As a grandparent, there is surely much knowledge—and even more learned lessons—you hope to pass down to your grandchildren: core values, family history, career planning, and maybe even money management. While all of these topics are valuable, there is perhaps no better way to ensure the happiness and security of your loved ones than by teaching them the art of money management. Few would argue that financial security opens the door to many of life’s greatest joys, while—on the flip side—financial insecurity can cause a cascade of hard-to-navigate complications.
Here are three important lessons about money management that should be passed down to your grandchildren:
1. Save, save, save.
As obvious as this piece of advice sounds, there are many adults who were never taught the importance of saving money, never mind children. To effectively instill this value in your grandchildren, hands-on practice is crucial. If your child receives an allowance, perhaps offer to match their savings the same way an employer would match a 401(k) contribution. Once your grandchild is old enough to hold a part-time job, encourage them to make contributions to a Roth IRA, or another avenue of savings.
2. Put your money to work.
Maybe money doesn’t grow on trees…but compound interest may make it feel like it does. Investing might not be the easiest lesson to teach a young grandchild, but for those old enough to understand the principle of keeping fees low and buying broad index funds, this is invaluable knowledge. If you are in a position to buy your teenaged grandchild a low-cost index fund in a custodial account, it’s a great way for them to experience the pleasure of a surging market—especially if you explain the importance of staying the course, or even buying more as the market dips. This knowledge about how to invest their money will reap great dividends as they get older…pun intended!
3. Spending money is okay, too.
Enjoy the fruits of our labor is one of life’s greatest pleasures, and a lesson you should certainly pass down to your grandchildren. After all, the purpose of good money management is for future enjoyment. Take your grandchild out bargain shopping. When they pick up a toy or other item that they’re interested in, pick up your smartphone and see if you can get the same item for a better price. After all, taking advantage of specials and promotions is another way of saving.
Finally, as the saying goes, “with great power comes great responsibility.” Teach your grandchild the importance of charitable giving. As far as lessons go, altruism and compassion for those who are less fortunate is one of the most important ones out there.
Now, the Teacher Becomes the Student…
You have plenty of lessons to teach your grandchildren, but do you need to learn more about estate planning? The Estate Planning Law Group of Georgia hosts free workshops to help you understand how to best protect your assets. To be informed about our upcoming workshops, please complete the brief form below. Plus, those who attend a workshop at our estate planning law firm are eligible for a free consultation with estate planning attorney James M. Miskell!