Grandparents are in a fantastic position to teach their grandchildren about money. Often, grandparents can more openly speak with grandchildren than their parents can. Grandparents often take on the role of family storyteller and children may be more willing to listen to their stories and lessons.
Research supports this view; a 2014 study by TIAA-CREF found that 85% of the young adults surveyed were open to discussing their finances with their grandparents. While just 30% of grandparents felt that they were able to influence grandchildren’s habits, 73% of the grandchildren surveyed believed grandparents helped shape their financial behavior.
Here are a few ways you can help your grandchildren learn the right lessons about money:
Share stories. Use personal stories and lessons from your life to illustrate your values about money. Children often love hearing family stories and you can use them to share important lessons about frugality, debt, and hard work. Use teachable moments whenever you can to demonstrate what you’ve learned along the way. For example, shopping together can offer the chance to talk about paying with cash instead of credit cards. Cooking a meal together can teach the value of eating at home versus eating at restaurants.
Teach with gifts. If you can afford to do so, giving grandchildren savings bonds, appropriate investments, or contributing to college savings accounts can also help them learn the value of saving. You can use the “three jars” technique to split money into: Save, Spend, and Donate categories. Money in the Save jar goes into saving for something the child wants; money in the Spend jar can be spent on whatever they choose or put toward a savings goal; money in the Donate jar goes to a charitable cause the child supports. This technique can help even young children understand the value of saving for what they want and sharing their wealth through philanthropy.
Involve grandchildren in financial decisions. Children often learn best by seeing direct examples of smart financial behavior and getting involved in the decision-making process. For example, when taking grandchildren on an outing, set a budget and offer them the opportunity to choose between activities that cost different amounts. When planning a family vacation, ask children to save money for a desired activity or souvenir. Getting children involved in the planning process and giving them a tangible way to contribute can increase their enjoyment and teach them valuable lessons about saving.
Grandparents hold a unique role in the lives of their grandchildren and can help teach them critical lessons about money. Don’t discount the value of your advice; helping your grandchildren learn smart financial habits can set the stage for a financially successful life.