5 money lessons to teach your grandkids

Giving your loved ones gifts that delight is wonderful. Even better? Sharing some hard-won money wisdom in the process.

One of the most rewarding parts of growing older is having the opportunity to spoil your grandchildren. But as fun as it is to see their faces light up when you surprise them, the reward is even greater when you use the opportunity to teach them some valuable lessons about money—hopefully ones you’ve relied on yourself through the years.

One important caveat: Before you can even begin to think about gifting, you want to make sure you’ve met or are on track to meet your own financial goals. “You don’t want to go into debt because you’re giving so much money to your family,” says Shelly Eweka, Senior Director, Financial Planning Strategy at TIAA. Once you know that you’re in a position to contribute, “make gifting a budget item and stick to it,” she says. Then, give your gift even more impact by wrapping it in one of these lessons:

1. Offer to match their savings. Instead of buying your grandchild a gift outright, ask them to pick out an item that they want, and then offer to match what they’ve saved toward it by a certain date. (It doesn’t have to be dollar for dollar. If the item costs $200, and they save $50, you can kick in the remaining $150.) “Kids will see the value of earning, of having a plan and contributing to it,” says Eweka. And their parents may even get some help with household chores, too.

2. Discuss the concept of value. It can be tempting to want the most expensive smartphone or the newest, coolest pair of sneakers, but when you buy something less costly, that means you have leftover funds to spend on something else. “Help them to understand their decision-making and know what they’re paying for,” says Rob Stevens, a Financial Planning Strategist at TIAA. For example, if they have $100 to spend, instead of using all $100 for sneakers, buying $50 sneakers leaves them with $50 to spend on something else, like Legos. You can also help reinforce the notion that you “don’t need to keep up with the Joneses,” says Daniel Ruppel, a Financial Planning Strategist at TIAA. “People may have flashy things, but you may not see the debt they’ve built up to have those flashy things.”

“Kids will see the value of earning, of having a plan and contributing to it.” ­

—Shelly Eweka, Senior Director, Financial Planning Strategy 

3. Show them the power of investing. If you have working-age grandchildren, your gift can help fund a Roth IRA for their future. (Contributions are limited to $6,000 or the child’s earned income for the year, whichever amount is less.) For younger kids, give them a small amount of money to invest. Letting them help choose what to invest in and showing them how the money can appreciate over time is a great way to engage them. “Pull up a chart and show them that the shares you bought for $23 each are now worth $76 each,” says Stevens. Teaching them about diversification is vital as well. If they have 529 accounts, split their gift, suggests Eweka. Spend less on their actual gift and put the rest of the money in their college account. “It’s a useful way to give a gift and show them the value of long-term planning,” she says. (It’s also a good idea to talk to your tax advisor before making any contributions into savings plans.)

4. Watch or listen to an age-appropriate financial literacy course together. “Really go through the program with them and talk about what you’ve learned,” says Eweka, who adds that there are many resources on FDIC.govOpens in a new window as well as the Junior AchievementOpens in a new window website. “Education is key when it comes to financial literacy,” says Eweka. “They need to understand what they’re doing and why.”

5. Expose them to community service. Helping people or organizations doesn’t always mean donating money. Our time can be just as valuable, says Eweka. Volunteer at a soup kitchen, food pantry or other local organization with your grandchild to help them realize that there are people in need, and show them how meaningful a couple of hours of their time can be.

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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.