Typically, I write about how to save money or avoid the temptation to indulge. I, at times, have chastened friends for their unnecessary expenditures. Today, I want to express quite the opposite.

Close-up of our Christmas tree

My wife and I just put up our Christmas tree. I believe that we broke some universal law by putting it up before Thanksgiving. But we just couldn’t wait. Christmas trees seem to carry with them all of the good and warm feelings that Christmas invokes and we were feeling rather merry (maybe it was all that egg nog).

Much to my wife’s chagrin, we own a fake tree rather than a live one. We purchased it several years ago at Target for around $50. Since then, we have been adding ornaments and embellishments. Anyone that has owned a cheap, fake tree knows that they don’t look to great just out of the box. There are random, barren spots. To make the tree look good, you kind of have to put a lot on it.

Last year, we decided to invest in our tree by buying quite a few new decorations. I estimate that we’ve probably spent all-together around $300 on our Christmas tree. That price tag may seem a bit at odds with my normal “save wherever you can” approach. However, I think it’s important, almost essential really.

First, you need something to splurge on

I have a friend who is working on getting out of debt. We occasionally talk about what he and his wife are doing to pay down the debt. One of the comments that he has made to me several times is that they need to splurge every now and then. Otherwise, they feel suffocated by the debt.

The way I see it is if you are going to splurge on something, then why not let it be on family traditions. Tree trimmings can be used year after year. We make putting up the tree and Christmas decorations a day long event involving music, food and fun.

Second, Christmas is one of the most memorable events as a child

I still remember all of the ornaments that we would hung each year as a child. I remember the box they were stored in. And I remember when I was finally old enough to start putting the tree together myself. Our three year old was ever so anxious to help setup our tree. Both of our kids talk all day about Christmas and snow.

The holiday season, for me at least, is about creating memories – not so much the gifts. I want my kids to know that they grew up in a home where we celebrated this joyous season.

Third, don’t be a Scrooge-ly miser

I get that Scrooge was a wealthy man and had money to spare. You may feel that you don’t have extra cash. My recommendation is plan and save for it, just like anything else. Also, consider diverting some of the gift money to a tree fund, which benefits the whole family.

Let me end withe the words of one of my favorite Christmas songs (I Cry the Day I Take the Tree Down by Michael McLean):

I thought I’d seen all the lights and sung all the songs
I thought the holiday lasted a bit too long
I never shed any tears when Christmas was through
Until I celebrated one with you

And now I cry the day that I take the tree down
I want the season to last all year round
And I’m surrounded by these memories
It’s almost like you’re here with me

For more of my musings on families, careers and financial planning, follow Rabbit Funds on Twitter. Also, let me know in the comments section what holiday traditions you splurge on.

I have two girls, two and one, and for Christmas this year, we talked about how we could help our two year old begin to understand what Christmas is actually about – and no it’s not about receiving gifts. No matter what your religion or beliefs are, Christmas is a time to think about things bigger than yourself. Christmas is a time to throw our inner-Scrooge out and help others.

Young children, though, are generally only exposed to the commercial Santa Claus story instead of the figure of a man determined to bring cheer and happiness to innocent and equally deserving children the world over. I largely place the blame at the feet of Hollywood (who lost its values long ago) and retailers. Please do not misunderstand me though. I have no problem with Hollywood and retailers trying to make money. However, profits do not incentivize them to create an accurate or compelling story of the true meaning of Christmas. That responsibility falls to parents, as it should.

To give you a few ideas, I’ve compiled a list of five activities to teach children how to appreciate Christmas and what it really means.

1) Earn money for gifts

Growing up, my siblings and I would go to Grandpa’s house and rank the leaves to earn $100 that was to be spent on buying Christmas gifts. First, there were a lot of leaves. I mean a lot. Second, raking those leaves are some of my fondest holiday memories. Even at a very young age, we helped in whatever way we were capable and were equally rewarded.

Earning money that I then exclusively spent on others was not something I did often. So having that experience each year gave me a nearly singular opportunity to develop an attitude of financial sacrifice. Also, I learned that Grandpa makes up the difference. The 5 year old was probably more trouble than help. And yet, he would receive as much compensation as the 9 year old and 12 year old. Why? Because Grandpa made up the difference by working a little harder. Wouldn’t this world be so much better if we all worked a little harder to make up the difference?

2) Create a Christmas budget

Once your children have earned money for Christmas gifts, have them create a Christmas budget. For example, have them create categories like Charity, Family, Friends, Schoolmates, etc. Within each category, list the names of everyone who will receive a gift. Last, place a dollar value next to each person’s name.

When picking the values, let your children do it. Hopefully, it doesn’t add up to the amount that they actually have to spend. Let me explain why I would hope that happens. If the amount does not add up, then you have the opportunity to talk about balancing a budget. So let’s say that your child has $100 to spend but wants to spend $150. Explain that the budget can’t exceed your income, or the $100. Then revise the budget together. I wish more adults had this skill.

3) Participate in a local charity program

As part of the budget, allocate a few dollars for a charity program in your area. You will probably need to add some money to the budget. Where I live, we have Sub-for-Santa and Angel Tree. Both programs allow you to go and buy gifts for a specific child or family. This year, we selected a two year old girl and had our two year old, Kennedy, help pick the gifts. We told her that she was giving presents to another little girl that was her “friend.” I’m not sure she fully understood, but will in time.

4) Volunteer time at a shelter

Okay, this one doesn’t really involve money unless you think time is money. Nevertheless, serving those less fortunate almost never fails to teach appreciation for the things and luxuries in one’s life. In fact, you may realize that having a pantry with food in it is considered a luxury in most parts of the world. Afterwords, talk about how being educated, getting a good job, and earning money allows us to help others.

5) Have them put Christmas money received as a gift in savings

If your kids receive money as a Christmas gift, have them put it in savings or open a savings account if they don’t have one yet. Make sure to make them a part of the entire process. Meaning, even have the four year old go in and hand the money to the teller. Have the nine year old fill out the deposit slip.

My cousins always had to put their Christmas money in savings while I was allowed to spend it all. Now, I wish that I would have been encouraged to save it, or at least most of it. I usually received sufficient toys from my family and the savings would have been helpful down the road.

What holiday traditions do you have to help teach your children about the true meaning of Christmas?

Dear Santa Claus,

First, let me say that I’m a big fan. Ever since seeing Tim Allen and Martin Short duel for your position, I’ve felt a renewed vigor and belief. So I thought I would drop you a line this year and make a few requests.

1) A fully funded 401(k)

I’ve tried to be a good boy. Before my company was spun off in the 2nd quarter, I diligently contributed to the company 401(k), despite the terrible array of investment options. But since the spin-off, we haven’t had a 401(k). In fact, Prudential is now sending me letters telling me to roll my 401(k) over to someone else. Apparently, I don’t have enough money for them. So I would have kept contributing if I could have. So will you please fully fund my 401(k) please? Don’t worry about the company match.

2) A Roth IRA for the wife

Once our 401(k) disappeared, I started making contributions to my Roth IRA. Unfortunately, my wife still does not have a Roth IRA. Having a shiny new Roth IRA at, let’s say, Vanguard with a couple of index funds would be great. Just something to get her going. She’s running her own business though, so maybe a SIMPLE IRA would be better. I’ll let you decide. I mean, you seem like you are pretty financially savvy. You’d have to be to finance the production of million of toys each year.

3) Better health insurance

Since I’m talking about my job, our health insurance isn’t that great either. I know that I should just be grateful that we have health insurance, but can you really call a $5000 deductible insurance? For example, my wife has scoliosis and had started going to the chiropractor regularly since the pain was increasing. She was just making progress when I had to tell her that she needed to stop going for at least a couple of months. We simply have no way of paying for her to go twice a week. I’m willing to do my part to earn some extra money, but a better health insurance plan would go a long way.

4) An emergency fund

As I’m sure you are aware, I’m currently studying to take the GMAT this Saturday. Realizing that I needed some extra help, I signed up for the Kaplan Advanced GMAT prep course, which I highly recommend to any of the elves looking to change careers. Paying for the GMAT, the prep course, two new tires, and medical bills has depleted our emergency fund. So maybe I’m pushing my luck, but a replenished emergency fund would make sleeping at night easier. Think of the children.

5) Dems to sign-off on tax cuts

I was planning to ask for extended tax cuts as well, but it seems that President Obama and the GOP have decided to give us an early Christmas present. I was just hoping for the extension, so the Social Security tax cut, the equivalent of a 2% pay raise, was a very pleasant surprise. Though, the Democrats need some persuading. So maybe you can threaten them with some coal.

6) Maybe an up-swing in the housing market

Last, but certainly not least, is there anything you can do about this housing market? Our home is two years old and we are underwater. Hoping that we were just a little underwater, we had an appraisal to find out what our home is currently worth. I think I was better off not knowing. What’s really frustrating is that we are responsible and our irresponsible neighbors who bought a home they couldn’t afford have caused home prices to drop. So maybe you could just leave Dave Ramsey’s Financial Peace University under everyone’s Christmas tree this year.

As you can see, we have a number of financial goals and challenges that we are facing as 2011 draws near. And although I’m gainfully employed, my pay just doesn’t quite cut the mustard.

Anywho, I’ve rambled enough.

Thanks Kris (can I call you Kris?)

Adam

P.S. A couple shares of Berkshire Hathaway would be cool too, but whatever.