Kids have a reputation for being rebellious, especially against their parents: they do not want to wear those socks, or eat those veggies, or go to bed! But it turns out there’s one set of family members that kids actually do want to listen to: their grandparents.
It seems that grandparents haven’t caught on to this fact yet. While only 30% of grandparents in a 2014 study think they influence their grandkids’ money habits, 73% of grandkids say they actually do. What kind of money lessons can grandparents offer their grandkids? And how can parents help foster these conversations?
When it comes to money, grandparents are treasure chests of big picture wisdom. Whether it be home ownership, maintaining a great credit score, or never missing a single bill, grandparents are filled with success stories to share. Equally important, of course, are stories of their struggles; keeping potential pitfalls in mind will help young kids grow into financially healthy young adults. There are loads of money-related topics grandparents can bring up:
Investing for the long-term. Grandparents have learned firsthand the benefits of sticking it out through a tough time in the economy, and not getting spooked by sudden shifts. They’ve seen up close the proof for the theory of “buy low, sell high.” This takes decades of observation, so who better to talk about it than grandparents? Plus, it’s possible to track the payoff of the education they were able to receive—better jobs, more promotions, higher savings rates. Whatever lifestyle they can afford at this stage was made possible by their earlier investment choices.
Saving for college. A higher education is the ultimate investment in a person’s future, and grandparents know it. Those who went to college themselves understand the value of the experience and degree firsthand, and those who weren’t able to attend will want their grandkids to have even more opportunities than were available to them growing up.
Taking debt seriously. Kids today may never need to balance a physical checkbook, but knowing where your money is and not spending above your means is an evergreen lesson. In decades past, loans and credit cards were not nearly as easy to secure as they are these days—which means that grandma and grandpa viewed debt a lot more seriously than we do today. This perspective is a useful counterbalance to how easy it is to get a credit card, take out significant student loans, or get a hefty mortgage these days.
Budgeting. Grandparents can be thrifty, especially those that grew up witnessing the effects of the Great Depression and recessions over the years. It’s hard to imagine how important saving a little bit is when you’re young, but grandparents are benefiting many times over from the money they saved decades ago; every little bit counts, especially when times are hard. How did they survive those times? What lessons did they learn from their personal experiences?
Despite all this, however, grandparents are reluctant to talk. Just 8% of grandparents expressed a desire to have conversations about money with their grandchildren—but 85% of grandkids say that wanted to have those conversations. So, what can parents do to encourage these conversations?
- Invite grandparents to participate in inherQuests’ downloadable games and activities. We have already posted some that could be great fun between a child and their grandparents, like our recent Labor Day activities, our Halloween Quests, or ones that encourage them to take risks. We will be posting more throughout the year, and soon, will have our product ready: a box filled with fun and engaging games and activities that your daughter can do with her grandparents, or you!
- Explain that these don’t have to be serious, formal conversations. It can be as simple as noting how you choose which brands to buy at the grocery store, or talking a little about how they saved for their wedding or education when looking through old photo albums. Kids love hearing stories of what it was like “back in the day,” so these are great “gateway” conversations that set the stage for kids to ask for more.
- Give smart gifts. For a child as young as 4, , a physical piggy bank is perfect, and a clear one is even better so they can visually see their money grow. Once she grows up enough to understand how saving in a bank account works, taking her to open an account and making a small contribution to their 529 is a great way to start talking about saving for college. Toy, books, and games that teach money-related concepts are great too!
- Similarly, have a conversation with grandparents about how 529’s work. Two out of three don’t know much about this, even though many actually want to contribute! Get everybody up-to-speed on the specifics so grandparents’ wisdom can shine through.
- Get grandparents up to date on the cost of college. Nearly half of grandparents think college costs $30,000 to $75,000; it actually can cost $100,000 at a public school up to $164,000 at a private institution. Armed with this information and confident in their knowledge, these conversations will be even more powerful and they won’t feel “out of touch.”
Grandparents are always trying to dote on their grandkids and give them gifts. In some ways, being able to provide financially for their grandkids is the ultimate reward for a financially responsible life, though their hard-earned wisdom is the best gift they can give.
This Grandparent’s Day, take some time to talk about how they can pass down their knowledge and advice from decades of lived experience. The ripple effect of that wisdom will be felt for decades to come.