Stop Spending and Start Saving

Want, Need, Wear & Read: Why Everyone Should Follow The 4 Gift Rule

Are your children getting a little too acquisitive? You might want to introduce them to the 4 gift rule.

Gifts Gifts Gifts

In 2016, the average parent spent $422 on Christmas gifts for each child. When you include birthday gifts, Valentine’s Day gifts, Easter gifts, gifts for things like a good report card, not to mention gifts from family members and friends, the numbers not to mention the stuff, really start to add up.

And many of those gifts will be forgotten in the bottom of a toy chest or broken and in the trash long before the next gift giving occasion rolls around.

Gifts Can Have Negative Consequences

When you or anyone give a child a gift, that is a well meaning gesture. And it is. But when children receive too many gifts, it can create problems, in the short term and throughout their lives.

Children who are greedy can turn into adults who have problems with compulsive shopping, credit card debt (fuelled by compulsive shopping), and even gambling problems.

Some parents use gifts to assuage guilt; maybe they work a lot and don’t spend a lot of time with their children or are the non-custodial parent after a divorce and buy the children lots of gifts to make up for not seeing them every day. Having a lot of material things does not correlate with high levels of self-esteem. Having a strong relationship with parents does.

It’s true that money doesn’t buy happiness and receiving gifts doesn’t either. Giving to others has been proven to increase happiness so teaching children to be generous with others will provide them with a source of happiness.

Also, when child free people (like me) see your greedy brat having a melt down in Target and wailing for a toy, we are judging you!

Get our best stuff in your inbox:

The 4 Gift Rule

The 4 gift rule is an easy to understand the way to teach children that they can’t have everything they want. You buy your children four gifts, one from each of four categories.

Something They Want

This is a gift the child chooses for themselves and is usually the “big” gift they receive. They can make a list of a few options and the parents can decide or they can choose one thing and that’s what they’ll receive. Part of the fun of getting a gift is the surprise though so the list of choices seems more fun and exciting.

Something They Need

Depending on the age of the child, this could be up to them or up to the parents. For a baby, it might be to start a 529 College Savings Plan. For a teenager going to college in the fall, it might be a laptop.

Something to Wear

Considering that four gifts are not an overwhelming amount, maybe make the gift in this category a little better than new socks or underwear. A new winter coat or a new pair of expensive sneakers seem more appropriate.

Something to Read

For some of us, this overlaps with the first category. Books are the best gifts! This is another splurge category. If your child is very small, maybe something like a whole set of Golden Books and if they’re older, the complete set of Harry Potter or the entire works of their favorite author.

Other Benefits

There are lots of good reasons to follow the four gift rule that doesn’t have anything to do with raising grateful, non-greedy children. You don’t have endless amounts of money to spend on gifts and even if you set a gift budget, it’s probably a lot more than it will be when you adopt the four gift rule.

The four gift rule is green. So much of what is made for children is plastic junk that will sit in a landfill somewhere not degrading for hundreds of years. And it comes packaged in more plastic.
Manufacturing all that third world made junk pollutes the environment and much of it is made using child labor. Twenty million child laborers work in factories that manufacture toys along with other things like clothes and carpet.

It’s less clutter in your house which means you can live in a smaller house which means your housing costs will be lower!

Do You Still Need a Gift Budget?

Yes, you need a budget for all of your spending. Your gift budget shouldn’t be hastily scraped together at the last minute. You should have a budget category for gifts year round. Gift giving occasions pop up all year long, Valentine’s Day, graduations, anniversaries. Many of these holidays shouldn’t come as a shock. Christmas is on the same date each year as is your anniversary.

Should your Christmas budget be any different than past years if you adopt the four gift rule? Yes, that’s part of the point. The main reason to do it is so children are not overwhelmed with gifts and come to expect that kind of largess all the time. But saving money is a motivator too.

Raising kids isn’t cheap. It costs a quarter of a million dollars to do it to 18 so that doesn’t even include college. The money you save by following the four gift rule can be better spent buying your children food or health insurance.

They Won’t Remember Any of That Stuff

Do you remember what toys you got for Christmas as a kid? I remember one, a Light Bright and I think the only reason I remember that is because I remember turning off the kitchen lights and playing with it with my grandmother.

The only other toys I can remember I only remember because there are pictures of me posing with them as I opened them. Your kids won’t remember all those plastic toys either.

What They Will Remember

You don’t want to feel like Scrooge at holidays. You want your family to have happy holiday memories. Happy, lasting memories are created by what we do rather than what we buy. Start holiday traditions like caroling or going to a tree farm to select and cut your own Christmas tree.

Celebrate a birthday by taking a trip to a zoo or an amusement park or to the beach. Decorate cupcakes together for Easter. It’s those things that children will remember and associate with holidays, that you spent time together as a family.

The Rest of the Family

Should you try to get other family members who buy gifts for your children on board with the four gift rule? That’s a personal decision. Some may be grateful for the decision, especially grandparents who have several grandchildren to buy gifts for.

Some people may resent it and find it too controlling or miserly. You should probably pick your battle here. If implementing the four gift rule is important to you, explain why (or just send this article!). In the end, you are the parent and how you raise your kids is up to you.

If this is not a battle you want to fight, there are still ways to teach your kids that they can’t expect lots of gifts and gifts aren’t what makes you happy. You can try things like requiring that for every new gift they receive they have to donate an older toy to a children’s charity. Maybe for every X number of items donated you will take them on a special outing.

If a family member asks your child for a list of gifts, only make the list a few items long. Ask that rather than buying so many gifts, they contribute to your child’s college fund instead. You can try to steer them to certain types of gifts, things like board games and puzzles that can be enjoyed as a family or active things like a yearly pass to a museum.

Part of Parenting

It’s fun to spoil kids, they’re only kids for a little while after all. But that is the point of things like the four gift rule and teaching good money habits early. They are only kids for a few years, they are adults much longer. The things you teach them as children will shape the kind of adult they become.

Teaching children that material things don’t bring happiness will make them happier adults. Teaching them to be generous to others will make them kinder adults. And teaching them that they can’t have everything they want will make them better equipped to handle their personal finances.

What's next?

home podcast popular toolbox search