Christmas a Time for Financial Teaching : Thrift: Giving and receiving gifts can provide the lesson that money doesn’t grow on trees.

For families whose children think money grows on trees--particularly the decorated evergreen variety--the holidays may be more stressful than joyful.

Yet they can also provide the best opportunity all year to teach youngsters about money and to introduce them to the world of investing through gifts of stocks, bonds and other financial products.

“This season is a perfect time if you haven’t already started to discuss money,” said Neale S. Godfrey, who heads the Children’s Financial Network in Mountain Lakes, N.J., which produces educational teaching materials.

“No. 1, kids are bombarded with commercials, and No. 2, there’s the feeling in terms of having to keep up with the Joneses. It doesn’t matter what socioeconomic group you’re in.”

Without sounding like Scrooge, parents must convey to children the importance of setting financial limits and of making choices. It also wouldn’t hurt if they followed their own advice when making holiday purchases.

“You might say, ‘Sure, you can have the $100 sneakers or computer game, but you can’t have much else,’ ” said Godfrey, co-author of the recently published book “Money Doesn’t Grow on Trees.”

“You have to be satisfied with the finite amount. That’s the real message.”

One place to start is the Christmas wish list, which may be long enough to wallpaper a room or two in some households.

“Ask the child which three items are most important; they can circle them or underline them,” said Bonnie Drew, author of “Money Skills: 101 Activities to Teach Your Child About Money.”

“And . . . ask them to make a list for what they want to give, so they begin to think about their contribution. Maybe it can be something they can make or do.”

What about the younger child who believes there’s a Santa carrying around a bottomless sack of goodies?

“Tell them, ‘Santa has so many people that he has to cover . . . and he has to have a budget and stick to it.’ That’s how we cover the Santa Claus thing,” Godfrey explained.

Older children should also be taught to maintain a budget. Some financial experts suggest the envelope approach: putting aside a certain amount for each person for whom they want to buy a gift.

Paul Richard, who runs the National Center for Financial Education, a nonprofit San Diego group that distributes educational games and publications, says parents should avoid merely handing out money.

Children “should get money for their shopping from their allowance, doing household chores for extra money,” Richard said. “And we never tie the allowance to basic chores.”

Children also need to learn comparison shopping. “Differentiate between a shopping trip and a spending trip. Try to compare prices, quality and value, then go back and buy the item,” Richard said.

One interesting gift mix--particularly for the older child--can be stocks, bonds, mutual funds, even cash, given along with the Barbies, video games and Mighty Morphin Power Rangers.

“I don’t think you’d win the favorite aunt or uncle award. But you can teach them an important lesson . . . and they’ll appreciate it when they get older,” said Amy Nathan, associate editor of Zillions magazine, a children’s version of Consumer Reports.

Nathan recommends starting off simple with bank investments, such as certificates of deposit, or U.S. savings bonds, which can be bought for as little as $25 at most financial institutions.

She also notes that some mutual funds will allow initial investments starting at around $250, while a few others set no minimum.

Another gift idea is to purchase a share or two of stock, which children can then follow throughout the new year. It doesn’t come cheap through the usual channels, but if you have an established relationship with a brokerage firm or bank, you might be able to get the usual fees waived as a courtesy.

Other options are to transfer a share you already own into the child’s name or contact the investor relations department of a company.

Some companies, such as Texaco and many utilities, let you buy initial shares directly from them. Many more offer dividend reinvestment plans that allow for periodic additional purchases of shares without brokerage commissions, sometimes at a discount.

“Buy a stock (children) can influence . . . and explain how they’re owning a little piece of the company,” said Godfrey. “Teach them how to read stock tables, let them see annual reports.

“Discuss what impacts a company’s stock. What happens to Paramount if it comes out with a new movie and no one comes to see it . . . or if sugar prices go up, how does that affect Hershey.”

Some companies cater to young stockholders, as Charles B. Carlson, editor of Dow Theory Forecasts, pointed out in his recently published book “Free Lunch on Wall Street.”

He notes that a number of companies offer shareholder freebies likely to appeal to youngsters.

William Wrigley Jr. Co., for instance, gives shareholders a box of 20 packs, or 100 sticks, of the company’s chewing gum around the holidays. (This year’s flavor is Wrigley Spearmint.)

Wendy’s International Inc. periodically includes discount coupons in shareholder mailings, while McDonald’s Corp. will send out a mock stock certificate suitable for framing during November and December.

Some young shareholders may never look at a Happy Meal the same way again.

“They may announce to the crew (of the restaurant) that they’re part owner,” said Mary Healy, director of investor relations at McDonald’s, where 21% of the shareholders are custodial accounts, which means they’re owned by children but held in the name of the parents.

“Some may be careful about how many napkins they’re taking or ask themselves, do they really need that extra package of ketchup.”