15/12/2016 09:45 GMT | Updated 16/12/2017 05:12 GMT

Giving The Gift Of Financial Education



Many of us will remember the run up to Christmas when we were young. Days spent leafing though the Argos catalogue highlighting this year's 'must haves!'. However, with the growth of the internet, the Christmas list has invariably become longer and more expensive. At a time when online payments makes spending easier than ever, and with children exposed to immense volumes of targeted advertising, it can be easy for young people to lose sight of the cost of Christmas.

One thing that hasn't changed, however, is how difficult it can be to pick a present for someone. This is especially true for children, whose interests and obsessions can change in a blink. One moment they are 'into' Pokemon, the next it's Star Wars, often requiring a total change of posters and bedsheets. As such, it is tempting to give money to avoid disappointment and to ensure that your carefully wrapped Squirtle doll isn't ungratefully and ignobly deposited into a bin.

One might consider this lazy. Giving money is often contemptuously referred to as 'sticking a fistful of notes into a card'. Yet this is a slightly unfair characterisation, and there are some benefits to this approach. Firstly, it allows a child to choose a present that they actually want. Perhaps more importantly in the long run, it may also help improve their financial confidence, with a practical lesson in financial management.

Of course, such an approach does throw up a number of important questions. What age should a child be given money? How do we ensure that children don't get sucked in by unwanted advertising? Are gift cards a solution, or is there too much of a risk of money being wasted on lost or forgotten cards? Would another form of electronic currency be safer, and is there benefit in providing money in a digital form rather than in cash? It really is a minefield.

One suggestion might be to attach some caveats to the money being gifted - to suggest a proportion be saved, or that it only be spent on something specific. Offering to give a child part of the money towards a larger purchase, is a good way to overcome the demands for larger, ever more expensive presents, like an Xbox or a laptop. This also helps children learn the benefits of saving and instils a sense of satisfaction when they buy the item rather than you.

One family I know has their own solution to the dilemmas of the Christmas spending frenzy. They buy just one gift for each other to open on Christmas Day, and then agree a budget to be spent after Christmas when everything is cheaper in the sales. It means they all get the items they really want, and no fluffy Santa socks tucked in the back of the drawer for years to come! This approach also delivers a practical lesson in responsible money management.

But does that take the shine off of Christmas? Does a morning sat around the tree opening envelopes instead of presents somehow have less festive sparkle? I guess that's for you to decide.

What I would say is: giving money need not be a lazy option, but rather an excellent way of ensuring your child gets a present they want, along with an important lesson in financial management. And that will stay with them long after they have outgrown their Star Wars doll!