Helping children understand money this Christmas

Christmas is a season of joy, generosity, and often, a little financial stress.

For many families, it’s the first time children really notice the value of money, how much gifts cost, why some presents are possible and others aren’t, and why parents sometimes have to say “no.” While it’s tempting to shield children from financial discussions during the holidays, Christmas can actually be the perfect opportunity to teach healthy money habits and explore the psychology behind our spending.

We are so close to Santa coming down the chimney, you are probably wondering why I’m talking about this topic now.  You can’t change how you have approached the run up to Christmas this year, but what you can do is reflect, watch and learn for next year.

Why money talks matter
Research shows that our attitudes toward money start forming in childhood. These early beliefs influence spending, saving, and giving throughout life. Children notice patterns, even when we think they aren’t listening. Do we stress over bills? Do we impulse-buy gifts at the last minute?

Do we talk about money openly or avoid it altogether? All these behaviours send subtle messages about money psychology.

Think back over the last couple of weeks.  What messages do you think your children have picked up from you this year?  Which of them do you want to change for next year?

Technology has added another layer. Younger children, especially under 10, often struggle to connect digital transactions with real money. A tap of a card at a store or a click online doesn’t feel the same as handing over cash. Without guidance, children may see money as infinite or magical a mindset that can affect their financial choices later.

When I was growing up, my parents talked about the money tree in the back garden, now it’s the ATM down the road, or your phone!

Christmas questions are learning opportunities
The festive season brings plenty of candid questions:

• “Are we rich?”
• “Why can’t I have everything I want?”
• “Can I use my pocket money to buy that gift?”

These questions are often more about feelings than finances. They may reflect anxiety, comparisons with peers, or curiosity about values. Instead of rushing an answer, ask, “Why do you ask?” This helps you understand the underlying concern and respond thoughtfully.  Your child’s perspective of the world is quite different to our adult view.  Are we rich is nothing to do with our balance sheet, it could simply be that their school playmate has something new and exciting.

For example, if a child asks, “Are we rich?”, you could explain: “Being rich isn’t just about toys or money. It’s about having what you need, enjoying what we have, and helping others. We have all that, so we are fortunate.”

Answering with honesty, rather than judgment or fear, encourages children to think critically about money and develop a healthy relationship with it.

Using Christmas to teach money psychology
The holidays offer natural lessons in spending, saving, and prioritising: These don’t only relate to our children.  Us grown ups need to think about them too.

• Budgeting for Gifts: Invite children to help plan and allocate a gift budget. This teaches limits, planning, and trade-offs.
• Delayed Gratification: Encourage saving for a bigger gift rather than buying everything immediately. This fosters patience and long-term thinking.
• Value Beyond Money: Focus on experiences or meaningful gifts rather than material items. Explaining the emotional value behind a gift helps children appreciate non-monetary wealth.
• Generosity and Empathy: Let children select a charity donation or a gift for someone in need. Giving reinforces that money can reflect values, not just consumption.

These small lessons highlight the psychological side of money: understanding choices, emotions, and priorities.

Navigating emotions around money
The holiday season can amplify emotions tied to money, excitement, anxiety, envy, or guilt. It’s important for parents to model calm, thoughtful decision-making. I know this is a challenge at this time of year, while we are navigating everything else we need to pay attention to, but children learn to manage their own financial emotions by observing how we handle ours. We have no idea what snippets of conversation they hear and what they take from it and the impact that it can have in later years.

Avoid framing money as “good” or “bad.” Instead, discuss decisions and trade-offs: why one gift was chosen over another, how saving allows for something bigger later, or why experiences can be more rewarding than things. These conversations shape beliefs and habits for life.

Age-appropriate conversations
Tailor discussions to the child’s age:

• Young children (4–7 years): Use simple explanations with tangible examples. Counting coins to buy a small gift can make abstract concepts concrete.
• Older children (8–12 years): Introduce budgeting, saving, and prioritisation. Discuss how gifts fit within a household budget and why choices are necessary.
• Teenagers (13+ years): Engage in deeper conversations about value, debt, and financial independence. Encourage them to manage part of their allowance or earn money for gifts.

Age appropriateness was clearly demonstrated to me a few years ago at a family Christmas.  Aunty had put a $20 note inside each Christmas card as her gift.  Mr 14 looked at it and said Gee thanks Aunty, with a little bit of “this isn’t going to buy me much’ attitude attached.

Mr 8 was much more impressed with the $20 and his eyes lit up with glee.

While Miss 4 said thanks Aunty for a lovely picture.

A gift that lasts beyond Christmas
By using the holiday season as a teaching moment, parents can help children develop financial awareness and emotional intelligence around money. These lessons are gifts that endure long after the tinsel is packed away.

If you’re unsure where to start, resources like Ron Lieber’s The Opposite of Spoiled provide practical strategies for all ages. Remember, the goal isn’t perfection it’s building a foundation of understanding, values, and confidence that will serve your children throughout life.

This Christmas, give your children more than presents. Give them the tools to understand money, make thoughtful choices, and feel secure in their financial future.