Ways to present fiscal lessons without looking like the Grinch.
(Money Magazine) -- Tired of battling hordes of shoppers for Tickle Me Elmo, the latest Xbox 360 game and other hot holiday items that feed your children's rampant consumerism?
Eager for a present that gives your kids a financial jump on life and is still, well, fun? See what gifts can help your children learn how to save and spend wisely, with payoffs that last well beyond the season.
Best book for teaching little kids the value of a buck
Alexander, Who Used to Be Rich Last Sunday
Price: $6.99 at most bookstores
Who it's for: Four- to eight-year-olds
What it's about: In this charming story by Judith Viorst, Alexander gets a gift of $1 from his grandparents. He has lofty plans to save the money for a big-ticket itembut instead blows it all in the face of life's temptations and regrets it.
Why it works: By age four, kids are old enough to grasp the basic concepts of saving and spending, but they're not likely to sit still for a lecture on the topic.
"When children are engaged by a story and see a character's life turn this way and that, they'll learn by example," says Margaret McKeown, a senior scientist at the Learning Research and Development Center at the University of Pittsburgh.
Who it's for: Four- to eight-year-olds
What it's about: In this charming story by Judith Viorst, Alexander gets a gift of $1 from his grandparents. He has lofty plans to save the money for a big-ticket itembut instead blows it all in the face of life's temptations and regrets it.
Why it works: By age four, kids are old enough to grasp the basic concepts of saving and spending, but they're not likely to sit still for a lecture on the topic.
"When children are engaged by a story and see a character's life turn this way and that, they'll learn by example," says Margaret McKeown, a senior scientist at the Learning Research and Development Center at the University of Pittsburgh.
Best board game for learning money-management skills
Payday
Price: $14.99 at most toy retailers
Who it's for: Preteens
What it's about: Created in 1975, this game sends each player down a 31-day path to earn and spend money - working, investing, shopping, paying bills, even gambling occasionally. The player with the most cash left at the end wins.
Why it works: Recent research has shown that, developmentally, kids are most receptive to learning financial concepts before they hit high school. But that doesn't mean they're interested. When they're having fun playing a board game, though, they won't even know they're getting a tutorial on budgeting, borrowing with interest, saving - and the perils of squandering their money.
Who it's for: Preteens
What it's about: Created in 1975, this game sends each player down a 31-day path to earn and spend money - working, investing, shopping, paying bills, even gambling occasionally. The player with the most cash left at the end wins.
Why it works: Recent research has shown that, developmentally, kids are most receptive to learning financial concepts before they hit high school. But that doesn't mean they're interested. When they're having fun playing a board game, though, they won't even know they're getting a tutorial on budgeting, borrowing with interest, saving - and the perils of squandering their money.
Best gift from Grandma
Contribution to a 529 Plan
Price: Typically $25 to $250 for the initial investment
Who it's for: Kids up to 18
What it's about: Move over, savings bonds: 529 accounts have the edge for grandparents eager to help pay Junior's college tuition. Advantages include tax-deferred growth on earnings, tax-free withdrawals and, in many states, a deduction for contributions. Compare plan details at savingforcollege.com.
Why it works: While kids may not get excited about this gift now, just wait a few years. When they owe thousands less in student loans than their college buddies do, you're sure to get plenty of appreciation.
Who it's for: Kids up to 18
What it's about: Move over, savings bonds: 529 accounts have the edge for grandparents eager to help pay Junior's college tuition. Advantages include tax-deferred growth on earnings, tax-free withdrawals and, in many states, a deduction for contributions. Compare plan details at savingforcollege.com.
Why it works: While kids may not get excited about this gift now, just wait a few years. When they owe thousands less in student loans than their college buddies do, you're sure to get plenty of appreciation.
Best way to make your kid a millionaire
A Roth IRA
Price: As low as $100 to open
Who it's for: Any child who has earned income
What it's about: You can invest as much as your child makes, up to $4,000 a year. Tax-free compounding over time produces a powerful payoff: A $1,500 yearly contribution will be worth nearly a million bucks in 50 years, assuming an 8 percent average annual return.
Why it works: Few teens are likely to be excited about saving their hard-earned babysitting money for retirement. So offer to match what they make in an IRA. Want another way to ramp up their enthusiasm? Slip a little cash into the gift card too.
Who it's for: Any child who has earned income
What it's about: You can invest as much as your child makes, up to $4,000 a year. Tax-free compounding over time produces a powerful payoff: A $1,500 yearly contribution will be worth nearly a million bucks in 50 years, assuming an 8 percent average annual return.
Why it works: Few teens are likely to be excited about saving their hard-earned babysitting money for retirement. So offer to match what they make in an IRA. Want another way to ramp up their enthusiasm? Slip a little cash into the gift card too.
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