Vol. 4, Issue 5October 2012


Kids and Money

You want to be generous to your grandchildren, and you enjoy giving them gifts and money. After all, what is the point of having worked so hard all those years if you can't share with the people you love most? But at the same time, you don't want to spoil the children. You want them to understand the value of a dollar. So how can you help teach them to manage money responsibly?

First, understand that you are only an auxiliary teacher. Parents are responsible for setting the rules, so make sure you are not undermining anything they are trying to do. For example, don't let yourself unwittingly become a way for your grandchildren to get cash for something their parents won't pay for. You may want to discuss your strategy with the parents before you start.

You can help teach your grandchildren the value of work by paying them for chores they do for you. Even little children can help with simple jobs like dusting or folding laundry. Older kids can do things that may have become difficult for you, like shoveling the sidewalk, raking the lawn or hauling junk out of the basement. Make sure they do a good job, and pay them fairly. Don't miss the opportunity to share some hot chocolate or milk and cookies when the work is finished.

Many grandparents give children gifts of money, especially as they get older, so that they can buy what they want. If this is your approach, try to encourage your grandchildren to save something. Some grandparents, for example, give two checks: one to spend and one to save. You also can give savings bonds, which encourage the children to save them at least until the bonds reach maturity. Or you can open a savings account in their name and deposit something each time you give a gift of money. Make sure they know about these deposits, though, and understand what you are doing.

Talk with your grandchildren about their purchase decisions. You might even want to go shopping together. Try not to be judgmental – just because you don't like rap music does not mean it is without merit. But see whether they consider things like value and durability when they are deciding what to buy.

If you really disapprove of your grandchildren's spending habits, you can of course stop giving them money. If you want to continue to make gifts, give them something other than money or make a deposit into their savings account. Tell them that you love them very much, but you don't want to help them buy things you don't think they should have. But be prepared for an argument – or a cold shoulder.

Finally, take a hard look at your own approach to money, because no matter what you tell your grandchildren, much of what they ultimately learn about money will come from watching adults, especially those closest to them. If you want them to save, let them see you save. If you want them to be generous, let them see you giving. Show them by your example the role that you think money should play in their lives.

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