You may remember watching your children or nieces/nephews spend “their” money differently than “your” money? Suddenly, what they asked you to buy, was not what they were willing to spend their own money on, remember that? That always made me chuckle. And now I am seeing the same scenario in our grandchildren.
Money as a Gift
Now that most of our grandkids are school age, we switched from giving a small gift they could open (plus their real gift of a 529 contribution) to giving them cash. And we tell them we want them to start practicing using money to save, spend, or give. And we leave the details of the guardrails around how that works to the parents. My chuckles continue.
Money Motivates
One grandson was so excited he kept repeating on his birthday “this is my best day ever!” And, of course, finding multiple bills inside of a card vs just one (of the same total dollar amount) made his eyes get bigger and bigger. Their concept of money is just emerging as his counting and math skills advance as well at his Kindergarten age.
But he understood quickly that if he offered to do some chores around the house, he could make that pile of money grow even bigger. He had his eyes set on buying a Lego set at an upcoming vacation to Legoland so his parents sent me a picture as he was suddenly motivated to wash windows.
Earning Money
We moved recently so some of our grandchildren ran a lemonade stand at our moving sale in the driveway. The youngest was quick to be sure everyone who arrived heard the lemonade offer at least once or twice. And the three of them took turns manning the booth, restocking the mini donuts, and even making signs to promote their offer.
Several generous adults just made donations, and they were prompt with their manners and appreciation. They split the proceeds three ways and beamed with $10 in each of their pockets at the end of the morning sale.
Investing Money
Another grandson told me as soon as I saw him the other day, “I spent that money you gave me.” He was very matter-of-fact about it as he and his dad explained that he had invested it into a stock using an app on his mother’s phone. He said it would “pop back up on the screen again in a couple of days.” I can’t wait to hear this 5-year-old’s interpretation as he watches the stock over time.
Spending Money
My sister has started to take grandchildren on a shopping spree to spend their holiday money. One granddaughter quickly realized that one big item would use up all of her dollars, so she ended up putting it back and getting five less expensive things she wanted instead. The shopping process took awhile, but they had so many good conversations along the way.
So Many Ideas
Janet Bodnar writes a great column for women in Kiplinger’s Personal Finance magazine, and I remember some of the stories she shared when she wrote about financial gifts for grandchildren. One woman set up a Savings Challenge to her grade school aged grandchildren where she would match what they saved and the one who amassed the most on top of what she gave them after a certain period of time would earn an additional $100 bonus.
Another grandmother gives instructions with her $400 gift: save $200, give $100 and spend $100 any way you wish. And other grandma gave an amount of money that had to be invested in any dividend paying stock they chose, as long as they picked it with their father and reinvested the dividends. So many clever ideas!
Free Tools Guiding Money Decisions
One of the best tools to help children with the idea of “practicing using money” comes from a colleague in the financial education industry, Karen Holland, Founder of Gifting Sense. She developed a Does It Make Sense (DIMS) calculator to help children think before they buy. Whether it’s a toy, clothes, experience, pet, or even a first car, this free to access and use tool helps kids think through all aspects of a purchase complete with a report at the end that could be printed out or shared with a parent to finish the decision together before a purchase!
Practice at anything makes “perfect,” right? I don’t think any of us will ever feel like we’re perfect with money but the practice part is sure helpful to kids in so many ways: learning to earn money, experience selling something, feeling delayed gratification, motivation and reward for saving, finding out that saving or investing is another way to grow money, enjoying the feeling of giving to help others, and experiencing mistakes like overpaying, spending too quickly, regret after a purchase, etc. The list is long!
For older grandkids (and even adults), I designed a free to download AutoPilot Your Finances tool that takes the emotion out of so many money decisions. We have room to grow and learn and apply at all ages of life, so I encourage you to drip on the youth in your life whenever teachable moments come along. Practicing with money definitely provides teachable moments!
Let’s Talk:
What have you seen work or not work with the children in your life practicing with their money? How did your childhood or experience with children impact how you gift today? Any tips to share on helping grandkids practice using money? Let’s have a discussion.
