Related topics: family, raising children, cell phones, stocks, Liz Weston
A cell phone
Buy your kid a cell, and you've blown what could have been a great teaching tool. Why? Because your child is desperate to have a cell phone and willing to do almost anything for one -- including work for it.
It's not too much to ask your child to save up for a phone and to pay the monthly cost, particularly when you can get unlimited texting/unlimited Web-access plans from pay-as-you-go providers such as Virgin Mobile for as little as $25 a month (pay-as-you-go metroPCS has a $40 plan that includes unlimited calling). If the kids don't pay the bill, the phone stops working, bringing home the consequences of financial irresponsibility.
Saving for a goal, budgeting for an expense, bearing the consequences if a bill isn't paid -- these are all great money lessons you should be teaching your child.
And what's too young for a cell phone? You should probably hold off until your kids are middle-school age, when they're old enough to do things like walk a neighbor's dog or be a mother's helper to raise cash.
A framed stock certificate
Liz Weston
You might think this is a great way to get your child interested in investing. It's not. Few kids think a framed anything is a cool gift, and what you're really doing is paying twice (or more) what something is worth -- not exactly smart behavior for an investor.
If you want to teach little Janie about investing, sign her up for a custodial or joint account at Sharebuilder.com and help her choose some stocks or mutual funds to buy.
Any pet that will outlast the kid's tenure at home
Some pets, including turtles, snakes and parrots, can live for decades. That's a long, long time to be responsible for another creature -- and its vet bills. Your child swears now that he'll take care of it, but when he goes off to college, guess who's going to have the responsibility?
Junior can get an exotic pet when he's an adult. Until then, shoot for pets that will leave you with an empty nest someday.
A savings bond
This might have been an OK gift back when interest rates weren't close to zero, but these days there's way too much delayed gratification required for savings bonds to be anything but an exercise in how to waste money.
Paper Series EE bonds are sold at half off, so $25 for a bond with a $50 face value, but the bonds don't reach that face value for 20 years. Given even a small amount of inflation, $50 in 20 years will have the same buying power as $25 today. Gee, thanks, Mom.
If you want to teach delayed gratification, have them save for a cell phone (as in the first slide). If you want to teach them something about investing, open that Sharebuilder.com account (slide No. 2). If you want to help them save for college, open a 529 college savings plan. If you just want to annoy them, then, well, be yourself.
Anything 'collectible'
If your child collects something as a hobby, and you want to occasionally add to that collection, fine. But don't set out to buy "collectibles" that will be "worth something someday," because they probably won't be. Few items that are mass-produced today will be worth anything tomorrow, since they just won't be rare enough.
To have much value in the future, a true collectible typically must be relatively rare and fairly expensive now (to become more so down the road), plus attractive to a wide group of other collectors. Otherwise, you're just encouraging your kid to spend good money on stuff that will eventually wind up in a box at Goodwill.
Since things don't make us as happy as experiences and relationships, a better gift might be tickets to a sporting event, performance or theme park that you can share together.
