The other day, I had a client ask me for some financial advice they could give to their grandchild. The first thing that came to mind was a quip from the movie Fight Club: “We buy things we don’t need with money we don’t have to impress people we don’t like.”
The second thing that came to mind was: how much can a quote from a movie teach about personal finance? As a grandparent (or a parent, guardian, or mentor) you play a crucial role in guiding the next generation in so many ways—including in the money management department. I believe your first-hand experiences, wisdom, and long-term perspective will be more impactful than any second-hand advice (no matter how witty).
Here are three practical ways to lead those who lack some of the financial skills you’ve gained in your lifetime:
- Make it personal.
- Stories about your financial journey—both your successes and your mistakes—are more memorable than abstract advice. Financial principles have evolved over time, and past experiences can provide valuable lessons for the future.
- Stories about your financial journey—both your successes and your mistakes—are more memorable than abstract advice. Financial principles have evolved over time, and past experiences can provide valuable lessons for the future.
- Keep it simple.
- Budgeting, saving, and investing needn’t be complicated. Show your loved ones how to create a practical budget and track expenses. Emphasize the importance of saving regularly for needs, wants, and short- and long-term goals. Introduce basic investing concepts like index funds and the power of compounding growth.
- Budgeting, saving, and investing needn’t be complicated. Show your loved ones how to create a practical budget and track expenses. Emphasize the importance of saving regularly for needs, wants, and short- and long-term goals. Introduce basic investing concepts like index funds and the power of compounding growth.
- Encourage dialogue and charitable giving.
- Inspire them to ask questions about money and finances. Be open and patient in discussing these topics to ensure they’re comfortable and don’t fear judgment. Encourage them to research charities and give if they feel inclined. Discuss the importance of giving back and being involved in their community.
While there are many other points you can discuss, these are three solid stepping stones toward financial literacy and responsible money management. If you take the time to help your loved ones understand the foundational principles, your guidance can shape their habits and attitudes for years to come.
