Published Article
by Patricia Fry
Teach Your Grandchildren
Money Awareness
(Published in The Family, 1996)
When is money an appropriate gift for the grandchildren? How much should we
give? Should we hand our grandchild money indiscriminately or only in exchange
for chores? What is the best way to introduce our grandchild to the concept of
saving and investing? How can we help our grandchildren become financially
independent adults?
Every grandparent ponders these questions at some point. Having no real
guidelines at hand, most of us tend to follow our own instincts, but often with
reservations. We wonder, "What is my responsibility in teaching my
grandchildren about money?" "Can't I just relax and enjoy my
grandkids now-giving what and when I want?"
The following are a dozen tips from the experts:
- Discuss these money issues with the parents. Talk to them about their
allowance system and their rules for their children with regard to earning and
spending money. Ask how you can reinforce the lessons being taught at home.
Patrick Allinger is the executive director for Creative Grandparenting, Inc.,
in Wilmington, Delaware. He advises, "Coordinate with the child's parents
regarding general principles involving money. Find out how the parents feel
about gifts of money and when it's appropriate. Ask whether or not there should
be conditions placed on that money and whether or not the parent should be
advised when money is given."
- Teach grandchildren the concept of money through play.
One thing that grandparents and grandchildren do well together is play. Make
play productive by incorporating money awareness lessons into it. Create
counting and math games, for example, using coins and bills. Play store, bank
or auctioneer using real money.
- Teach grandchildren the value of a dollar.
One way to do this is to avoid buying them everything they want. As Paul
Richard, vice president and director of education at the National Center for
Financial Education (NCFE) in San Diego, California says, "Be cautions
about just answering any 'gimme' call."
And he suggests discussing with the grandchildren some of the questionable
advertising they see on TV and the concept of using credit cards to pay for
these things.
- Provide them with real spending experiences.
Take your grandchildren shopping. Richard urges grandparents to, "Explain
how to comparison shop-how to look for value."
Allinger adds, "By talking with the child about getting value for your
money, the durability of the product and finding out whether you can get it
somewhere else at a better price, you're teaching some general consumer-wise
behavior."
- Be a good role model.
According to Richard, "Grandparents are natural leaders for their
grandchildren. I would say that, in many instances, grandparents have as much
or more influence over their grandchildren as the parents do."
- Put your grandchildren to work.
Like many grandparents, Jackie McDaniel of Ojai, California hires her
grandchildren to help with chores that she no longer has the time or
inclination to do. She says, "I pay two of my grandsons to clean the pool
and my granddaughter helps me with the yard work. This gives them the
opportunity to earn money outside of their allowance and it gives them a sense
of responsibility."
McDaniel reinforces the lesson in responsibility by paying only for a job well
done. She explains, "If they play around and argue and don't get the job
done, I don't pay them."
- Create traditions and rituals through the use of money.
My own children's grandfather used to pay them a nickel for each lead penny
they added to his collection. Another grandmother I know pays her small
grandchild a penny for each snail he plucks from her garden.
Richard says, "Not only are those kinds of things beneficial in giving the
kids a way to earn a little extra spending money, but it s a way for them to
share something that's important to the grandparents."
- Help them to save and teach them to invest.
Children won't become automatic savers. They need positive role models,
guidance, encouragement and incentive. Some need this more than others. Talk
about your savings account and demonstrate how you use it. Save coins in a jar
at home for example. When the jar is full, have your grandchild help roll the
coins and accompany you to the bank to make the deposit.
As an incentive to save, when the child asks for something pricey, suggest that
she save her own money toward the purchase and offer the guidelines to help her
achieve this.
- It's okay to give grandchildren money.
Janet Bodnar, author of Dr Tightwad's Money-Smart Kids and Mommy, Can I Have
That? (Kiplinger Times Business), recommends that if you send a check to a
small child to be put in the bank or to be used toward something they want or
need, that you should also enclose some cash that they can spend on their own.
She explains that small children don't understand the concept of money when its
in a check form and says, "To very young kids, checks are useless. Kids
can't play with them, spend them or cash them by themselves."
Bodnar further states, "If this is a gift from the grandparents to the
grandchildren, the children should have discretion in spending it. Certainly
you wouldn't give a 5-year-old $50 to spend but you might give a 10-year-old
$50 if he has his eye on a sports jacket or something specific."
- Contribute to your grandchild's education.
Allinger suggests that grandparents not be too quick to turn large amounts of
money over to the child. According to Allinger, when a student applies for
financial aid or a student loan, the amount they're allowed depends on the
family's assets. He says, "To allow the student to get the maximum amount
of financial aid, its often better not to put money in his or her name."
He suggests setting up a savings account for the child in the grandparent's
name until the time that the child needs the money.
- Avoid bailing your grandchildren out of financial jams.
The best way to teach a child to be irresponsible is to have no expectations
that he be responsible. If a grandchild comes to you for financial help after
having spent his allowance you may be doing him a grave disservice by bailing
him out. Keep in mind that lessons in becoming independent and responsible are
best learned from failures and struggles. No one ever grew up knowing how to
take care of himself without some hands-on practice.
If you must give the child some money, make it a loan and insist that it be
paid back or offer the money in exchange for work.
- Teach money awareness through shared involvement.
It's when you're relating and sharing that lessons are most easily and
naturally learned. Children can learn more about life, relationships and even
money while fishing with grandpa or helping grandma in the garden than while
being lectured. And one of the best togetherness activities for grandparents
and grandchild is the vacation.
Make planning part of the experience. Get the grandchildren's input as to the
itinerary and discuss the expenses involved.
Encourage the child to save some of her own money for the trip and provide some
chores to help her earn some extra spending money.
Discuss ahead of time how the child's money is to be used. Will he be expected
to pay admission to amusement parks and some meal expenses or just buy his own
post cards, souvenirs and other extras? Will there be any restrictions on how
he spends his money? Can he buy unlimited candy?
It's crucial to the future of our country and the future of our young people
that they have the tools needed to meet the economic demands of tomorrow. And
who better to provide those tools than their own grandparents?
Patricia Fry is the author of Creative
Grandparenting Across the Miles (Matilija Press, 2000).
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