Here’s one resolution you can still make this year: Teach your kid the full value of all those holiday gift cards.
When it comes to these cards—a $130 billion-and-growing industry, of which the December holidays make up a significant portion—this season of revamping and resolutions is a great opportunity to teach your kid to spend them responsibly.
Various surveys have revealed that many of us give gift cards because they offer kids freedom to pick out their own gift. According to one by GiftCards.com, over 38% of parents said gift cards can help kids to make good buying decisions, with many respondents adding that they can be used to teach other responsible behaviors, like how to set a budget.
But left to his own devices (in every sense), your kid can easily blow through a $50 iTunes gift card in mere minutes, bingeing on in-app purchases for Burrito Bison: Launcha Libre like Bart Simpson on an all-syrup Super Squishy bender. And without proper parental guidance, today’s upgrades spree can lead to tomorrow’s tears.
Oh, and just because it’s January doesn’t mean you’re out of the woods: Birthdays are the number one occasion for a kid to receive a gift card. So, before more gift cards make their way into his hands, here are some things to (re)consider:
- Kids may not understand that purchases made with a gift card are not “free.” Whether it’s been loaded onto a merchant-specific card or a prepaid debit card, a dollar is a dollar. Your kid needs to understand this. Before she begins a spending spree, show her in cold-hard cash the value of her gift card; seeing a $20 bill next to her $20 gift card will help her understand the two are of equal value.
- A little delayed gratification today can mean more toys tomorrow. A recent edition of our Poll the Parents survey asked, “What should your kid do with any gift money her or she gets this year?” An overwhelming number of you voted for your kids to stash away some of their holiday cash. A windfall of cash-equivalent gift cards isn’t any different. As a gift card or two is likely only part of your kids’ holiday haul, point out that he can play with the LEGO Star Wars set he already has right now and, if he saves that gift card, wait to buy another set when his attention eventually turns to The LEGO Batman Movie. (And it will.)
- A gift card is not an invitation for your kid to turn into Scrooge McDuck. Remind your kids of one of money’s most important uses: charity. Now, we don’t expect you to make her surrender her entire Amazon gift card—but just knowing there’s an option like Charity Choice, which allows her to turn a gift card into a donation to up to three different charities, will help reinforce altruistic thinking in the future. (Note: Like some of the gift cards-for-cash sites you have no doubt come across, organizations like Charity Choice also collect a percentage of the card’s value.)
- Avoid “spillage” and overspending. Your kid should remember to use the gift card in full, and before its expiration date. Unused balances, known as spillage, total nearly a billion dollars a year, because people either lose or forget about the money remaining on their cards. On the flipside, make sure your kid can’t tie his online purchases to your own credit card. If he can, you could be in for a pricey surprise when he exceeds his gift card limit, then keeps on spending on your dime.
- Remember the “gift” in gift card. To truly maximize any purchases made with a gift card, it’s important to make sure your kid sends the giver another card of immense value—a thank you card.