How to Teach Your Grandkids About Financial Literacy

People often associate legacy planning with leaving an inheritance to their children and grandchildren. But direct financial gifts aside, there’s something just as valuable you can leave to your family—and that’s the gift of financial literacy. When you take the time to help your grandchildren develop healthy financial habits now, you give them the foundation for a lifetime of making positive, forward-focused financial decisions. 

So how, exactly, can you incorporate more financial literacy lessons into your day-to-day interactions with loved ones? Many people find it easy enough to provide grandkids with practical, yet effective, activities like budgeting and saving exercises—though simply discussing money management principles can work wonders as well.  

Why Teaching Financial Literacy Is Important 

The basic principles of finance aren’t taught in most schools, let alone more complex topics like investing or retirement savings vehicles. For example, a recent survey found that 58.1% of Gen Zers don’t know what a Roth account is.¹

For many people, their first real introduction to spending and saving happens when they head to college, open a 401(k) at work, or start living on their own. The lack of literacy can lead to a lack of financial confidence and clarity and cost your grandchildren missed opportunities or unnecessary fees and penalties. In 2023, for example, Americans lost an average of $1,506 because of a lack of financial literacy.²  

If you haven’t already, now’s the time to start having no-pressure, easy conversations with your grandkids about responsible money management. Doing so can not only help them become more financially literate, but it can ensure they become more responsible stewards of their inheritances as well. 

For Your Youngest Grandchildren 

Depending on how young your grandkids are, consider starting off simple. With their parents’ permission, offer an allowance and encourage the kids to divvy up the money into three jars: savings, giving, and spending. 

Help them figure out how much should go in each. If you give them $10, for example, perhaps 30% goes toward savings, 50% to spending, and 20% to giving. 

Encourage them to set some easy goals for their savings, like buying a new toy or video game. This is a great way to start teaching them the value of balancing the feelings of immediate gratification (using their spending money) with long-term gratification (saving up for something big). 

For Your Teenage Grandchildren 

If your grandkids are a bit older, start building onto those principles of spending and saving by teaching them the basics of investing. Show them the power investing has to grow their wealth over time and teach them the importance of balancing risk and opportunity. 

 Consider gifting them shares in stocks chosen together, so they can watch their new portfolio grow over time. 

For Your Adult Grandchildren 

If your grandchildren are young adults, they may have already established some solid financial habits. However, there’s always more to learn, especially if they’re just starting their first jobs or recently graduated from college. 

Maybe you could help incentivize them to take advantage of their employers’ 401(k) by providing your own contributions to their retirement accounts. Or, find out what charitable causes or organizations are important to them and go in together on a donation each year.

Don’t Forget to Involve Your Kids 

If you’re going to be helping your younger grandkids through financial literacy exercises, don’t forget to include their parents (your child and their spouse) in the conversation. 

Open communication is key to avoiding misunderstandings and ensuring you’re not overstepping. You may even be able to coordinate gifts with the parents or otherwise work together to strengthen your financial literacy lessons. 

Need Help Talking With Your Loved Ones? 

If you could use some help coming up with the most effective ways to teach financial literacy to your grandchildren, we’re here to help. Our advisors can facilitate conversations between you and your loved ones, as well as provide ongoing guidance and resources for instilling healthy financial habits in children. Don’t hesitate to reach out to learn more. 

Sources: 

¹2024 Survey: Generational Banking Trends 

²Financial Literacy Statistics