Beyond the idea that a legacy means creating a financial windfall to pass to your heirs, is the concept of teaching financial wisdom to your grandchildren. Often in the busy-ness of daily life, it's difficult for parents to squeeze in (or have energy for) the great many lessons of intention. Grandparenting for many provides a unique opportunity to fill in these lesson gaps, while also connecting with your grandkids on a topic of interest to both of you. On this page, you can explore ideas and resources to pass along financial wisdom to your grandchildren, create in them an entrepreneurial spirit, and instill in them a thirst for more of the money knowledge they'll need to be successful.
Money Memory
Flashback to the late 70’s...
I find myself in our families blue station wagon. Dad is behind the wheel and talking about going to the bank. Two banks actually. At bank number one, just on the other side of our neighborhood, our plan is to withdraw some funds from my childrens’ savings account opened a couple years prior. What a gift of education was this savings account! It merely cost the thought & a little time from my parents. Though a simple gesture, it served as an incredible lesson starter. The second bank is 20 minutes away in the city and it’s a bank I had never been to before. A big banner out front displays the promotion of 11% CD’s. What’s a CD dad? (Long before CD’s actually carried a different meaning for kids) Dad explains that 11 was a really good number and explained the concept of interest earned.
Like lightning…the concept strikes me, leaving the memory branded somewhere in my brain for over 30 years to date.
My money turns into more money all by itself?! To you and I now, this may sound silly. Of course it does. Long ago we “got it” as children...especially if our parents or grandparents were schooled by the financial realities of the post-depression or WWII eras…times when financial education was more obviously necessary for survival.
Our parents naturally imparted their parents’ practices & wisdom to us. Understanding the power of interest and lesson of savings provides an incredibly powerful lesson for children.
Do your grandchildren have a savings account?
Do they know what interest is all about?
Do you periodically take them (or computer) to make a deposit?
While I used to ride my big red bike to the neighborhood bank, today’s market provides internet options as well and perhaps, better represents the future of banking for the next generation. And, even if your grandchildren are younger and not quite ready for a savings account…how about a piggy bank?
The concept of savings and managing their “own” money can be incredibly powerful. This simple gift may even serve as the foundation for two wonderful projects….the first building block of your grandchild’s financial education and the very foundation of your legacy.
Sound simple? Don’t underestimate simple. Simple works wonders & miracles.
Regardless of your level of financial knowledge, you’ve experienced plenty of money matters over the years. Sharing your insight can help stir interest in your grandchildren to develop healthy money habits. Get them thinking about it.
What were some of your financial windfalls?
Your worst money blunders?
What lessons did they teach you?
What was the salary of your first job?
How hard did you work?
What did going to the movies cost you as a child?
What lessons did YOUR parents teach you about money, saving, investing, or cost control?
Do you have a story about being swindled out of some money?
How about a story when timely advice from someone else became super valuable?
What money habits to you exhibit today, and where did they come from?
Engage in the discussion about money with your grandchildren as it can offer a rich tapestry of opportunities to teach while connecting your life experiences.
Children have never been very good at listening to their elders, but they have never failed to imitate them.
-- James Arthur Baldwin
Now some kids may not be as enthralled with the concept of a savings account or interest with the rapid pace of life thrown at the current generation…but do your best.
And, build on these early starts with fun ways to connect. Make if fun. Aside from Monopoly, there are a number of other games / books for kids to possibly spawn their interest.
Money Lesson Ideas
Study the Dollar: Even at a very young age, children often have a love for money. Although they're far from truly understanding the "value of a dollar"...they appreciate that this paper carries some sort of special significance. And, studying the dollar closely can be a fascinating lesson at any age. Check out some cool facts about the dollar. Plus, the US Government has a great site for kids to explore much more about how money is made along with many related games.
How is Money Made?: Answer the question from your grandchild with either with a tour of the Bureau of Engraving and Printing in Washington, DC, or in Fort Worth, Texas. Or, in this modern day world of information on demand, explore their website, and/or sit back and watch a program all about it from the History Channel with this YouTube link...
Savings Account:Some may opt for a local bank to establish a savings account, and this lesson has the upside in a tangible, brick and mortar experience with "real" people. On the other hand, it's also a great lesson to teach that banking today can also conveniently be done with a few clicks on the computer. An even better lesson? Do both! It will help convey to your grandchildren that savings and investments are not to be piled up all in one place...a lesson that a number of adults could have used these past few years. I use ING Direct for an internet savings account, and while I can't offer a comparison to several others...I can say that my experience with ING has been simple, seamless, and trouble-free, which is exactly what I'd expect from a bank!
Exposure to the "Markets": Now depending on your grandchild's age, discussing stocks, bonds, and the like could surely get them yawning. So, the key is to keep the exposure age appropriate. For instance, if the TV's on, turn on one of the stock market shows on CNBC. There's no need to dive into the gritty details. But point out the charts to your grandchild. Ask them if they want to know what that means. You might be surprised with the answer. Explain that when the charts are going up, it's like a company getting a good report card. Chart going down...company not doing well.
That's it. Keep it simple. End before their attention span kicks over naturally to something else. And Pow...you just planted a seed of interest to build on for the future.
Internet stock quotes: In a followup lesson, remind them of the company's report cards. Would they like to see some? Check out www.yahoofinance.com. Ask your grandchild to pick their favorite company. (I bet you a dollar it's McDonalds). Type 'MCD' into the quotes box, and now you and your grandchild are analyzing how that company is doing. No worries if you don't know a companys symbol...start typing it in, and a list of options will appear.
Stock Market Account:It's never too early to learn. If YOU don't yet have a stock investing internet account, start one today! And, for your grandchildren, it's ALSO never too early to learn. Gone are the days when you need big bucks and a hotshot Wallstreet broker to buy and sell the market. And, the available tools for researching your investment options are far superior today than are needed to make wise decisions. Again, here I use and really like the services of ING Direct. For yourself, open up a Sharebuilder account. And, here's the really cool part...ING Direct also offers special stock investing accounts specifically for children! What are you waiting for?
Money Lessons & Games: Here's a neat US Government website that compiles a large variety of educational games about money. How it's made, how to collect coins, designing your own bills, learn about the US mint, the Treasury, the history of money, and lots more. Plus, they've segmented the lessons in an age appropriate manner as well. For kids in grades 6 - 8, they include more resources for teaching about careers, earning, savings, selling & marketing, in addition to wise spending. These could be great lesson tools to connect with your grandchild...
Money Personalities:There are a number of financial "gurus" that have risen into the mainstream. Their insight and advice is very timely to fill the void of education in simple financial matters. I find them all fascinating in their own way. Yes, their opinions will vary and that's exactly why I like to watch them all. Suze Orman, Dave Ramsey, and Jim Cramer do a good deal of "counseling" to people who call into their TV/radio shows for advice. Hearing of the financial positions of others, their questions, and the sound advice given is a great education for young & old alike. Here are some links to a few"gurus" I have enjoyed...
Traditionally, when it came to teaching children about money, many have leaned on a few simple conventions:
Give an allowance
Provide a piggy bank
Tell them to save their money
After all, that WAS the conventional wisdom for parents to convey money skills for many years. And, for many children today, that remains the beginning and end of their financial educations.
However, a deeply empowering alternative exists.
Teach your grandchildren to gain an entrepreneurial spirit over any sense of entitlement, and you will have laid the groundwork for a substantial legacy. You see, the world is a changing. And, as the world becomes ever more competitive, your grandchild will need the skills of self-reliance, not as a luxury for the rich, but a necessity to survive.
The days of lifetime employment and stable pension plans have largely phased out. Today, the job stability for “older” workers (50+) is revealing itself as an illusion. (That 50+ age, by the way, used to be 60+ or even 70+.) And, that age will steadily drop as younger workers evolve from the job-hopping of today to outright contract consulting.
Your grandchild is likely not to work for one company…but several all at once in a new age that clashes the modern employment picture with individual entrepreneurship.
So, more than ever, the extra support families provide their young ones with a new style of thinking when it comes to money and income generation, the better their chances to thrive down the road.
And, the key is to challenge the status quo.
First, think about the objectives for financially educating your grandchild. Then, and only then, consider the right tactics and practices to support those goals.
Take an allowance for example. Should we provide children an allowance? I mean, after-all, we received one as a child.
An allowance is a set amount of money that arrives after a period of time (weekly/monthly), and typically the older the child, the greater the allowance. While some parents apply conditions (ie, clean room) to the receipt of an allowance, the large majority concede these details come allowance day.
Do we really want to teach our children that money just shows up periodically, regardless of their effort? And, as they age, their “paycheck” grows by default…
Absolutely not!
While an allowance's intentions are sound and seemingly harmless, it's a bad idea. (I too have fallen into the trap of providing an allowance, but have shifted gears, and believe you should too!)
An allowance is a crippling training program that ingrains the philosophy of entitlement over hard work, of privilege over earning.
And how about those Little League programs that still employ the TAG day…do you know it? It’s when the kids put on their baseball uniforms and stand in front of the local supermarket with a can, asking for donations. Kids are highly impressionable. How could they not pull from this experience the lesson that money is made by begging? Surely, they’re given a fundraising goal?
Nope. Just stand there for an hour.
Fortunately, there IS a great alternative. It’s the same secret used by the greatest entrepreneurs and corporations out there. And, it’s incredibly simple.
Money is made when there’s an exchange of a valuable product or service.
This is the precept of every successful corporation, and also dictates the effective pact between employee and employer.
So, wean your grandchild (or yourself) from the concept of an allowance, and instead, require that money only exchange in return for a valuable product and/or service.
Make it fun. Make it a game. Have your grandchild open up their “own business.” The possibilities are endless if you think creatively.
Try to avoid paying for jobs that fall within the realm of “chores”….or things the child should do for their own benefit. An example is cleaning their room. Later in life, no one will pay you to clean up your own messes.
Want some ideas to get you started? Read on...
If you want children to keep their feet on the ground, put some responsibility on their shoulders.
--Abigail Van Buren
Kids Business Ideas
As you think of creative and fun ways for your grandchild to 'learn to earn'...don't forget to use the opportunity to discuss the concepts of products and services. What is a customer anway? And, where might your grandchild find one? Perhaps they need to advertise or market their business? What are the competitive options the child should consider when establishing a unique selling proposition and pricing?
Yes, even if this is all "in play" within the family...incorporate some of the more detailed lessons into the game. Not only will your grandchild eat up the experience...you'll get a more fun challenge out of the creativity too!
Assistant baker
Kitchen cleaner upper
Dog bather
Snow shoveler
Grass cutter
Garden weeder
Newspaper retriever
Trash taker outer
Neighborhood dog walker
Pet sitter
Restraunteer - family dinner night
Lemonade stand
Door-to-door cookie salesman
Car washer
Floor mopper
Dish washer
Recycle organizer
Grocery store cart pusher
Kitty litter cleaner
Laundry folder
Vacuum and Dusting
Pool skimmer
Car ice scraper
Leaf raker
Etc.
As the daily and seasonal work comes up around the house, put your grandchild to work! Before they come over for a visit, think up a few jobs. Write down the objectives and the pay for successfully completing them. And, pretty soon, they’ll be asking for more work opportunities!
Piggy Banks
Grow your savings the high tech way with this digital “piggy” bank! Adults and kids alike will have fun while reaping the rewards that come with building a little nest egg, coin by coin. Keep tabs on your total at all times while you put that pocket change to good use – a great gift for all ages!
