Help Your Grandchildren Make Smart Decisions About Money
- Making good decisions about money isn’t something that just comes naturally.
- Children can be taught good money habits from a young age.
- If you have grandchildren, these are five things you can do to help them make smart decisions when it comes to their money.
With graduation season upon us, you may have grandchildren who are about to embark on their college educations or start their first “real” jobs. Their lives are changing and they’re likely going to have more responsibility than ever for their money.
As a grandparent, you’d surely love to see them make really smart decisions about their money, as early on in life as possible, to set them up for good habits throughout their lives. Whether you have a college-aged grandchild, or a preschool-aged grandchild, there are five tips for you to consider when you talk with your grandkids.
The number one thing you could say to your grandchildren about money is really simple and easy. It’s to “Save first, spend second.” If they just remember this one thing, they’ll do really well.
Number two, don’t worry about buying them things. Instead, give them your time. What they want more than anything else from us is our time. There’s always some new, shiny, material thing kids want, but those things will be quickly forgotten, whereas memories of spending time with you will last their entire lives. You can help them understand the world and make memories with them by simply giving them your time – something money can’t buy.
Number three, talk about compound interest with them. Supposedly, Albert Einstein called it the eighth wonder of the world. Compound interest is phenomenal and, especially for young people, makes a huge difference into the future.
Number four, as they get to the age where they’re looking to buy big-ticket items, such as smart devices that can be $500 to $1,000, help them to understand the cost in terms of time. Give them examples of how many hours or days they’d need to work to earn enough money to purchase the item. It might take three weeks of paychecks, net/after taxes, to afford that new smart device. Understanding this might help them ask themselves if they really need to make those big purchases and to prioritize how they want to spend their money.
Finally, talk to them about generosity and giving to others – both their money and time. Help them to identify causes that resonate with them. Are they a nature lover who cares about the environment? Maybe they love animals and want to help out at the local shelter. Are they passionate about art and want to get involved in volunteering at a museum? There are countless options and ways to give back.
Now, if your grandchildren are very young, you may want to take a look at the Savvy Pig as a way to help them get started, as young as preschool age. This is a piggy bank with four sections to it, labeled Save, Spend, Donate, and Invest. This helps them to understand these four aspects of money from an early age, so that by the time they become young adults, the message is locked in.
Regardless of the age of your grandchildren, there are many ways you can help them develop a healthy relationship with money. Something to think about the next time you’re considering throwing a bit of money their way. Until next time, enjoy.
Gary Klaben serves as a Financial Advisor, and visionary for Coyle Financial Counsel. He has over 30 years of experience and is the author of Changing the Conversation, Wealth of Everything and co-author of The Business Battlefield. Whether advising his clients, mentoring his team, or coaching entrepreneurs, he is always simplifying complexity and motivating others to take the next action that’s right for them.
Learn more about The Coyle Process, approach designed to get your arms around the big picture, so you can make informed financial decisions. Ask Gary about The Coyle Process and schedule a complimentary consultation and start living the Good Life Managed Well™.
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