Think back to last Christmas.  Were there a number of toys and other gifts that you bought for your kids that sat on the sidelines?  Was there no real interest in them?   Perhaps you bought them to make it look like they had a lot of presents to open?

I know we have done that in the past.  Essentially, we were spending an extra bit of money and not really making our kids any happier with that money.  Seems like a waste of money.  On top of that, the toys are probably made of plastic which isn’t doing much for our planet.

One option is to simply spend less and keep this money for the family.  I would highly recommend this strategy to those parents who have limited savings (or are in debt).  Over the long-term, I’m sure kids would want their parents to be financially healthy rather than get an extra toy (they might not realise it yet, but they will in the future).

The other option to stop the waste is to consider other ways to use that money for your kids’ benefit, which could be more impactful than an extra toy.

3 ways to spend some Christmas money on your kids

1. Put a little extra into their savings

Instead of spending that money on them, save it for them.  This money will soon grow and they will be thankful for this money when they are older.  Especially if you repeat this process every birthday and Christmas.

We started doing this for our kids but also for those very close to us.  In 2018, one of my best friends had a baby boy.  I was honoured to be asked to be a Godfather.

In terms of a gift, I thought I’d do something a bit different.  From the outset, I said that instead of buying a gift for his birthday and Christmas, I’d invest £10 per month and give this money to him when he reaches 18.

As we are investing that money, I estimate that he’ll get over £4,000 when he turns 18.  I wish I was given that amount on my 18th birthday!

As he grows up, I will make sure he learns about money so that he knows it’s there and learns how to look after it when he’s an adult (just giving an 18 year old a lot of money without that knowledge can actually do more harm than good link).

There are some additional benefits from taking this option:

  • They will be able to witness the power of compound interest as they see this money grow if you put money in a high-interest savings account (although not that much at the moment) or invest that money.
  • They will see the benefits of delayed gratification.  While they might feel they’d prefer an extra toy now, they’ll soon forget about that toy and see that they’d rather have the money.
  • Less presents for you to purchase each year (I hate shopping!)

2. Charitable donation

Give this extra money to your kids so they can make a charitable donation.

Rather than you simply donating the money, get your kids involved.  Allow them to consider who they’d like to help and give them the sense of helping others.  I have no doubt that they’ll be brimming with pride and smiles after they learn about the impact of their donation.

We started doing this with our kids.  My eldest was saving up for a Star Wars lightsaber.  When she reached her goal, the lightsaber was on sale.  We then talked about giving the extra money she saved to charity.  She loves cats so decided to give some money to a cat rescue centre (Jack’s Cat Cafe).

We should not underestimate the power of giving.  There is a lot of research that shows that people feel happier and that can actually make you live longer!

For those that like a bit of science, the act of giving releases a hormone in our bodies called Oxytocin, or ‘the Cuddle Chemical’.  Oxytocin can help reduce stress, reduces addictions and helps you sleep better which all contribute to greater physical wellbeing.

This approach is also teaching them that money isn’t just for spending on ourselves but can be used to help others.  The sooner they learn that their happiness can be achieved from non-material purchases, the more likely they are to avoid ‘Keeping up with the Joneses’’ in the search for happiness.

Christmas gift

3. Plant a Tree

Climate change is discussed at school nowadays so, why not consider the gift of a tree for your kids instead of that extra toy?

For our kids they will get a great sense of pride from taking action to look after the planet they are going to inherit from us.  While it will take more than one tree to make a difference, if all parents made a contribution on behalf of their kids then we’d be going some way to make a positive impact.

With this approach, not only are you planting a tree, you’re probably reducing the amount of waste by not buying that extra plastic toy which won’t get played with.  A double bonus for our planet!

Here’s a link to help you plant a tree for your kids.


Are you buying your kids that extra Christmas gift you know is just a ‘filler’?  Ask yourself whether that money can be used in a different way to help your kids and potentially others.

Consider the following options:

  • Put a little extra into their savings – in years to come, they will be grateful that you took this action.
  • Charitable donation – make sure your kids are involved so they learn the power of sharing.
  • Plant a Tree – to make an impact on the world they will be inheriting

The key is to not just do this on their behalf but to get them involved so they learn about the different ways that money can be used.

This was another blog in our Kids & Money series from Will Rainey of Blue Tree Savings.

If you are struggling to work out your own financial priorities and are struggling to make sense of your money and want to make some changes, then come and talk to us.  We can help you achieve your financial goals by showing you how to build a money management system that is tailored to your needs and fits with your lifestyle.

When you are ready to talk, we are here to listen and help.  Drop us an email or click on this link to find a day and time that suits you to have a chat with us, we’re really very friendly.  Best of all it’s free.

More on Will Rainey: After years providing investment advice to governments, insurance companies and some of the world’s largest pension schemes, Will founded Blue Tree Savings to help parents teach their kids about money.