If you’re a grandparent, you likely already offer support in a lot of ways including financial and emotional. But you can also provide practical help. A frequently overlooked area where you can definitely make a difference is with your grandchildren’s personal financial education.
Some of us were lucky enough to have a grandparent who we considered a great friend. We even talked to them about things we didn’t discuss with our parents. Or did you happen to notice that your grandparents lived pretty simply and then finally connect the dots to realize that’s how they helped put you and your siblings through college. Or did you have had a grandmother who obviously didn’t have a lot of money yet she still enclosed a small check with every Christmas card she sent.
One gift that a grandparent can make that is likely to benefit their grandchildren over their entire lifetimes may be to help them learn how to be smart and responsible about money. So how can we help them develop good financial habits? By taking advantage of the fact that they really are already watching and learning from what we do and say.
Talk about money and how you think about it. Many of us are reluctant to talk about money. Yet openly sharing your financial values and how you handle money is a great way to pass on your good habits. How do you handle credit cards? What’s your savings plan? Why do you have investments? At the appropriate age, bring these topics up with your grandchildren. They do wonder about such things. Turn that curiosity into knowledge.
Take your grandchild to the bank with you. This will be a financial field trip. They will learn some of the mechanics of cash banking such as the difference between a checking and a savings account. What does a teller do? How does an ATM work and where does that come from? I was the first
kid in my little group to have a checking account but my friends never seemed to understand how I could be out of money if I still had checks. How about opening a savings account with your grandchildren to help them understand interest and compounding?
Encourage a part-time or summer job. When they are old enough to work, help them look for a job and prepare for an interview. Once they’re getting paid, talk to them about withholding and basic income taxes. Help them decide how they want to spend and save some of their earnings.
Introduce investing basics. As teenagers, they are already interested in companies they know about (think Facebook and Google). But that’s also the time to explain why it’s important to diversify their portfolio. Beyond individual stocks, a mutual fund is also an easy way to introduce investing. Make a point to help them monitor their investments. Also talk about the uncertainties with investing and how to think about market volatility.
Introduce the idea of charitable giving. Good money habits include sharing. Discuss the charities you support with your time and/or money. Ask them which organizations they might like to support, such as a food bank or animal shelter. If they want to help, show them how to contribute a portion of their savings.
The greatest gift of all. Grandparents are in a very unique position to show love and support in so many ways. It can be something practical like money skills or your philosophy about leading a happy, appreciative and successful life.
But most importantly, sharing your values, both in word and by example, can be the greatest gift of all. It will be remembered for a lifetime. We know that from our own experience.