Handling Cash Gifts for Children
In my family, there are a lot of older relatives who don’t like to shop for gifts. So, whenever my son has a birthday or when Christmas rolls around, he normally ends up with large chunk of cash.
He gets $10 or $20 each time, but there are enough gift giving relatives that it adds up quickly.
Gifts of cash weren’t a problem when he was too little to have any concept of money. Now that his second grade class has been working on counting money, however, he has strong opinions on his finances.
I told him that he needed to put 75% of his gift money into his savings account and that he could have the other 25% to spend. My husband said we should put 50% in savings and let him spend 50% of it.
My son, of course, thinks he should get to decide what happens to the money on his own, because it was a gift to him and not an allowance from mom and dad.
My son is a good kid and fairly responsible with his money. As I mentioned in a previous post, I’ve been letting him spend smaller amounts without any parental input.
But, since he received a ton of gifts over the holidays and there is nothing specific he wants at the moment, I don’t feel comfortable letting him have $150 sitting around in his piggy bank. I feel like he’ll just spend a few dollars on candy and small toys whenever we go out and then end up with nothing to show for his money in a month or two.
Do you have a special rules in your family for handling cash gifts that your children receive? Do you require them to spend the money in a certain way or do you allow your children to make their own decisions?
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