How to help your grandchildren handle money

By Shelly Gigante
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites.
Posted on Aug 9, 2018

Ask adults whom they credit for helping them to define their sense of self and many will share stories about a beloved grandparent who celebrated their triumphs, guided without judgment, and loved without limit.

Grandparents play an integral role in the extended family, bringing patience and life experience to the table — a combination particularly well suited to helping their grandchildren develop financial literacy skills.

“Grandparents can be a wonderful resource,” said Susan Beacham, chief executive of 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.”

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.

“My own grandmother used to drive us around our neighborhood, where she also grew up, and point to the homes that sold for $10,000 during the Great Depression,” said Beacham. “She told me she wasn’t ready then to take advantage of that opportunity, but that she wanted me to be ready when opportunity presented itself. That so influenced my behavior and, to me, translated into the need to save.”

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.

Cultivate their entrepreneurial spirit by helping them open a lemonade stand, sell handmade bracelets at your local community center, or wash cars in front of your house. (Make sure that you check the regulations in your community and state to be certain that the venture is permitted.)

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.

You can also give your little ones $5 the next time they visit and suggest ways they can prioritize their spending. Take them to a yard sale to show them just how far that money can go.

While parents have their hands full getting dinner on the table daily and helping with homework, grandparents have the luxury of time. Cooking together with your grandchildren not only creates special memories, but can also be educational.

The website Sixty and Me suggests planning a meal together, making a list of ingredients, and heading to the grocery store to show your grandkids how to comparison shop by brand. Show them the receipt after you check out and explain how much cheaper it is to cook at home than it is to eat out.

Or, watch their eyes light up when you use a compounded interest calculator to show them how much even a small amount of savings today could grow to over time. For example, a $200 initial deposit with an additional $100 contribution per year would be worth nearly $25,000 in 40 years, assuming a 7 percent annual rate of return.

Another idea, said Beacham, is to give your grandkids, on an age-appropriate basis, their first lessons on investing. Consider buying a stock together and tracking its performance. “Even if you’ve never invested yourself, it’s a great opportunity to learn side by side,” she said. ( Learn more: Money and children: Teaching by age groups )

Let your grandkids teach you

You can text each other about the stock’s performance when you’re not together, or tweet each other an article you’ve seen about what’s moving the market.

Not so handy with smartphones or social media? Even better. “Grandparents love to talk to grandchildren about technology so it becomes a bridge,” said Beacham. “While their own adult children may roll their eyes when they ask questions, their grandchildren are touched and amused. Look at your grandchildren as experts and they will start to see themselves that way.”

Team effort

One caveat: As you look to get involved in your grandchildren’s financial education, be sure you communicate with their parents.

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.”

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The information provided is not written or intended as specific tax or legal advice. MassMutual and its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own, and do not necessarily represent the views of MassMutual.