A grandfather wrote to me about his 11 year old grandson whose parents did not give him an allowance because they say that their son was too busy with sports and school work and doesn’t do anything around the house. He asked what he could do as a very concerned Grandparent to help his grandson to become financially savvy without interfering. He wanted to subtly teach his grandson about giving, receiving, spending and saving.
I have thought FOR YEARS that grandparents hold the key to solving the economic literacy crisis we are in today. My opinion comes from my own experiences with my grandmother, who came to live with us early on after my grandfather died prematurely. For some reason, my grandmother was just that much easier to listen to than either of my parents. Go figure!
My advice to grandparents is to make a regular date with your grandchild. Always keep the appointment in one way or another, whether on-line, over the phone or in person. Tell them you have a gift for them. Use 4 see-through containers, such as plastic tumblers, and label each cup with the 4 money choices – Save, Spend, Donate and Invest. Tape or tie all four cups together. When you have your first meeting, talk about how you are going to help them learn about money and begin to build their own stock portfolio. But, they first must prove they can manage choice. This means they must be able to take a certain amount of money and allocate to each choice and set goals. Have your grandchild write down their goals on small pieces of paper, or draw a picture, cut one from a magazine and tape it to each tumbler for each choice.
Next, let them know that you are going to give them some money each week (I recommend $4 each week or $16 a month), and that when you meet each week you will discuss the “allocation,” where the money was placed and the goals that they have set for each choice. It would be great if you are close enough to take them for their savings account deposit each month. But if that’s not possible, then tell them to get their mom and dad to do so. If the parents are unwilling, then you can suggest that you will match the funds that they have allocated towards “save” or that you will pay them a certain percentage of “interest” once a month on the balance they have allocated towards “save.”
Then, let them know that you will help them buy one share of stock each year. Get them to pick the company. Have them do the research online. They will LOVE this concept and you will immediately get them to engage with this idea. But you must follow-though once you start. Most kids at this age in the classes I have visited have told me that parents DO NOT follow-through and therein lies the problem. Kids often do not trust adults when it comes to money because we frequently break our promises to them.
Whatever you choose as a tool — 4 plastic cups, a 4-chambered bank or 4 clear boxes — just choose something. Do something. It does not have to be perfect. Anything that starts the dialogue and with the kind of love and commitment grandparents have for their grandchildren