Print

Email story

Comment

Email editor

Grandparents caninspire smart spending

Children can learn a lot about money management - good and bad - from Grandma and Grandpa.

By ASSOCIATED PRESS
Published May 28, 2006

A lot of grandparents dedicate themselves to spoiling their grandchildren. But when it comes to money, that may not be the best strategy.

"Grandparents are in an ideal position to be money mentors to their grandchildren," said Nathan Dungan, president of the Share-Save-Spend educational group in Minneapolis. "It's not just about teaching them to spend money. It's about using your resources to inspire them."

Loretta Simonson, 72, of Colorado Springs, Colo., wholeheartedly agrees.

Simonson, who works as a consultant on parliamentary procedures, thinks the best thing she and other grandparents can do is set a good example for their grandkids. She worries that her four grandchildren, ages 5 to 15, are bombarded with media messages to buy, buy, buy.

"It creates the sense that everything is immediate, the 'I want it now' mentality," she said. "So I try to show them another way. They see I'd like a new car, but I tell them I'll wait a few months until the current models are on sale."

When it comes to giving money to grandchildren, she likes the idea of "things of a lasting nature, like contributing for education." But Simonson said money was only part of the equation.

"Aside from the money, you can build expectations with your grandchildren," she said. "You tell them, 'Well, you are going to college, aren't you?' "

Linda Leitz, a certified financial planner in Colorado Springs who has worked with Simonson, said grandparents need to communicate with their children in deciding how to deal with money and the grandchildren.

"Sometimes the parents may not have thought about an issue, and this will get them thinking about it," Leitz said. "Or, maybe they have, and as grandparents you don't want to do anything that conflicts with the plan that's in place."

Leitz, the mother of three teenagers and author of The Ultimate Parenting Map to Money Smart Kids, warns against financial rewards for trivial issues, as in "you've been courteous, here's $10."

On the other hand, she likes the idea of grandparents stepping in to support long-term goals financially and emotionally.

"I encourage situations like, 'I'm so proud of the internship you got, so I'd like to help you out with the apartment you're going to have to get,' " she said. Or, "we'd like to put $10,000 toward the down payment on your first home."

Grandparents can share experiences from their lives that offer lessons for younger generations, she said.

"My mom used to tell a story. She was working a civil service job during World War II. She would get on the bus the day she was due to get her paycheck with nothing but her 10-cent bus fare. So someone my kids know literally went to work with a dime in her pocket and made it, and that lets them know they can, too," she said.

Dungan of Share-Save-Spend is especially interested in what he calls "the intersection of money, values and the culture."

The author of Prodigal Sons and Material Girls: How Not to Be Your Child's ATM, Dungan urges grandparents to help in ways that motivate their grandchildren.

He tells the story of a couple who thought that every time they gave their grandchildren a gift, they sensed a bit of entitlement. So they started giving each a check with everything filled out except the "pay to" section.

"They told the kids, 'We want you to give this away to a cause you feel passionate about,' " Dungan said. "They were trying to show them that when it comes to money, it's about more than you and spending."

Another idea he likes is what he calls the "family 401(k)," patterned after the company-sponsored retirement savings plan. It's a vehicle for parents and grandparents to "match" some of the money a young person saves, he said.

"When those young people finally hit the work world, they'll recognize that they have an opportunity to invest in their future, understand that there are benefits to living within their means and that they're doing something good for themselves in the future," he said.

Dungan urges grandparents to be sensitive to their children's needs and their goals for the grandchildren.

"They need to recognize that their adult children are often struggling to help the grandchildren," he said. "Wages have been basically flat, but living costs are going up, tuition costs are going up, everything costs more.

"Grandparents need to learn to ask, 'How can we help in a productive way?' "

[Last modified May 28, 2006, 07:08:19]