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Teach grandchildren financial responsibility

Created date

August 24th, 2010

When your grandchildren return to school this month, they ll be immersed in valuable lessons about history, math, and science. But, one of the most important life skills they can possibly learn money management will most likely be missing from the curriculum. So often kids graduate from high school and they don t know how to balance a checkbook; they don t understand the concept of 20% interest, or even basic budgeting, says St. Louis investment advisor Arthur Montgomery. When he s not helping adults manage their investments, Montgomery volunteers in local schools to teach students the basics of finance and money management. He says grandparents can have a significant influence on grandchildren s attitudes and habits when it comes to money.

Teach by example

One of the most valuable lessons you can teach your grandchildren is to save for large purchases instead of accumulating debt. Montgomery illustrates this lesson in classrooms by walking students through the story of two college graduates one who lives modestly and saves for indulgences, and the other who charges a lavish lifestyle on credit cards. Montgomery says grandparents can teach youngsters the value of saving for the future by sharing stories about your own successes and failures, and, of course, by practicing what you preach. If kids see their parents and grandparents living on debt and spending a lot of money, there is a good chance they are going to do the same thing, Montgomery says.

Earn and learn

Lisa Reynolds, an executive at RedPlum coupon company, says grandparents can seize real-life opportunities to teach children about saving money. If you want to give your grandchildren cash gifts, she suggests opening savings accounts in their names and reviewing monthly statements with them to explain how money grows by earning interest. Even better than handing over money to children, Reynolds says, is giving them opportunities to earn it. She says her children work in their grandfather s office, earning money for odd jobs like cleaning. I think it s important for grandparents to be sure not to just always indulge kids, Reynolds says. Another easy way to teach even very young children the value of stretching a dollar is to take them with you to the grocery store. Kids can go on a treasure hunt to help find coupons for things they like, Reynolds says. It s a great way for them to contribute, and also shows them what kind of savings you can get at the end of that shopping experience.

Not your typical fairytale

If you re looking for a little inspiration or a framework to teach your grandchildren about money, check out Prakash Dheeriya s series of children s books entitledFinance For Kidz( In his books, Dheeriya, a finance professor at California State University-Dominguez Hills, explains basics like wants vs. needs and also tackles complex topics such as risk and return. Dheeriya says he looked to his own children s toys and activities to identify story lines that would resonate with children. He uses easy-to-visualize examples like baking a cake to explain complicated concepts like starting a business. I wanted to write books in such a way that children would be interested in reading them, Dheeriya says.