Five Lifelong Financial Lessons You Can Teach Your Grandkids

If you’ve been a grandparent for less than a year or more than a decade, you know there’s nothing you wouldn’t do for your grandkids, right? Whether it’s buying the latest “cool toy” or serving up the third bowl of ice cream in a day, the urge to splurge on grandchildren is difficult for any grandparent to resist. And grandkids know it, too; they catch on pretty quickly to the difference between the daily routine with Mom and Dad and “Grandma and Grandpa’s rules”—mainly, there aren’t many!

You probably also know that most kids listen to their grandparents a little differently than they do with Mom and Dad. Maybe it’s because grandparents don’t have to be as concerned with the daily guidance, correction, encouragement, and “prodding” that goes with parenting. Instead, they can spend more time on fun stuff, telling stories, doing interesting activities, and so on.

What this means is that grandparents have a unique opportunity to impart some important financial life lessons to grandchildren. And since you’ve already accumulated most of a lifetime’s worth of experience—good and bad—chances are, you’ve got some things to teach that your grandkids need to learn. Here are a few basic “facts of financial life” that you can share with your grandkids. It will do them a world of good!

1. Delay gratification. Starting at age 3, your grandchild can learn the value of patience and preparation, as opposed to the “get it now” mentality that sets so many up for bad financial habits later in life. According to the American Psychological Association (APA), the ability to delay an immediate reward in favor of a superior, deferred benefit is linked to greater academic success, effective coping skills, healthier weight, and better relationships with peers. Instead of always buying that toy they want, have a “fun day jar” in your house where grandchildren can save money they receive for doing chores, helping you with a task, or other small jobs.

2. Work is good for you. Kids as young as 8 can start doing regular household chores (like making up their own beds) for a small financial payment. As they get older, you can encourage entrepreneurship by helping them start a babysitting business, mowing lawns, or taking care of a neighbor’s pet. When they’re old enough and if you’re in the position to do so, take them to work with you for a half-day, so they can get a glimpse of the importance of a career.

3. Invest. Children as young as 10 can understand and even get excited about owning stocks, especially if it’s a company they’re already familiar with: Disney, Nintendo, Nike, etc. They’ll be fascinated by the idea of “owning” part of a favorite company, and it will motivate them to understand more about profit and loss, the financial markets, dividends, and other aspects of stock ownership. There are even online apps specially tailored to helping kids get started with investing.

4. Avoid debt, especially credit cards. This is a lesson that many of us learned the hard way, long after we were kids. Starting at age 14 or so, and building on the lessons about deferred gratification, you can tell them of your own mistakes in handling credit cards, explaining that these companies didn’t become multibillion-dollar enterprises by making life easy for borrowers.

5. Make saving a habit. By age 17, your grandkids need to learn the proverb: “Pay yourself first.” After all, the greatest gift of youth is time, and instilling the savings habit early in life sets them up for decades of opportunities for compounding and growth. Help them set a target to save 10% out of every paycheck (with a portion earmarked for investment). When they start their first career, urge them to take advantage of their company’s 401k or other retirement savings plan.

At Empyrion Wealth Management, we provide expert, individualized guidance for grandparents and others who want to make a difference in the lives of the next generation. To learn more, click here to read our article, “Grandparenting: Counting the Cost.”

Stay Diversified, Stay YOUR Course!