I grew up as 1 of 3 kids, and we didn't exchange birthday gifts until we were older and took the initiative ourselves, probably when we were in high school. My elementary school had a little holiday store where kids could buy inexpensive presents for family members, so we started doing that when I was 8 or so. Some years we exchanged, some years we didn't.
My kids are 9, 7, and 4. Our birthday gifts are from the whole family, but 2 years ago we started giving them a small budget ($5 per sibling) and taking them shopping to pick out holiday gifts for each other. We do give some guidance and have veto power as they're shopping. Then one night of Hanukkah the kids exchange presents but don't get anything from us. Most of the presents themselves haven't been that popular, but the kids love picking them out and giving them, so we'll keep doing it.
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