Some conversations should be left up to parents, but grandparents should feel comfortable having basic talks about money with their grandchildren. Teaching young children about debt, investing, saving, and establishing good financial habits is something everyone in the family can be involved in.

Don’t feel that you have to be an expert to impart wisdom. All you have to do is be willing to talk honestly and frankly about your own experiences with money. Here are some effective strategies for how to start a conversation about this important subject with your grandchildren.

Earning and Spending Money

One of the lessons you can teach early is the value of a dollar. It’s very helpful to let children know the true cost of things. For example, if they want an expensive gift, like a bicycle or a gaming system, take some time to talk about how much those things cost and where the money comes to pay for them.

It’s important that children understand that money doesn’t flow freely from ATMs and that using a debit card still requires you to have money in a bank account. Talk about earning money. If you’re still working, talk about how hard you work for your income. If you’re retired, you can talk about what you did prior to retirement or point out how hard their parents are working.

Taxes, Saving, and Investing

As children near college age, it’s a good time to start talking about how important it is to save money. If you can afford it, start a 529 college savings plan for your grandchildren. Explain to them how it works why you’re doing it. Tell them that college is expensive, and you are putting aside a small amount whenever you can in the hopes that it will help cover some of their future educational costs.

Start talking about the stock market with your grandchildren when they are around 11 years old. There are plenty of ways to invest small amounts of money online or through apps with as little as $5. You can do this as a real-life learning experience with your grandchild. Allow them to choose a stock and watch how the stock performs and your investment changes together.

Taxes are better left until grandchildren are teenagers, around the time that they might be looking for their first part time job. Explain it in very simple terms. For example, say, “For every $100 I earn, I have to give $25 directly to the government. So, I really only have $75.” Once they begin earning their own money with their own pay stub, this becomes a little easier to understand.

Credit Cards

It is so important to talk to your grandchildren about how credit cards work. Average credit card interest rates are around 18 percent and this is often higher for young people who don’t have an established credit history.

One of the biggest lessons is about how interest works and how quickly costs build up if the credit card balance isn’t paid in full every month. A lot of teens and young adults assume that making the minimum payment is enough and don’t fully understand that this leads to a larger unpaid balance and significant interest over time.

A Family Affair

Raising a child that’s smart about money is a family affair. While some conversations, like the birds and the bees, should be left to the parents, conversations about money are something that grandparents can safely be a part of.

Any opinions are those of Thomas B. Fleishel and not necessarily those of Raymond James.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation for a particular investment account.