all.”
Opening or contributing to a registered education savings plan is a great holiday or birthday gift for a special grandchild or godchild of any age -- but the younger the child, the more time your contribution will have to grow, and the more free money the government can chip in.