Can You Teach Kids About Birthday Budgets Without Being A Buzzkill?


Nobody wants a pile of presents with a side of budget lessons, but parents have to balance providing both — especially as kids get bigger and ask for pricier items for birthdays and other major life events. As a mom of five, I often wonder what these conversations will start to look like when I have five kids asking for a new iPhone at the same time. But, like me, in a study conducted by Wells Fargo, 67% of Americans are cutting back on spending. So, depending on kids’ ages, it might be time to have a few of those tougher conversations if we really are preparing them for the realities of adulthood.

“I think it’s important to remember that gifts don’t mean as much when we’re giving just to give [something],” says mom-of-two Olivia Howell, co-founder and CEO of Fresh Starts Registry. “I enjoy being considerate and thoughtful in my giving.”

As anyone with tweens or teens knows, though, they can seriously pile on the pressure. I asked experts for advice on walking the line between giving your “big kids” a fun birthday and letting them in on some of the realities adulthood brings (for better or worse).

Involve them in the process.

You’ve likely talked to kids about money throughout the year, so there’s no reason to stop around their birthdays — as long as the emphasis is on the celebration and not guilt about spending.

“When it comes to my kids, I’m having honest conversations with them about what they really want,” says Howell. “I’d rather get them special gifts they’re excited for than wander around Target picking up gifts simply to have something to unwrap. I think it’s important to have these conversations with the people in your life.”

While you don’t need to feel guilty or overextend your budget, simple conversations involving them in the decision-making process can help.

“I believe the first step is to be honest with your kids and let them know how expensive things really are,” says Mahesh “MO” Odhrani, president of Strategic Wealth Design in Las Vegas. “A dollar here or there, a cup of Starbucks, or a lunch out can add up quickly and become expensive. And, of course, most kids want the latest and expensive gadgets. So, it is critical to have kids involved in the financial decision-making process, so they may understand just how quickly the expenses add up.”

It’s also a great time to involve them in considering what would bring them the most fulfillment, and not just for a few weeks post-receiving.

“As they add new items, you can prompt them to prioritize with questions like ‘Which of these do you think will give you the most joy?’ and ‘What on this list would you most want to play with your best friend?’” says Kerrie Carden, founder and CEO at Equip, a company providing career, financial, and business coaching. “You can also encourage them to identify their top three on the list and ask why. This helps them take it out of the temporary context of ‘I want that’ and frame it in their broader lived experience.”

Build a solid financial literacy foundation.

While birthdays may not seem ideal for discussing financial literacy, it might just be the perfect time since kids are naturally invested in the receiving process.

“One rule we use is that any money they earn, they have to save 50% of it, and they can spend 50% of it on fun things,” says Odhrani. “Also, Mommy and Daddy won’t pay 100% for all the fun experiences … they have to earn their way.” He gives the example of his son, who wanted to go on a school trip to Universal Studios that cost $300. “Our deal was that he could go on the trip as long as he earned $150, and we, as parents, would pay the difference. He is now washing cars and picking up extra duties around the house that we are happy to pay him for. It is important to us to instill confidence and a good work ethic in our kids.”

So, if you can afford part of a pricier gift for their birthday, at a certain age, it might be worth splitting it with them or gifting them the money you can pay toward the present.

Determine if presents will involve wants, needs, or both.

If your idea of a great present is socks and your kids’ is AirPods, it might be worth chatting about whether the giving process includes wants, needs, or both at your house.

“Parents can talk to their kids about the difference between needs and wants starting at a young age — as soon as they have wants that aren’t needs,” says Jennifer Seitz, a certified financial education instructor and director of education at family finance company Greenlight in Atlanta. “You can teach kids to prioritize what they might enjoy the most or get the most use out of. Help them make sure they’re focused on the ‘wants’ they most want.” She adds that it’s also OK if families include “needs” on the wish list. “Encouraging gratitude and contentment for what they already have can also help counter the constant stream of wants.”

Conversations about family budgeting goals, such as saving up for a big vacation, can help kids learn about the long game with money, Seitz says.

“In general, it helps to be appropriately transparent with your kids about money and decision-making,” agrees Carden. “They often pick up on our habits whether we want them to or not, so talking through your decision-making can help them, and you, better understand what wants and needs are.”

Don’t compare your experience with others.

Jealousy is a tough one for kids and parents alike.

“Remember that your children will look back and remember the experience of the memories with you, not the items they got,” says Howell. “You don’t need to do all of the things or buy all of the things, but we can’t go back in time and redo moments, so focus on what you can do with the resources you have, and spend the time together in a positive way.”

But don’t make birthday celebrations all about finances.

It’s not the time to push too hard when it comes to teaching your kids finances, even if a few lessons here or there can help. Just like we’d rather not think about adulting over special celebrations, kids want to focus on fun, too.

“Ultimately, the goal is to instill responsible financial habits in our kids,” Odhrani says. “Suggest engaging in activities that don’t involve material gifts, promoting the joy of shared experiences. Striking this balance will not only make our wallets financially manageable but also create lasting memories for the whole family.”

In the end, your kids will remember the magic and love your family brings to their daily lives, not the size of your budget.



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