“Learning never exhausts the mind.”

~Leonardo da Vinci

Question:  This summer our grandchildren will be spending time with us. What are some things we can do to teach good money habits to help raise smart spenders and savers?

Answer: Talking to grandchildren and kids about money can be awkward, but it’s important. That’s the takeaway from a recent T. Rowe Price survey, which showed that parents consider topics like death and politics easier to discuss with kids than saving for a goal. A full 85% wanted to avoid the issue by signing their kid up for a personal finance course. Though a class might help, kids and grandkids take their cues from you. Think of your financial advisor as a valuable teacher’s aide who is here to help.

“Parents are the number one influence on their children’s financial behaviors,” Beth Kobliner, author of “Make Your Kid a Money Genius,” told Forbes. “It’s up to us to raise a generation of mindful consumers, investors, savers and givers.” Here we offer essential financial lessons to teach your kids at each age and stage.

Ages Three to Six

Don’t underestimate them – at three, your kids can grasp basic financial concepts, and by age seven, they have already formed money habits, according to a Cambridge University study. Start with the basics, including the idea that you work to earn money in order to pay for what you want and need – and help your kids understand the difference. 

Create a wants vs. needs collage: divide a sheet of paper in half and have your child cut and paste photos from magazines into the two categories.

Other money milestones mapped out by the experts at the Consumer Financial Protection Bureau include the ability to focus and persist through tasks. Saving for retirement takes large amounts of patience and self-control, so we might as well start teaching them early. Recognizing tradeoffs is another important concept. Whether a trade involves money, treats or time, discuss with your child how every decision has consequences.

Around age five, it’s important to give kids some cash to manage. A regular allowance allows them to start thinking about tradeoffs. You can offer them a four-part piggy bank (save, spend, share, and invest) so they begin to understand the different functions of money. By age six, children can complete small chores to earn money and understand the value of different coins and bills well enough to sort and count them.

Ages Seven to 12

Values such as empathy and gratitude are strong in children. Understanding that some families live in poverty and need assistance is part of financial literacy. Seeing photos of families around the world living in various economic situations can help. Also consider letting children have a say in where the family’s charitable dollars will go.

The summer is a great time to share family stories of how you built a business, made your first big purchase, and weathered the inevitable ups and downs of life. These tales can help us understand our place in the world and develop perspective on what has value in life. Another idea is to open a bank account with your grandchild allowing them to become a “saver.” They can experience the positive emotions of tracking interest payments, even if it is a few cents.  

Ages 13 to 18 and above

As your grandchildren become young adults, you can step up your game with more complex topics. You can help them get started by taking control of buying their school supplies and clothes on a budget.

It’s likely that you trace your good money skills back to a formative moment, influential person or that first part-time job. There’s no better way to experience firsthand the effect of taxes, having a boss, being part of a team and managing your time to fit in schoolwork. A seasonal job during school holidays or a part-time gig could help your teen better grasp the working world – and how they picture themselves in it.

Finally, come up with a savings plan for long-term goals, like a car or college tuition. There are budgeting apps to help visualize progress, keep spending in check and provides a sense of ownership and confidence in your grandchildren’s future.

Start the conversation

Whether your kid is seven or 17, they’re ready to hear money talk from their parents and grandparents. After all, financial literacy is not just about dollars and cents. You’re really showing them how to think for themselves, develop values and make sound decisions. In the space of a few teachable moments, you can empower them to take control of their future – a worthy investment. Stay focused and plan accordingly.

The opinions expressed are those of the writer as of June 20, 2021, but not necessarily those of Raymond James and Associates, and subject to change at any time. Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. Past performance does not guarantee future results. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.