Dear Oakley,I’ve been thinking about gifting money to my grandchildren. Before I do so though, I’d like to teach them about financial responsibility. As a financial planner who works with seniors and their loved ones, how do you suggest I do so?
Finn Anshull
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Dear Finn,
Grandparents are often the ones who bring patience and life experience to the table — a combination that is well-suited to helping their grandchildren develop financial literacy skills.
There’s often a whole different emotional dynamic that exists between grandparents and grandchildren. They are often unconditional in their support and they have a window of opportunity to really reach their grandchildren and be heard. Here are some ways you can teach your grandchildren financial literacy:
– Share your money history
Grandparents can be powerful educators by simply sharing their stories. Telling your 10-year-old grandchild how much a car or a candy bar cost when you were their age, for example, captures the imagination (and illustrates the effects of inflation) better than any history book ever could.
– Open Up About Money Missteps
As grandparents reminisce with their grandkids, they should not be afraid to open up about their own money missteps. In fact, they should make it a point. Share your successes and your failures as well. It shows future generations that if you recovered, then they can, too, which gives them permission to take a risk. It’s about teaching the next generation to be courageous, not perfect.
– Give Them a Small Allowance
You can also give your grandchildren $5 each time they visit, or set up a small bank account or debit card account for them and suggest ways they can prioritize their spending. Take them to a yard sale to show them just how far that money can go.
– Cultivate their Entrepreneurial Spirit
Apart from sharing stories about their personal relationship with money, grandparents can also help their grandkids earn and manage money of their own. Cultivate their entrepreneurial spirit by helping them open a lemonade stand or sell handmade bracelets or baked goods at your local community center or church or synagogue. With the money they earn, help them make a budget for spending some and saving some for an item they really want. This will help them establish a savings discipline.
– Cook Together
Cooking together with your grandchildren not only creates special memories, but can also be educational. Plan a meal together, making a list of ingredients and heading to the grocery store to show your grandkids how to comparison shop by brand. Show them the receipt after you check out and explain how much cheaper it is to cook at home than it is to eat out.
– Teach them about investing
Another idea is to give your grandkids their first lessons on investing. Consider buying a stock together and tracking its performance. Even if you’ve never invested yourself, it’s a great opportunity to learn side by side.
– Let your grandkids teach you
You can text each other about the stock’s performance when you’re not together, or tweet each other an article you’ve seen about what’s moving the market.
– Make it a team effort
Make financial education a team effort with the parents. Of course some parents may push back, especially in cases where the parents think the grandparents are undermining their attempt to instill financial values.
As a grandparent, you are a valuable resource for the younger generation. With patience and unconditional support, you can help prepare your grandchildren to be confident, emotionally intelligent adults and also be instrumental in teaching financial awareness.
Hope this helps,
Oakley
About Renee Eder
