Saturday, April 22, 2017

Teaching grandchildren (and their parents) about money

"Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like." -- Will Smith, actor and producer, songwriter and rapper, (1968 -   )

New link: "Teaching Kids About Money: A lesson guide for parents and educators," recommended by Peyton Wertz to earn a Scouting "financial badge." click here.

By Julia Anderson
In our era of instant gratification and in a financial world where a regular bank savings account pays next to no interest, how do you help your grand kids learn about using money carefully, investing and saving for the long-haul?

The good news is that there are a lot of great resources on the Internet offering good step-by-step advice. These tips will help you help your grand kids get a handle on saving and investing, on budgeting, and spending wisely.

Here’s a run-down of six helpful Web sites:

At, writer Laura Shin has put together a list of five money lessons to teach kids according to their age. She describes each lesson to be taught, then follows with several exercises to help with the learning.

For example: The lesson for a three to five-year-old is “You may have to wait to buy something you want.” She provides three ways to help a young child learn about having a savings goal and a spending goal for small purchases.

Ages six to 10: You need to make choices about how to spend money.
Ages 11 to 13: The sooner you save, the faster your money can grow from compound interest.
Ages 14 to 18: When comparing colleges, be sure to consider how much each school would cost. 
The lesson for an 18-year-old? “Use a credit card only if you can pay the balance off each month.”

Web site: - The power of compounding

The Web page at, explains in dramatic fashion plus “the power of compounding.”

Here, the unnamed author, offers an exercise to teach the power of compounding. Other money gurus use similar examples.

Ask your grandchild, “Would you rather have $1 million now, or take a penny and double the amount every day for 30 days?”

Most people (certainly most kids) would take the $1 million. But that would be the poorer choice. The visual chart on the Web page makes it clear how doubling your penny every day for 30 days would result in the tidy sum of $5,368,709.12!

Included with this exercise are three tips: The sooner you start saving and investing, the better; It is good to make saving a habit with regular investments, and that patience is a virtue. It takes time to build the nest egg “by investing wisely and leaving the money alone for the long term.”

Web site:

The American Institute of Certified Public Accountants has taken on the mission of improving the financial literacy of all Americans. is geared toward those aged 25 to 34 to help them take control of their finances.

Here are the resources for young adults (your kids or grandkids) to reduce debt, plan ahead, boost a credit score, save to buy a house or a car. Mr. Pig, BenjaminBankes, will send along savings tips, if you sign up for free email.

There is a companion Web site,, with more money tips including a page for Tweens & Teens and their parents.

Dave Ramsey is a well-known money guru with a lot of books and a radio show. On this page, he also focuses on the miracle of compound interest.

He uses the comparison of two young adults. One starts investing at age 19, the other doesn’t get started until age 27.

The 19-year-old puts $2,000 into an investment account for eight years and leaves it there until he’s 65. It earns an average of 12 percent a year, which is what the S&P 500 has historically done over the past 50 years. He ends up with more than $2.2 million.

His friend who started later at age 27 and puts $2,000 in from age 27 to age 65. He ends up with only $1.5 million. So starting early and leaving the money there to grow is a huge deal.

I don’t know anything about Chicago-based Windgate Wealth, but I do like their six ways to teach your kids about saving money. In a nutshell, here are the tips:

Start with a piggy bank.

Open a bank account.

Use savings jars to save for short- and long-term goals.

Create a timeline to visually help kids see their savings progress.

Lead by example. When shopping, for instance, engage your children in the buying decisions. Explain the choices you make.

Start a conversation about money and the importance of saving.

General advice: Parents and grandparents an make money and saving money fun and accessible. Discuss the difference between needs and wants and help them visualize their financial future.

This article summarizes a study about millennials and money, which mentions that one-third of this age group is uncomfortable talking about money with their parents. (See FidelityInvestments Millennial Money Study)

Included are eight tips for how to have the “money” conversation.

1. Keep your advice brief

2. Share your experiences.

3. Keep your expectations in check.

4. Set rules when lending money.

5 Discuss investing strategies.

6. Set a good example -- and let it show.

7 Don't avoid the inheritance topic.

8 Discuss your finances with your kids at least once a year.

Maybe it is no surprise that nearly half (47 percent) of young adults have received financial assistance from their parents since leaving home to pay for such basic things as cell phone bills, car insurance and even to buy groceries.

Twenty-five percent said that a one point they had moved back home for financial reasons.

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