Grandparents’ gifts of cash at birthdays and holidays awaken good memories for most of us. These cash gifts often represent nuggets of wisdom gleaned from a lifetime of lessons about the real value of money. One of the most common bits of wisdom is to “save your money for a rainy day.” Another might be to “spend wisely,” or perhaps the wisdom is “to enjoy your money once in a while” by buying an ice cream cone or going to the movies. Whatever the case, these memories stick with us.
So as a grandparent, how do you build on these nuggets so they have a lasting effect on your grandchildren? I believe one of the first things to do is to talk honestly about money and focus on the lessons you really want to imprint on their minds. According to the T. Rowe Price 2012 Parents, Kids & Money Survey, 77% of parents say they are not always honest with their kids about money related items. The study also reveals that kids age 8 to 14 want to know more about money matters, particularly about saving and how to make money.
One of the most powerful ways children learn is through observation. So, to instill in them the importance of using a financial advisor, take them to one of your advisor meetings. To crystallize the concept of paying yourself first, once they have income, help them set up a Roth account online with built in automatic savings. To help them be informed shoppers, spend time with them on a Sunday afternoon going through the advertisements for items they may want to purchase, and help them understand how to spot real value.
The important lesson is to communicate the wisdom you have learned over the years. John D. Spooner did just that in writing the book No One Ever Told Us That: Money and Life Letters to my Grandchildren. Spooner, a Boston investment advisor, was inspired to write the book after a comment from a student during a speech at Brandeis University.