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How to teach kids good money habits over the holidays

Nov. 30, 2011 at 9:10 AM ET

Reality check: 80 percent of all college freshman say they've never had a conversation with their parents about managing their money. What's more, almost one in four of these same teens say it's just fine to blow as much as $500 without checking in with Mom and Pop.

(I'd love to have their allowance, but that's another issue).

The findings are hardly a proud parenting moment. The truth is too many kids are flunking financial literacy and one big reason may be that we've failed to teach our children essential "money-smart lessons."

If you're concerned about your kids' future spending habits, there's no better time to start your money talk than these next few weeks. the "official" holiday shopping mania has begun. Newspapers will be filled with coupons and penny savers. Television ads for holidays "deals" will air non-stop. Teen magazines will feature those supposed holiday "must have" items. Lots of pressure to spend, sure, but this is also the perfect opportunity to let your kids know that money doesn't come easy. It's the time to set clear expectations and limits for your family's spending during the holidays. Here are a few ways to use the holiday season to boost kids' money smarts.

Monitor TV Consumption

Television commercials are relentless in trying to get kids to buy, buy, buy. Research shows that media affects our children's money attitudes and increases materialism. During the next few weeks retailers will be pushing products and urging your kids to spend. Beware of those advertisements! Do take time to explain to your kids the real intention of those advertisers.

Be a  role model

Take your child shopping with you. I dare ya! Show him how you compare prices. Explain to her how you look for bargains. Use those outings as teaching moments to instill good shopping habits.

Teach bargain hunting

If your kids are purchasing gifts for siblings (or even you!) get them involved inchecking out penny saver ads. Have them clip coupons. Tune your kids into the bargains at those dollar stores. Hit the outlet malls, and don’t overlook thrift stores and even garage sales. And tell them to watch for sales! Grandma will never know if her present was ten dollars less because Johnny waited to buy until sales day.

Cut impulsive shopping

Set a household rule that your child must write down any pricey intended purchase, and then postpone buying it for at least twenty-four hours. It's a great way to teach kids to delay gratification and to think before spending. (Profound concept, eh?) A younger kid can draw it  on her "wish list." The wait time could vary from an hour or day to a week or month depending on the child's age and maturity.  If your kid loses interest before the time is up, even she will agree that she didn't really want that item after all.

Teach “Wants vs. Needs”

This is the “Gotta Have It NOW Generation,” so a big step in helping today’s kids become smart spenders is teaching the difference between “want it…” versus “need it.” Get your kids to assess what they already have that is still in good shape and can be recycled; what’s missing and then what's really needed is on the holiday request list.  

One-store shopping boosts consumer skills

Your kids planning to do their own holiday shopping? If so, this is a great way to help teach them consumer skills. Consider choosing just one store that has the best bargains in town to take the kids for their shopping this year. By announcing, “We’re shopping only at this store,” the kids are forced to look for the best bargains in one place and you won’t find yourself driving to multiple stores (and bringing back multiple items). Save money and gas. This is also the time for them to bring their coupons and shopping lists.

Consider after-holidays gift buying

Seriously! I know families who realize the best deals are December 26. Those parents set a rule: "You receive a few items under the tree but wait for that pricier item the day after the holidays." The kids learn to appreciate the value of a good deal, the parents are grateful to save a ton of money, and the whole family enjoys that day-after shopping outing for everyone's special-- and better-priced -- gift.

All the best on your shopping!  

Dr. Michele Borba is a TODAY contributor and author of "The Big Book of Parenting Solutions: 101 Answers to Your Everyday Challenges and Wildest Worries." Follow her on twitter @micheleborba.

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