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Turn Holiday Spending Into A Merry Money Lesson

Many families will use the power of plastic to make cash registers ring this holiday season. But that might bring bad tidings after the first of the year, according to a new survey by USAA that asked teens how they learn about money. And unfortunately, racking up holiday debt may be another way parents are teaching bad money management skills to teens.

According to the survey results, nearly three out of four of high-school teens say they learn "a lot" or "a decent amount" about money management from their parents. But it doesn't come from lectures — it's from watching how their parents spend.

"Parents are raising a generation of big and possibly irresponsible spenders," explained USAA CERTIFIED FINANCIAL PLANNER™ practitioner J.J. Montanaro. "Nearly half of the parents surveyed confessed that their money management habits range from 'OK' to 'horrible'."

There's still hope for the holiday season, though. Montanaro offers these four suggestions for how parents can turn holiday shopping moments into lifelong money lessons:

Put Holiday Budgets on a Diet
Just as splurging on extra holiday dessert can add up around your waistline, the same applies to holiday overspending, which can fatten up your debt. With more than 40 percent of parents in the survey admitting they don't have a household budget, many teens aren't subject to the financial discipline they need. Turn this statistic around and sit down with the whole family to develop a spending budget for each family member for the holidays. This will help teens develop the financial discipline they'll need in the future, while still allowing them the opportunity to do some holiday shopping.

Making the Most of the Christmas Credit Crunch
For many revelers, the holidays may seem like a bottomless bowl of treats with no long-lasting consequences. The same goes for teens who don't realize that abuse of an ATM or credit card can cause just as much long-term damage to their financial health. Start by encouraging teens to avoid the "invisible money" of the ATM until they have the skills to manage it effectively. Have them set out what they want to spend so they can see a direct connection between their budget and their spending. Also don't be afraid to get out the credit card bill and outline how payments, interest, and expenses add up to the number on the bottom line, and show your teen how interest can build up when credit cards are used irresponsibly and the balance isn't paid in full.

Give the Gift of the Hard-Earned Dollar
Getting teens to understand the value of all the hard work that parents put in so they can buy Christmas presents can be difficult. "Many teens may be missing out on the real value of the dollars they're spending, because they aren't making a connection with the effort that was put in to make that money," says Montanaro. With almost half of teens not working for their "fun money," according to the USAA survey results, a holiday season job could be just the ticket to learning the value of a dollar. Encourage your teen to get their own job so they can see their hard work turn into the cold cash they'll spend on their friends and families during the holidays.

Stuff Stockings with Savings?

Also, remember that there's no better way to teach teens to be accountable for their spending than by empowering them to manage their money. Set up an online savings account and debit card for them, and show them how to manage and monitor their spending on the web. When teens can see how their debit card takes money from their savings account, they'll better understand how that piece of plastic isn't an endless supply of spending power.

Using the holidays to teach teens good money management habits may make you feel more like Scrooge than Santa Claus, but learning to be financially savvy is a priceless gift. Visit for more information about teaching your children ways to develop good money management skills.

USAA means United Services Automobile Association and its affiliates.

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