Here are 3 unique holiday gifts for children that won’t add any clutter to your home and will set them up for success later in life
As the holiday season approaches, I feel a nagging anxiety mounting as I imagine all the shopping, wrapping, unwrapping, and waste that inevitably comes with it. While I love the magic of the holidays, especially the time spent with family cooking, eating and drinking together, playing games that seem to only come out at this time of year (living room charades anyone?!) and enjoying family traditions like going to look at all the lights at Butchart Gardens, I have a strong dislike for the consumerism that seems to be expected of us all.
In my role providing financial education, I encourage people to define their relationship with money in terms of what they value. This can be used to help determine how you want to use your money over the holiday season. And especially when we have kids, our choices about how we spend and use our money is setting an undeniable example for them.
Buying “stuff” that provides only a brief window of entertainment or a temporary use just does not rank high on my family’s list of financial value. I’d rather spend money on experiences than things – especially if you’ve ever moved homes, the piling up of ‘stuff’ becomes a real problem! Not only do physical items clutter your space, but they come with packaging and wrapping that tend to be unavoidable.
That’s why this year, with our son experiencing his first real Christmas (at age 2), we plan on focusing on a few quality useful items (like warm winter clothing and maybe one or two educational toys and books), but mainly experiences, like our son’s first time on skis (hopefully!) and, financial contributions to his future.
Because I work in the financial industry, we’ve already set up a couple of monthly contributions. If you are a parent (or grandparent) to young kids and you have not yet done this… perhaps this is the year to start and save yourself a few pieces of clutter in your home! Imagine instead putting those funds into something that will grow over the years and give your child a head start in life. Now that feels good!
3 unique holiday gifts for children for financial literacy, investing, and giving back
1. Set up an RESP account as holiday gifts
A registered education savings plan is an investment account that you can set up with your child or grandchild as the beneficiary. It gives you the ability to contribute funds which are then matched with a 20% grant by the Canadian government (to a maximum) called the Canada Education Savings Grant (CESG). Any earnings within this account can grow, sheltered from taxes, to be used for future education needs.
You can choose a self-directed RESP or a structured program, depending on your investment style and budget. Most financial advisors and institutions will be able to help you open an RESP and help you choose investments, or you can choose a self-directed platform like Questrade, Q Trade or WealthSimple.
Family plans allow you to add multiple children and grow one account which any of the children can access for education (and if one child decides not to pursue post-secondary education the funds are easily accessible to the other children).
If you live in BC, your child will be eligible for a one-time training grant of $1200, the British Columbia Training and Education Savings Grant (BCTESG), between the age of 6 and 9; simply having an RESP open with your child as beneficiary will allow you to apply for this grant.
Low to middle income families also qualify for additional grant contributions so if your family net income is less than $100,000, you will likely qualify for an additional 10-20% in grants. The Canada Learning Bond (CLB) is an additional grant paid by the government to RESPs for beneficiaries from low-income families (less than net $50,197). It provides $500 at account opening, followed by $100 per year until the beneficiary turns 15, for a total of $2,000.
So, if you haven’t opened an RESP for your child/children yet, what are you waiting for! Even $25-50 per month can make a significant impact over the years when the grants and interest are added in. What a lovely, unique holiday gifts for children!
2. Set up a permanent tax-sheltered insurance policy for your child
This certainly wasn’t something I was aware of when I first became a parent, but I’m thankful we found out about it because it is a powerful way to build generational wealth and also provide protection for your kids/family.
Essentially how it works is, you apply for a permanent life insurance policy for your child (or baby), which provides a tax-sheltered investment account. This is the only way to invest money for your children that is tax sheltered, outside of an RESP, which does become taxable when the child goes to school and withdraws funds, and it doesn’t have the limitation of being utilized only for education purposes.
Another wise idea is to add critical illness coverage for your child. When they are young and healthy the premiums are low, and you can guarantee they will be insurable; if anything happens to their health as a child, teen or young adult they may struggle to qualify for these types of insurance later in life, but if you set it up when they are young, they will be covered no matter what health challenges they may or may not face. It also provides you, the parents, with financial protection should you need to support your child through an illness.
When you start these policies for your kids at a very young age (you can apply for a baby as young as two weeks old!) you have the advantage of time on your side.
The investment account will have 18-20 years to grow and compound before your child is even an adult, and you could choose to wait until they are 25 or even 30 years old before handing it over to them. They will have a fully funded insurance policy covering them for a serious illness or death, and they won’t have to pay any future premiums, unless they want to significantly increase their coverage.
Allowing the money to continue to grow and compound, tax sheltered, within the insurance policy can produce a significant nest egg of funds that can be used for your child’s retirement or as a way to transfer wealth between generations. Or, if they choose, they can withdraw funds from the account or surrender the policy altogether and use the money for some other purpose: buying their first home, or starting a business, for example.
A licensed insurance advisor/agent can help you understand and navigate all the options in setting up a policy like this as a unique holiday gifts for children.
3. Make a donation to an organization in their name
This is a wonderful way to foster generosity in our kids! It encourages them to notice everything they have to be grateful for and how good it feels to give to others who may not have the same privilege. Ideally, you can involve them in this process by letting them help choose the cause or organization they want to give to!
Some ideas are:
- Make a one time donation near the holiday season to an organization like a food bank, shelter, animal rescue organization, etc that your child wants to support (if it’s a registered charity you’ll also receive a tax receipt)
- Build a food hamper to drop off to a family in need over the holidays (you can involve your kids in choosing the foods to include)
- Volunteer at a soup kitchen (help your kiddos understand that giving TIME is another valuable gift and a way to give if funds are tight)
- Purchase a gift for a child whose family may not be able to afford gifts (many malls run these programs over the holidays)
- Adopt a child or family abroad to support
- Purchase a physical gift that also includes a donation (WIRTH Hats is a great example where the purchase of hats/toques also contributes to providing free counseling for those who need it and can’t afford it)
When I was a kid, my grandparents donated to a few organizations on our behalf (including the TransCanada Trail) and also purchased some stocks/shares in our names and set up RESP accounts. While you might get the two seconds of excitement from the child when they open the gift, they will be enormously thankful for it much later in life.
So there you have it, 3 unique holiday gifts for children WITHOUT adding any additional clutter to your home or waste to the landfills AND providing an opportunity for your kids to learn about money, investing and giving back.