Here’s What Suze Orman Says Your Kids Should Do With Cash Gifts

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If your kids are lucky enough to receive monetary gifts from relatives for Christmas, what do you do with them?

Do you let the kids choose how to spend the money? Or put it straight into college savings?

Well, there’s a specific way parents should handle their children’s monetary gifts, according to financial guru Suze Orman.

Her strategy is simple, but smart, so we had to share it with you…

Help Your Kids Develop Good Money Habits With This Strategy

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Orman offers three rules for divvying up the holiday cash your kids receive. Of course, you can adjust percentages to your own needs, but we thought her framework was spot on.

1. Give Your Child Total Control of 50%

Orman says you should let your child choose what they want to do with half the money — no judgment or opinions allowed.

“Let your child learn through personal experience,” she says. “What they learn today will impact financial choices they make in the future.”

2. Save 40%

Though you can save for whatever you like, Orman says it’s important to have specific goals in mind — rather than just a general savings account.

“I personally think every child should be saving as much money as possible for college, even if it is 10 years away,” she says. “This is a natural way to start talking in an age appropriate way about the cost of an education.”

3. Donate 10%

Orman recommends letting your child choose a charity and donate a portion of their money to it.

“This is a fantastic opportunity to talk as a family about the importance of helping others, whether they are in our neighborhood or halfway around the globe,” she explains.

And I’d add one more rule: Your kids should send a handwritten thank-you note — not a text or email — and tell the giver how they plan to use the money.

My mom made me do this for every gift I received. Looking back, I’m so glad she did.

Help your kids develop good money habits this Christmas… I’m living proof they’ll thank you later!

To read Orman’s full post, click here.

Your Turn: Do you have any rules for your kids when it comes to monetary gifts?

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at, or say hi on Twitter @susan_shain.