Money lessons are among the most important instructions that kids must learn at home. Parents can help a child to become responsible with their finances by teaching lessons on saving money for items you want, for example. Apart from moms and dads, grandparents — who have plenty of life experiences to share with the young ones — can also impart financial wisdom to their grandchildren.
Grandparents play an integral role in the extended family, bringing patience and life experience to the table — a combination particularly well suited to helping grandchildren develop financial literacy skills.
Given how important financial skills are to succeeding in life, it’s surprising schools don’t teach our children more about money. As a grandparent, however, you can teach your grandkids important financial lessons — and you should! These lessons can leave a positive mark on your grandkids for decades to come.
“Grandparents can be a wonderful resource,” said Susan Beacham, chief executive of the financial education company Money Savvy Generation. “There’s a whole different emotional dynamic that exists between grandparents and grandchildren. They are unconditional in their support and they have this window of opportunity to really reach their grandchildren and be heard.”
Before starting the dialog though, grandparents should discuss their interests with the parents. You want to be sure that you are all on the same page and will be reinforcing the same lessons.
Share your money history
Whereas parents are more likely to make money management lessons a household mandate, grandparents can be powerful educators by simply sharing their stories. Telling your 10-year-old grandson how much a car or a candy bar cost when you were his age, for example, captures the imagination (and illustrates the effects of inflation) better than any history book ever could.
You can explain how prices have gone up on products and how selections have changed. A loaf of bread, for example, cost 25 cents in 1970. A pound of hamburger meat cost 45 cents in 1960. Those types of discussions give children a wider perspective on the role and value of money in our lives.
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.
“Grandparents should not only share their successes, but their failures as well,” said Beacham. “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.”
How to teach financial lessons
Apart from sharing stories about their personal relationship with money, grandparents can also help their grandkids earn and manage money of their own. One option for this is posing a financial challenge to your grandchild.
For example, have your grandchildren open a lemonade stand or have them help you with chores. With the money they earn, help them make a budget for spending some and saving some for an item they really want; this is an opportunity to help them establish a savings discipline. But leave the final decision to them. If they blow it all on a new video game today, don’t open your wallet the next day when they pine for something else. Small money missteps today can be valuable lessons that prevent your grandkids from making more costly mistakes later on.
Practicing handling money and other financial instruments is very beneficial in developing the expertise to do well with them. Find ways to let your grandchild earn or make money. Encourage entrepreneurship at an early age to help him or her learn business concepts and the role of risk.
The Importance of Saving Early
Grandparents can teach kids about saving money at an early age. For kids who are receiving allowances from their parents, grandparents should help them realize how lucky they are. Children should learn to keep part of their allowances for savings because they will not be depending on their parents financially forever. Soon, kids must grow up and learn to be financially independent when they grow older. Having some savings will help them financially when they decide to move out of the house or when they decide to start buying things for themselves.
Again, as you look to get involved in your grandchildren’s financial education, be sure you communicate with their parents first to ensure you are all teaching consistent lessons.
Beacham acknowledged that some parents push back, especially in cases where the grandparent is undermining their attempt to instill financial values.
“If a parent is trying to get his or her child to save for a bike and Grandma finds out and says, ‘here’s a check,’ the parent might understandably get upset,” she said, adding that parents and grandparents need to align on the objectives and work together to be effective.
Grandparents are a valuable resource for the younger generation. With patience and unconditional support, they help prepare their grandchildren to be confident, emotionally intelligent adults. They can also be instrumental in teaching financial awareness.
“Money should be something that we galvanize our grandparents to get involved in,” said Beacham. “They are an extraordinary army just waiting to be deployed