One of the best financial gifts you can give your grandchildren is the knowledge of how to manage their money. The habits they learn at a young age and the attitudes they have about money can last a lifetime. The way people think about finances can make the difference between having enough money to pay the bills on time and save for emergencies and the future … or being broke all the time.
There is no point in leaving an inheritance for your beloved grandkids, just to have them fritter it away. If you want the best for your family, you need to learn how to teach your grandchildren about money management.
Avoid Family Conflict
You might have the best of intentions for your family. However, if your actions cause hurt feelings or undermine your children, the family will suffer instead of benefiting. Before you set out on a plan to school your grandkids about money, talk with their parents.
Let them know what you want to do, and why you want to do it. Make sure they understand that you intend no disrespect and that your actions are not intended to be a criticism of their parenting or financial habits. You want to be supportive of their parenting, not tear it down.
Suggest that the grandchildren will sometimes listen to their grandparents more than their parents. Let your children know what you propose to do, and make sure it breaks none of their family rules or principles. Only proceed with the agreement of the parents. Be prepared to adjust some things you want to do, to honor their rights as parents.
Teaching the Value of Money
Young people often think of money as a thing you spend. They have no bills and turning 30, much less retiring, seems forever away for them. The only purpose many teens and preteens see for money, is to buy things they want.
You can teach them other goals for money, by creating tangible categories. For example, if you are giving a grandchild $30, get three $10 bills and put each one in a separate envelope. Label the envelopes “Giving,” “Saving,” and “Spending.” With older grandchildren, add a fourth category, “Investing.”
Encourage Saving by Matching Funds
If a grandchild has a small allowance, he might get impatient about how long it can take to save up for a purchase. If you match the amount she saves, she will see her savings grow faster.
Offer ways for the grandchild to make money. This strategy will teach the value of money and hard work. Pay your grandchildren to do chores, read, get exercise, and engage in other behaviors you and their parents want to encourage. Have a set rate you will pay the grandchild to draw a picture or write a one-page report on a subject that interests him. He will learn early that he can be in control of his finances.
Field Trips Are Fun
Take your grandchild along, when going to withdraw cash or deposit money in an ATM. Explain how the machine works and how to use one safely. Take her into the bank, write her a check and let her use it to open a small savings account. While you do this, show her how to write a check and what each portion of the check means. Make sure she understands that you must have the money in the account, before you can write a check on it.
Every state has a unique set of regulations, and your state’s rules might differ from the general law of this article. Talk with an elder law attorney in your area.
AARP. “Teach Your Children Well.” (accessed January 1, 2019) https://www.aarp.org/money/investing/info-2017/money-lessons-for-grandkids.html