Teaching your grandkids about money can be more valuable than leaving them with an inheritance that they don’t know how to handle. Even professional family offices have made financial education of the next generation to one of their top priorities.
Financial Literacy Stats of Young Americans
According to Greenlight “74% of teens reported that they don’t feel confident in their personal finance knowledge.
- 73% of teens said they wanted to learn more
- Of those lacking confidence, 15% don’t know where to begin,
- 62% of teens have learned about saving
- 50% have learned about earning — which includes jobs, career decisions and income.
- 44% are learning about how to save for college.
- 44% have learned about banking,
- 42% have learned about budgets.
- Yet, almost a quarter (23%) do not know how to actually make one.”
What you teach your grandkids about money certainly depends on their age. But even elementary school kids understand that they need money to buy ice cream or candies.
Strategies To Teach Your Grandkids About Money
What would you like your grandkids to know about money? What is your goal when educating them about wealth? Here are some ideas?
Banking
- Why do we need banks: show them their or your accounts, credit card and explain how bills are paid.
- Explain how ATM machines work.
- Tell them where they can get a loan and open a stock account.
Teach Your Grandkids About Money – Spending
- Be smart about how to spend your money: As most kids love ice cream it can be fun to promise them 10 dollars and get them to find out how to maximize the value of their ten dollars.
- Example 1: Encourage kids to start comparing prices for simple goods like ice cream. Different stores charge different prices for identical goods like Häagen-Dazs ice cream.
- Example 2: Show them that sometimes it is very difficult for consumers to compare prices. Two ice cream places might have different quality and different sizes of scoops. Thus, it is harder to compare.
- Ask them why they prefer to buy certain brands. The idea is to raise their awareness that consumers also pay for the name of certain brands.
- Give them pocket money every month and ask them to make a list of how they spend it.
- Budget: Start a conversation with them on what people have to spend money on every month. This way they get an idea about costs of living.
- Explain the nature of loans: a good way is to differentiate borrowing money for a house compared to a consumer good like a TV or car. Point out risks and chances.
Teach Your Grandkids About Money – Savings
- How to get money for saving: teach them that a budget surplus opens possibilities for savings. Make them aware of creating an emergency fund, a fund for future private purchases like a home or car is important.
- College Finances: Let kids research the costs for college education and ways how students finance their education costs.
- Discuss standard options for investing: Depending on the age of kids a savings account with an interest rate can be a great start.
- What is a stock: The simplest way is to start with a company that they know and whose products they know like Apple.
- Risks and Chances stocks: compare a value and growth stock and show them the volatilities of the stocks.
- Stocks with dividends
Teach Your Grandkids About Money – Taxes
- Explain how high tax rates
- Explain how taxes are paid.
- Let them do the math on how much taxes they need to pay and what stays in their account.
Resources that Help You To Teach Your Grandkids About Money
Earning
- Financial Football: Visa and the National Football League have teamed up to help teach financial concepts with Financial Football, a fast-paced, interactive game that engages students while teaching them money management skills.
Spending
- Get your grandkids a prepaid debit card to teach them about spending and budgeting.
Savings
- Get your grandkids the Bankaroo App. Bankaroo is an educational virtual bank for kids that helps kids learn about money, budgeting, setting goals, and saving up.
- Get your teenage grandkids the USAA Bank’s mobile app: It allows kids ages 13 and over to access their youth savings and spending accounts online. They do it on the bank’s regular mobile app with their parent’s approval. Thus, they have real life experience.
- The Stock Market Game: you and your grandchild will explore the fundamentals of personal finance and investing, while practicing content and skills in math, English Language Arts, economics, social studies, and other subjects. Working together to build and manage an investment portfolio in a real-world, dynamic marketplace.
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A Word From healthylifestyleflorida.com
Family events are a great opportunity to talk to kids about money. No matter if it is Christmas, Thanksgiving or a family birthday. Have the courage to start the conversation about money.
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