4 Simple Tricks to Save on Kids’ Gifts – and Teach Them Financial Literacy at the Same Time

Even as many of us closely track our post-pandemic budgets, landfills are overflowing with discarded consumer goods. For parents and grandparents, along with aunts, uncles and other family members, buying presents for children is a sizable slice of our spending. With supply chain disruptions and slower delivery times, we can’t even be sure the gifts we ordered will arrive. Meanwhile, many parents are actually starting to wish that their kids got fewer gifts, as they watch piles of barely used toys continually grow. Or, worse, simply get thrown away.

The following clever techniques can help you save money while giving better gifts and reducing waste and excess. Even better: the money you save can actually go toward helping make kids better savers, too, by teaching them valuable financial skills – in ways that will give them a huge boost in life.

So how do you save on gifts? Here are the four tricks. Choose the one that works best for your family.

What can budgeting lessons teach us about gift-giving? The 50/30/20 rule for creating a balanced budget was outlined by Sen. Elizabeth Warren and Amelia Tiyagi in their 2006 book, All Your Worth: The Ultimate Lifetime Money Plan. According to Warren and Tiyagi, a simple way to get the bills paid while allowing yourself some fun — and building toward financial security — goes like this: spend 50% of your after-tax income on your needs, 30% on your wants, and use the last 20% to pay off debts or build savings.

The 50/30/20 rule has resonated with millions of people (and helped keep the book on the bestseller list) and become a popular recommendation from financial advisors and institutions alike.

To apply the rule to gift-giving, consider making just one tweak

But what does this budgeting practice have to do with gifting? Needs...wants...savings — think of this as a template for what to gift. For kids, plan 50% for what they want and 30% for what they need. Finally, 20% of your gift budget goes into a savings account for them. Or an investment account, a tax-advantaged 529 college savings plan, an index fund, or simply a CD with a strong interest rate. Remember, for young children you can simply open a joint account or an account in your name that is dedicated to them. As you contribute to it, show them both what the account is and how the money grows over time.

All these options and more are easily available online. Feel free to rearrange these 50/30/20 puzzle pieces the way you want, even putting 50% into savings, and spend the other 50% on a combination of wants and needs. This trick works perfectly for any kind of family. Plus, how you conceived their gift becomes a story in itself — and one that conveys an important teaching: Prioritize spending on needs, make space for wants, and ensure the routine of saving is adopted, especially from a young age. (Think: The power of compound interest.)

Instead of the usual chaos of everyone buying everyone presents, just organize. Either you can put all the kids’ names in a bowl and the adults each pull a name and buy a gift for the one child they selected. (We recommend getting advice from the child’s parents!) Or you put everyone’s names into the bowl, and the kids get to give one gift as well. You can even assign secret Santas remotely through websites that do online name drawings.

The secrecy and guessing games of Secret Santa are extra fun for kids and a fantastic way to show them how satisfying it is to give gifts, not just receive them. You can also do this in big families for birthdays, if you plan for the whole year.

Either way, you save a lot on presents. Some of that savings can now go straight into savings or investment accounts you set up for your children. This trick works especially well in big families or close extended families.

Looking for something especially unique and memorable to share? If the child or children you’re shopping for love a certain activity, place, or musical artist, give them the gift of doing that activity together, going to the place, seeing the musician in concert. This can be a simple, magical way, in big or small families, to give children the unique gift of spending time and creating indelible memories together.

Experiences extend to taking classes, learning new skills, doing crafts together, teaching the child something cool that you’re an expert in, setting up a monthly outing to the movies, and more. Again, with experiences, you don’t just save on wrapping paper and storage space in the kid’s room. You can also save money – to add to their long-term savings or investment account. This trick can work just as well with one child as with many.

Want to see gifts from a whole new perspective – and get to know your neighbors better? This trick is great for a neighborhood with lots of families, or simply with a group of family friends. The fact is, children receive some toys they don’t especially love, and even with the ones they do enjoy, they usually tire of them after a while. The exchange is a chance for the children themselves to choose one thing they’re ready to let go of, wrap it up and give it away.

This can work at the holidays, when everyone does it together, or for birthdays or other occasions throughout the year, if all the families agree to stick with it. Children get a chance to think about what their friends might really like, as well, and start developing their own gift-giving skills. And of course, everyone saves a bundle.

With any of these money-saving tricks, choose part of your savings to go toward investing in children’s future. Then watch it add up year by year and see kids gain financial confidence. You might just have a lot of fun doing it too.

With Raisin, you can elevate your own savings strategy, and even set up deposit products that you co-own with a loved one — all through Raisin’s online marketplace and the convenience of one holistic Raisin account. Browse high-yield savings and money market accounts, CDs and more here.