3 Tips to Raise Money-Savvy Grandkids

The wisdom that comes with experience is worth sharing with your grandchildren, but you have to be smart how you do it.

(Image credit: henglein & steets)

Grandparents have a special relationship with their grandkids and can be a positive influence on their lives and their future finances. As a grandmother to two wonderful grandkids, I realize the impact that I can have.

It’s also true that, as grandparents, we may have more free time than our Millennial children, who are now raising their own kids. Remember what it was like when you were starting out? Well, the financial pressures are even more significant today.

The landscape of the American family is changing. Fewer children are living in two-parent households now than when Boomers were raising their kids. According to the United States Census Bureau (opens in new tab), “Between 1960 and 2016, the percentage of children living in families with two parents decreased from 88% to 69%.” The other news is that we grandparents are helping to play a more active role. The Pew Charitable Trusts (opens in new tab) reports that, “The number of grandparents who are raising their grandchildren is going up. … In 2005, 2.5 million children were living with grandparents who were responsible for their care. By 2015, that number had risen to 2.9 million.”

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Also, in our day, it was typical for Mom to be home and for Dad to be working. Now, according to the Bureau for Labor Statistics (opens in new tab), it is common that both parents are employed. Extra time on their hands? I don’t think so.

You don’t want to overlook how busy our children are, so pitch in and help with the grandkids. Here are some ways that you can assist (while teaching some critical money skills at the same time):

Tip #1: Know Who’s Chief of the Village

“It Takes a Village” may be an old saying, but it rings true, especially in today’s “connected” environment. To keep the peace, grandparents must realize that the parents are the chiefs of the village and everyone must show respect. Life is easier if you adhere to that hierarchy and make sure that the parents decide upon the rules for their village; as a grandparent, you are just there to support their wishes and not to undermine them in the process.

Once the hierarchy is defined, it’s time to get money discussions off the “big secret” list. We can’t expect our grandchildren to grow up to be financially responsible unless we have open and honest discourse and lessons.

The first conversation should be a discussion about where money comes from. I believe in teaching kids the concept that, “The only way you get money is to earn it.” They cannot get money by whining or hitting their parents (or grandparents) up for that $20 bill.

As such, I recommend that your grandchildren do chores to earn their money. However, not all chores should come with a paycheck. I believe that there are “Citizen-of-the-Household Chores,” where kids learn to be good citizens by assisting with daily tasks and having responsibilities that do not pay a salary.

Tip #2: Hold Regular Family Meetings

The family meeting should be a monthly gathering of all family members; you can join via Skype or FaceTime, if you can’t be present. These are meetings where goals and plans for the family are made, where rules are discussed, and — very important — where the value of money is used as a vital tool in the teaching of values and life skills.

Remember, you are giving the younger ones a taste of how top-level family goal-setting works and how they can start to set their own goals for earning, saving, spending and sharing, as well. The purpose is not to drill down into all of your debt. The purpose is to engage kids in the process and see how it also can apply to them. At the meeting, you should discuss topics such as:

  • short, medium and long-term goal setting
  • decision-making
  • problem-solving
  • the allowance system
  • budgeting
  • donation to charities
  • gift-giving and receiving, etc.

Hopefully, you have helped to set up the meeting and you understand your role as the “Grandparent/Coach.”

Before planning for a family meeting, it is essential to take a moment and reflect on what it is NOT. It is not a legislative body. A household is not and cannot be a democracy, though it can and should encourage participation, and respect the opinions of all members of the household. That said, it is ultimately the parent or parents who make the decisions.

Tip #3: Stop Being an Over-Indulgent Grandparent

I know how tempting it is to shower your grandkids with toys and stuff. I’m a grandparent; I get it. But, we are also the first to complain about the little ones running to the door and greeting us with, “What did you bring me?” (Those are the words that usually come before or are in place of the phrase, “Grandma and Grandpa, it’s so great to see you!”)

So, how do you cure that reaction? Stop your own habit first. You have trained and supported that behavior. Frankly, aren’t we indulging ourselves and doing a disservice to our loved ones?

Give your time, your wisdom, your guidance … help set the grandkids up for a secure future that they will manage someday. Gifts are fine when given appropriately. When it is gift time, discuss it with the parents first, and never use a gift as a bribe for good behavior or to undermine or outshine others.

Think of unique things you can do with the grandkids that don’t involve money. Bake cookies or teach them a family recipe that you can make for a holiday or special occasion. If you don’t have those traditions, now is a good time to start. Plan a picnic, a local fishing trip or golf outing. Plant the garden and let the kids tend to it; the culmination at harvest time is the meal or salad that will highlight their work. Or get crafty: My grandkids love making slime with me.

This is only the beginning of a lifetime of learning about money. Guiding your grandkids down the road to a secure and knowledgeable financial future is one of the greatest gifts you can give.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Neale Godfrey, Financial Literacy Expert
President & CEO, Children's Financial Network Inc.

Neale Godfrey is a New York Times #1 best-selling author of 27 books, which empower families (and their kids and grandkids) to take charge of their financial lives. Godfrey started her journey with The Chase Manhattan Bank, joining as one of the first female executives, and later became president of The First Women's Bank and founder of The First Children's Bank. Neale pioneered the topic of "kids and money," which took off after her 13 appearances on "The Oprah Winfrey Show." www.nealegodfrey.com (opens in new tab)