During the pandemic, the climate of economic uncertainty moved 25 states and the District of Columbia to propose increased access to financial education. In fact, 21 states now require high school students to take a class in personal finance.
I've been beating the drum on this for some time now as I do think that financial literacy should be an essential part of every child's education. But I also believe that financial education needs to start at home. Some of the most powerful lessons we learn about money come from the conversations we have and life lessons we absorb from family. And with today's working parents juggling so many responsibilities, there's a real opportunity for grandparents to affect how their grandkids think about and manage money.
Here are three ways that seniors can pass on some valuable money life lessons to their grandchildren.
1. Put price tags on their wish lists.
The way that your grandkids have grown up consuming information is profoundly different than how you and their parents did. Everything from their favorite TV shows and movies to conversations with friends and family on the other side of the country is just a tap or swipe away. Many kids have come to associate that same instant, no-cost gratification with spending as well. They don’t see mom and dad in the checkout line counting bills and a cashier making change. They see groceries appear on the doorstep like magic.
If you find yourself talking to a grandchild about any holiday wish list items that aren’t Santa’s responsibility, give them a little perspective. Asking, “Do you know how much that costs?” can open up a really important conversation about the value of a dollar and how hard grown-ups have to work to earn their money. That could affect how grandchildren think about wishes that are too big for Santa’s sleigh, such as a family vacation. They might even start thinking about ways that they can chip in to make that dream Disney trip a reality!
2. Give the gift of investment.
Do you tend to slip some cash into your grandkid’s stocking along with a present or two? Have a chat about what they plan to do with that money, as well as any other money their receive for holidays and special occasions.
You might get a grumble about how their parents insist that X percent of any gifted money goes into the bank – another sign of your positive influence, no doubt! That’s the perfect opportunity to explain the magic of compounding interest and how your grandkid could improve potential returns by investing in addition to saving. While the meme stock craze opened all of our eyes to the potential dangers of self-directed investing, there are apps and specialized bank accounts designed for youngsters that come with adult guardrails.
How about a matching gift program? For every dollar your grandchild earns (perhaps up to a certain amount) you could match it with the combined money going into a long-term investment portfolio. Together, you can watch the portfolio value change over time and you can share your wisdom along the way.
3. Talk about the future.
Between their holiday wish list and all those sports and recitals, you probably have a good idea of what your grandkids are into right now. But have you ever asked your grandkids what they want to become?
It’s never too early to start talking to middle schoolers and teens about career goals – and more to the point, the cost of college. Explaining how the 529 plan you set up for them works might inspire older kids to hit the books a little harder or start putting some of their own money into a dedicated college savings account.
You can also set a strong example for your grandkids simply by living that dream retirement you’ve worked so hard to secure. If grandma and grandpa are enjoying every minute of their golden years and sharing their joy with loved ones, that happiness is going to make a more lasting impression than any gift. Talk to your high schooler or college student about the long-term planning that brought you to today. When they start growing their own careers and families, your grandchildren will have a goal in sight and a blueprint that they can adapt for their own successful retirement.
The end of the year is a great time to think about building a legacy that’s bigger than money. At your financial review meeting, we can review your estate planning details to make sure everything is up to date. Then, let’s discuss how our planning process can help preserve your values as well as your assets for the next generation.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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