In a slowly recovering economy it’s important to teach kids how to use money to the best benefit. If you’re a grandparent, you can help your grandkids learn how to manage money when they’re older by showing them how to be responsible with it now. The Teachers Insurance and Annuity Association of America offer 10 ways to help your grandkids learn about money:
1. Teach them how/why to save. Many grandparents want to just buy whatever it is their grandchild would like without stopping to think how doing so affects the child’s view of using money. Instead, teach your grandchild the value of saving for something they want by helping them to devise a savings plan. You can also encourage their saving even more, and lessening the time it takes to reach their goal, by offering matching funds.
2. Help them earn money. Good money lessons can come out of the old lemonade stand in summer, or your summer garage sale, or paid for chores around your house when they come over. If kids are good at making crafts, pies, cookies, buy them supplies and have them make a bunch to sell at your garage sale or a driveway stand. Let them keep whatever profit they make from their own work.
3. Open Grandma and Grandpa’s Friendly Savings and Loan. With the interest rates that banks and credit unions charge, it takes forever for a kid to save anything significant and they lose interest. However, at Grandma and Grandpa’s Friendly Savings and Loan you can offer a 5% interest monthly to help them build their savings much faster. This gives the child more incentive to put more away when they see their sum growing regularly. Encourage them to put away half of any money they get from chores (yours, parents, neighbors, etc), allowances, gifts, in your special bank. Create a passbook that keeps track of their deposits and withdrawals.
4. Give Your Grandkids a Loan. From the money they deposit in your special bank, you can even make loans to your grandkids and charge a nominal payback interest rate (like 5 cents a month) to teach kids how to become responsible with credit.
5. Talk to them about future jobs. Nothing inspires kids more than someone taking an interest in what a child might like to do in the future as a career. If your grandchild is interested in marine animal research, find a nearby university that teaches Marine Biology and take them for a visit. If they show an interest in art and may wish to pursue it, take them to local artist exhibitions, gallery openings, and let them talk to artists. No matter what the field, mentors and teachers love to talk to kids about what they do. It’s a good way to help your grandchild start thinking about what kind of jobs, and incomes they could have in the future and how best to focus their education.
6. Help them comparison shop. Offer to take your grandkids shopping for school supplies at the end of the summer and teach them how to comparison shop for value/cost of items they need. It will teach them to not just grab something off the shelf because they need it. It will teach them that expensive brand name/designer labels don’t mean the product is any better than a generic brand and they need to look for the best price and value for the product they want.
7. Charitable giving. You can help teach your grandkids that not everyone in the world has enough money, food or clothing to live comfortably. You can also teach them that animals need taking care of as well as the environment by finding organizations that address these causes to make donations. Let your grandchild pick which charity they would like to donate a percentage of their money to. You could match their giving, the same way employers match employees charitable gifts. This teaches kids generosity and compassion early on and that they can also do good things with their money rather than just buying something for themselves.
8. Be honest about money. Money is a little tight for everyone these days. Letting grandkids know that you’re cutting corners too and may have to decrease what you give them for chores, gifts, etc. helps them feel like they’re a responsible part of the family.
9. Invest for them. There are some insurance plans that offer savings plans for college, and there are specific college funds, like 529’s, that can help you/your grandchild put away money for future educational use. You may even want to buy stock in one of their favorite restaurants, or stores, etc. When they get old enough to understand the concept of these investments, let them (and their parents) know that you have such plans in place.
10. Be a Good Role Model. Do what I say not what I do, is never a good policy for teaching lessons to children. If you want your grandkids to be successful and savvy handling their own money, now and in the future, teach by example in the way you handle your own money.