In our uncertain economy, it’s vital that kids today learn early how to cope with the complexities of money. Whether they are your children or grandchildren, the more they experience before needing to make a living, the better prepared they’ll be to face the inevitable adult responsibilities.
From a lifetime of experience, here are six key money lessons I’ve passed on to my grandkids.
Manage their own money
I start up a modest bank account for each grandchild, with ongoing instructions on how they should manage it. The accounts require responsibilities, which are monitored by their parents and me. Things the they need or want come out of that account; money they get from little jobs or gifts goes in.
Shop around to find the best price
As their bank accounts grow, I encourage savings. The grandkids learn about interest earnings, as well as the self-discipline of accumulating money for future needs. I suggest they shop around before spending money on junk food, toys, electronics, entertainment, clothing and other choices. By being exposed to the real world of money management, they learn practical lessons in budgeting and controlling their own bank accounts.
Save for the long term, don’t spend in the short term
I tell my grandkids there’s nothing wrong with occasional instant gratification. If they want to spend some of their money, it’s OK to get a new baseball glove, visit the amusement park, eat junk food and buy new games for their Xbox. I also emphasize the benefits of growing their bank accounts with regular savings. With the teens, I point out that the habit of saving will help later when they’ll need money for college expenses, clothing, down payments on cars, travel and other adult spending.
Value of money
I always make sure to try to teach something whenever I do give them some money. I talk about my job before I retired, so they understand how I earned my money, and saved it for retirement so I could enjoy spending it with them.
Earn their own money and be more independent
I teach the kids to get their own little jobs, whether mowing lawns, or just doing odd jobs around the house. If they earn money, then they can decide what to do with it.
While teaching kids the value of work and the value of money, we also let them know some people have problems, can’t work and need help. Also people get sick, they lose jobs, natural disasters hit and since we would want people to help us, we need to help people. We take the kids down to the Los Angeles Mission in downtown Los Angeles to volunteer a few times a year, so they can see kids like them who have a very different life.
Always involve the parents
On all money matters with my grandchildren, I consult frequently with their parents. I ask the parents to join in on monitoring the kids’ spending money that I give. I’m always available to mentor each grandkid, to offer advice when asked, as well as making suggestions on improving their earnings and savings performances.