Birthday parties are an excellent way for kids to gather with their friends and make lasting memories they’ll cherish for years to come. They’re also a great way for parents to go broke. If you feel a pang of guilt every time your kiddo rushes home with a birthday party invitation because all you see are dollar signs and not her happy face, you’re not alone — or even in the wrong, for that matter! Budget-conscious parents can finally breathe, though, because there’s a new trend sweeping the nation: the “Fiver” birthday party.
As the name suggests, Fiver parties have to do with fives — but they aren’t limited to a specific age (however, they’re typically for kids’ birthdays). Fiver parties are any birthday gatherings in which the host asks guests to bring $5 instead of a store-bought gift. That way, the birthday kid can save or spend the money as she sees fit, and party attendees don’t have to spend hours at the mall searching for toys.
Fiver parties come with a list of benefits, including teaching opportunities for kids about saving, budgeting, investing, and donating. Here are some of the ways you can use Fiver parties as teachable moments.
Gifts have, for better or for worse, become a staple at birthday celebrations, and the idea of explaining to a child why he won’t receive any physical presents can seem daunting. However, Fiver parties can open up valuable discussions between parents and kids about money and spending in a way that kids will respond to favorably, Brian Brandow of Debt Discipline tells SheKnows.
“When you talk to a young child about money it needs to be incorporated into a topic they have interest in,” he says. “When you speak to them about smartphones, video games, ice cream, and presents, you will typically have a captive audience. You can use the Fiver birthday party in the same way, letting them understand the value of the money gifted, including the cost of a purchase, savings, and giving.”
Has your kid been eyeing the Nintendo Switch or the hottest unicorn gear? Maybe she’s been wanting to go to a theme park or take a kids’ cooking class. Fiver parties make these wishlists more tangible, without putting all of the responsibility on parents. Kids can learn how to accumulate their money and spend it on the items and activities they love most.
Saving & Investing
Fiver parties shouldn’t all be about spending, though, says Chloe McKenzie, wealth literacy expert, financial advisor, and CEO of On a Wealth Kick. Instead, parents should use Fiver parties as a way to teach children about the importance of saving and investing money to grow their wealth.
“We should be teaching kids as early as three years old the value of wealth and how to start building it,” McKenzie tells SheKnows. “Fiver parties are teaching them that the money we save is meant to be spent. That’s not always true.”
While McKenzie believes there is value in teaching kids “to plan how they spend,” she says Fiver parties often fail to provide kids with a more holistic understanding of financial responsibility. “If we truly want our kids to understand the importance of saving, then they need to know its purpose as it relates to wealth-building, not buying things,” she adds.
As someone who didn’t understand net worth until her early 20s (terrible, I know), I get why explaining the concept to a toddler might seem like a confusing waste of time. However, the sooner kids learn about hard-to-understand topics such as financial planning, the more natural saving and investing will become for them. Besides, you don’t have to get too into the nitty-gritty for kids to learn the basics.
“These Fiver parties can be an opportunity to discuss wealth with kids. Everyone can bring five dollars, and parents can describe what wealth is, how exciting that is, and what the person who is now one year older can do with this collection of money to increase their net worth,” McKenzie says. “How profound would that be that each birthday the child gets to build a new balance sheet (an activity we do annually) and that child can decide among friends what to do with that money to maybe acquire a new asset, maybe invest or save, or not, but have a discussion about how that might affect the balance sheet?… A percentage can go toward building net worth, and the other to an item they want. That’s a win-win.”
Fiver parties may be relatively new, but their predecessor, the Toonie party, has been around for a few years in Canada, says finance and real estate expert Romana King. Unlike Fiver parties, Toonie parties ask for a $2 coin and often also teach children about compassion and giving.
“In addition to the $5 for the gift (or the $2 coin in Canada), many parents will also ask for a contribution that will go towards charity,” King tells SheKnows. “This, then, allows the parent to open a discussion about charitable giving, sharing and giving back, and gratitude.”
Some parents opt not to ask for additional money and, instead, tell children that half of what they received will be for spending, while the other half will go to a charitable cause of their choosing.
While there are a lot of pros to throwing Fiver parties, they come with a list of cons, as well, including greed and unrealistic expectations.
“One con is kids don’t get the experience of opening a bunch of thoughtful gifts from friends and may become too focused on money versus friends, experiences, and fun toys,” financial expert Stacy Caprio of Fiscal Nerd tells SheKnows. “Focusing on money, especially at the expense of people and experiences, at its worst, may cause someone to choose money over kindness and even cutting ethical corners and boundaries, hurting others, just to get more money.”
One way to prevent this kind of mindset is to lead by example. The less we conflate wealth with self-worth, which is significantly different than net worth, the less likely kids will do the same. Talks about money shouldn’t undermine conversations about empathy and inclusivity.
Additionally, some families may feel uncomfortable asking for money. You can control how much or how little information you want to share. If your kiddo knows he wants to save up for a new pair of cleats, feel free to say so on the invite. Otherwise, you can write something along the lines of, “Instead of store-bought gifts, we’re asking attendees to bring a $5 bill if their budgets allow.” As with all gift giving, bringing something should be optional rather than mandatory. You can also include a line saying parents with questions are free to contact you for clarification.
Overall, Fiver parties can provide fantastic opportunities to teach kids valuable lessons about spending, saving, and donating, while also relieving some of the pressures and expectations of parents. Don’t be surprised if you receive an invitation to one soon!