Nic Horn, Director and Regional Head at Citadel, suggests that families take a different approach to gift-giving this festive season.

The festive season is typically a time of frivolous spending, but there are some families that use this time of the year to improve their children’s financial literacy, appreciation and security. Here are four ideas for families who want to shake up their gift-giving this December.

Set up a tax-free savings account

If you want to give your children or grandchildren a gift that truly keeps on giving, consider setting up a tax-free account in their name, invested in low-cost unit trusts or exchange-traded funds. Not only will this teach them about the power of compounding over time, but it will provide a substantial nest egg in their later years.

One of my clients calls this ‘Daddy’s don’t-touch money’. Not only will it help children to build meaningful savings over time, it’s also a great conversation-starter on how money and compounding works.

Give the gift of financial insight

Some children can be frivolous with money. None of us wants that for our children. We want to raise children who appreciate and understand money, and who will take good care of their money and those around them for the rest of their lives.

One way of nurturing a healthy and responsible money mindset in your children or grandchildren is to make them pay for things that adults traditionally manage, such as their annual school fees or other annual expenses.

This will make your child think twice about how much things cost and what it feels like to honour a large financial commitment. You learn more from the bitterness of loss than the sweetness of receiving..

Another tactic worth considering for slightly older children is to include them in one or two annual meetings with your own financial adviser. This way they can really learn what’s happening with your own investments (which will one day be theirs) and how to take care of money from a young age.

Gift-giving to encourage family connection

You can “give” your children money to put into a family holiday kitty. It could be something like R1 000 per child for the holidays. If children put their ‘own’ money towards family time, it encourages them to decide how the family spends it to have the most fun together.

They will likely be more invested in doing things with the family instead of lazing their days away gaming or watching TV. And time together, in our time-poor world, is one of the most beautiful gifts you can give to your family.

Paying it forward

If you do give your children a financial gift, encourage them to spend a good portion of it on the charity of their choice, be it an animal, food security, literacy or environmental charity, or any other cause they are passionate about.

We live in a country beset by all kinds of problems and challenges. Making contributions like this deepens awareness of these issues, which will teach them to become empathetic citizens and caring humans.

Parting with that money and seeing it make a greater impact in someone else’s life than it would make in their own lives, is a beautiful lesson they will carry with them into adulthood. It teaches them the concept of a social return on investment and the impact of giving in a society where taking seems to outdo giving.

A different approach to gift-giving

Money can’t buy time, but it can buy time together. Money can’t buy love, but the way you spend it can be very caring and meaningful. It can teach our children remarkable life lessons they will carry with them during the holidays and far beyond, into the rest of their lives.

This post was based on a press release issued on behalf of Citadel.