8 Money Lessons You Must Teach Your Grandchildren

Grandparent and grandchild
Photo by michaeljung / Shutterstock.com

At this time of year, young people across the nation are graduating from high school and college and preparing to take charge of their financial lives.

If you listen closely, you can hear wallets groaning from coast to coast.

Now, this is not another rant against millennials and other whippersnappers. Americans of all ages are hopelessly behind the curve when it comes to handling money responsibly.

But unless young people have a natural interest in personal finance, they are at a high risk of making financial mistakes that lead to chronic debt.

Fortunately, if you are a grandparent, you can help. Pass on the following lessons to your grandchildren — whether they are graduating now, or just dreaming about doing so one day.

1. Debt is a form of slavery

Runaway debt can create havoc in your life. What happens if you lose your job or get an illness that health insurance does not cover? How much stress would you feel in that situation?

Debt, especially unsecured consumer debt, is a form of slavery. The debtor is beholden to the creditor because each day the debt remains unpaid, interest charges pile up. Over time, it’s easy to see how the unchecked use of credit can erode wealth and foreclose opportunities.

If your grandchildren already have fallen into debt, remind them it’s not too late to climb out. Check out “Resolutions 2020: Crush Your Debt in 3 Simple Steps.”

2. Financially successful people live below their means

Financial success is usually the result of years of self-control. A big part of that discipline involves living within or below your means. If every dollar that comes into your life has to go out, there’s little hope for getting ahead.

Remind your grandchildren to keep their overhead lower than their income, and to pocket the difference. And urge them not to let every bump in income become a boost in lifestyle.

3. Pay yourself first

Learning to pay yourself first is an important part of financial security. Direct a healthy portion of your income into an IRA, 401(k) plan or savings account before your paycheck even hits your account. Otherwise, you’ll have to constantly fight the temptation to spend every dollar.

Tell your grandchildren to automate savings and make that an unwavering part of their routine. Doing so puts the twin forces of time and compounding interest on their side.

Looking for a savings account that pays a great rate? Stop by our Solutions Center and compare rates.

4. Forget about impressing the Joneses

It’s easy to access some of the trappings of wealth in our society, but it’s difficult to actually afford them. Buying new cars, big houses and designer handbags might impress others, but these goods often mask high debt and a precarious relationship with credit.

Don’t confuse easy access to credit with real wealth. Although it doesn’t seem nearly as sexy, real wealth is usually the product of responsible spending, maximizing the value of every dollar and trading glitz for modesty and security.

You’ve learned that lesson over a lifetime. Now, pass on the wisdom to your grandchildren.

5. Save aggressively early, and you won’t have to save so much overall

Saving is a long-term proposition. No matter how modest the amount, starting the savings habit early pays off. A broader time horizon means more years to:

  • Benefit from compounding interest
  • Experience upswings in the market
  • Recover from downturns in the market
  • Refine your investment style

6. Craft clear financial goals

Financial goals can be too broad — buy a house, save for retirement and keep paying our bills. To succeed financially, goals need a big dose of specificity.

For example, it’s fine to shoot for buying a home. But what kind of house suits your needs and lifestyle? What size of down payment would leave you with a comfortable mortgage?

Grandchildren who can answer these questions in detail will have better-defined goals that, in turn, can motivate them to make better financial decisions.

7. Don’t believe everything you hear about money

Looking to popular culture for cues on how to manage your money is a bad idea. Avoid get-rich-quick schemes, and tune out people who tell you that purchasing the nicest clothes, the flashiest cars and the hottest stocks will make you rich and happy.

Instead, steer your grandchildren toward reading websites like this one, and learning from the experiences — and mistakes — of others. To rise above the financial clutter, grandchildren need to become students of personal finance and critically assess the information that’s at their fingertips.

8. Set your own spending limits — and stick to them

In life, there is no shortage of companies trying to get you to spend — from credit card lenders increasing your credit limit to banks steering you toward the largest mortgage for which you qualify.

Don’t let these companies set your grandchildren’s personal spending ceiling. Instead, encourage them to decide for themselves what they can afford, what they’re comfortable with and what their priorities are.

Tell them to remember that they are in charge of making money and they decide how it gets used.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
13 Smart Tricks to Organize Every Room of Your Home
13 Smart Tricks to Organize Every Room of Your Home

Get your household organized with these brilliant and inexpensive tricks.

10 Times You’re Right to Be a Cheapskate
10 Times You’re Right to Be a Cheapskate

Clever shoppers can save money without sacrificing quality. Here is how to do it.

12 Products to Keep Your Car Clean and Organized
12 Products to Keep Your Car Clean and Organized

These items will help put your vehicular mess to rest — and each is available for less than $20 on Amazon.

Top 5 Activities That People Dream of Doing in Retirement
Top 5 Activities That People Dream of Doing in Retirement

No. 1 isn’t visiting grandkids, and No. 4 might surprise you.

10 Things You Should Never Buy on Amazon
10 Things You Should Never Buy on Amazon

Just because you can purchase something on Amazon doesn’t mean that you should.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

8 Tips for Retiring Comfortably on Social Security Alone
8 Tips for Retiring Comfortably on Social Security Alone

It’s never too early to start learning how to live well while living on less.

Am I Eligible for My Mother’s Social Security Benefit?
Am I Eligible for My Mother’s Social Security Benefit?

Can an adult daughter tap into her late mother’s benefit?

11 Generic Products You Should Buy at Costco
11 Generic Products You Should Buy at Costco

Not all generics are worthwhile, but these are among the best from Costco’s Kirkland Signature brand.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have all of these documents that are crucial to their golden years — especially during a pandemic.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

9 Small Expenses That Are Bleeding Your Budget Dry
9 Small Expenses That Are Bleeding Your Budget Dry

Keep more of future paychecks by eliminating these budget-busting unnecessary expenses.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.