Creating great financial mentors through grandparents

Doug Horn

Children today are not always prepared to handle financial matters, regardless of their age. Several years ago the mother of one of my clients passed away, leaving a substantial estate to her three sons. My client was the youngest and his portion was left in trust to him. However, his two older brothers were in their late forties and early fifties, so their portion was given to them outright. My client shared that within two weeks they had each managed to spend over $200,000. They had purchased new pickup trucks, new Harley Davidson motorcycles along with many other gifts and toys. Age does not always translate to great financial decisions.

Whether it is the ability to manage sudden wealth created from the death of a loved one, winning a prize, or receiving a work related bonus, or just managing the decisions to purchase what is “needed” rather than “wanted”, most everyone needs a mentor to learn these skills. As parents whether you realize it or not, all of your financial actions are educating and training your children on how to manage their finances. Is this an area where you would like to say, ‘Do as I say, not as I do’? How about their grandparents? Are they assisting in fostering great financial habits or helping to create financial nightmares?

Dr. Eileen Gallo recently wrote an article in the October Journal of Financial Planning sharing some of her thoughts on how grandparents could model good money behaviors. She shared that an Ameriprise Financial survey indicated people were “looking for ways to help their children become more financially savvy.” How each generation interacts with finances and what is taught to their children as well as what the children learn from the times have varied over the years.

As a financial advisor, I recognize solutions must be tailored to fit each client and their experiences. Many of my senior clients grew up experiencing the Great Depression personally or through the actions and memories of their parents. For others it was the world wars, the cold war, or the affluent 1990’s, each time period leaves its mark as to investment style, risk, and habits.

With our society experiencing prosperity for so many years, the lessons of restraint, wants versus needs, saving for the purchase rather than charging it, may have been lost or at least their emphasis was not very high. The financial crisis of 2008 and the current economic slowdown has clearly demonstrated these skills are still important and could be critical to financial survival at times.

There are many opportunities for grandparents to help influence your children’s financial decisions and skills. For those who insist upon spoiling your children with expensive presents or large cash gifts, take time to share with them what you are hoping to teach your children and see if they would like to be a part of the plan. When Christmas, birthdays, or other special occasions come around, discuss with your grandparents the importance of teaching your children the benefits C.R.I.F. Charity Retirement Investing then Fun.

When children have money to spend, take the time to discuss with them what they would like to purchase. Share with them part should be given to church and other charities. Also, that part should be set aside for a rainy day or retirement. Investing in a single share of stock for each child can go a long way in educating them on the value of investing. Opportunities of discussion will arise whenever a dividend payment is received or the annual report is sent. Creating and tracking the value of the stock over time on a graph may also offer opportunities for discussion and education. These funds can be used later in life for a major purchase like a car, home, or to start a business. Once a portion has been used to meet these objectives, then the balance can be used for life including all the fun it may provide.

For assistance with portfolio allocations, insurance, estate planning, or investment management contact me at Quality Financial Concepts or one of the other Certified Financial Planners in our area. To continue a personal quest for education, you can also view our learning center on our website, There you will find articles on a variety of topics, on-line seminars, calculators, as well as a host of other free tools.

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