Though they’re known for spoiling their grandchildren silly with candy and toys, grandparents play a vital role in bringing up the next generation.
Studies have found that 85% of young people are willing to talk to their grandparents about money and savings, but only 8% of grandparents are likely to bring up the topic of finances. Grandparents also have the experience of financially preparing for retirement, making them a great resource for younger generations. The challenge for any adult who wants to bring up the topic of personal finance with young people is keeping them engaged.
Here’s how you can do just that.
Delayed Gratification Is The Key To Success
One of the most important lessons that your grandchildren can carry with them for the rest of their lives is the value of delayed gratification. Instead of frequently showering them with extravagant presents, give them a little pocket money on a regular basis, advising them to save some of the money for something they really want, such as a nice toy.
You can also encourage them to save by giving them an attractive piggy bank. When the piggy bank is full, you can accompany your grandchild to the bank to set up a savings account.
Today’s kids are pretty good at saving, with most of them socking away 68% of their allowance. But you can also give them a lesson in investing by matching their savings at the end of a certain time period (say, a year). And if you have the funds to do so, give your grandchildren financial tools like savings bonds as presents.
Teaching them early on that their money can earn them even more, and that will give them a head start in life.
Earning Your Own Money Feels Amazing
There are few things as satisfying as getting paid for a job well done. Teach this lesson by talking to your grandchildren about the different jobs you held throughout your life and how you were paid. You don’t have to give details on how much you earned. For example, you could say, “When I was a teenager I worked as a clerk, and got paid by the hour. I worked 20 hours a week and got a paycheck at the end of the week. I used the money to buy myself a car.”
Once your grandchild understands how people earn money, they may be interested in making their own as well. Encourage diligence and responsibility by paying them to do kid-friendly chores around the house. Or you could even help your grandchildren put up a lemonade or cupcake stand so they can get some first-hand experience at running a small business.
Having A Budget Is Essential
Give your grandchild a set allowance and let them decide how they want to spend it. Explain to them how much money they’ll have left over after each expenditure so they understand that money is limited and should be spent wisely. Take every opportunity to talk about spending resources wisely.
For example, when on an outing, you can set a budget and ask them to choose between different activities that cost money. At a store, talk about why one product is a better deal than another. These money talks will let them be more mindful with how they spend.
Grandparents are often in a better place to teach their grandchildren these lessons, as they may be more willing to listen to adults who aren’t their parents. However, it’s important that grandparents should align with a child’s parents’ objectives before intervening.
You wouldn’t want to undermine the parents’ efforts to teach money lessons. Sharing your wisdom can make a world of a difference to your grandchildren’s financial future.
By teaching them early, you can help form healthy financial habits that can set them on the path to success.