Help Your Grandchildren Save For The Future
Set your grandchildren up for financial success. Teach them healthy financial habits early in life.
Start Or Contribute To Their 529 Account Or Education Savings Account
A 529 account can be set up for children or young adults to use when they go to school. These state-sponsored, tax-advantaged accounts are excellent options for grandparents who wish to help finance their grandchildren’s education. They can be used for tuition, books and even room and board.
These 529 plans are not tax deductible, but the earnings are. Even a small amount set aside each month will grow significantly over the course of 18 years. You do not have to choose a 529 account from the state your grandchild lives in. You can maximize your investment if you pick an account from some of the best-performing states: the New York 529, Ohio, Nevada, and Utah.
If You Can’t Give Money, Teach Them About Money
Not every grandparent has the capacity to give money to their grandchildren through 529 accounts or an education savings account. If you don’t have the money to give, teach your grandchildren how to save. It is never too early to begin teaching children about the importance of savings.
Be a good role model. Take them to the bank with you and show them what you do when you go to the bank. Show them how you work with the teller to add money to your account and check your balance. You can teach them how to balance a checkbook and why you keep a physical or virtual checkbook to keep track of your accounts. You can even help them open their very own free checking and savings accounts. Counting money at home together and then going to the bank to deposit it can make the idea of saving money “fun.”
Help Them Access Funds And Give More In-Depth Knowledge
As your grandchildren age, their knowledge of finances should also mature. During this time, you can teach them how to access funds and use funds responsibly. A great way to do this is to discuss all of the options available to them and guide them through the pros and cons of each option.
Discuss college or trade school loans, business investments, certificates of deposit, money market accounts, and growing assets to help them understand what is available. Talk to them about 401(k) plans and Roth IRA accounts where they can start to save for retirement.
This is also a great time to discuss what the peer pressure in college or in their social circles may look like when it comes to money. While it might seem fun to buy new clothes, shoes, furniture or a fancy car, they will be putting unnecessary purchases ahead of future necessary purchases. Looking at budgeting and the cost of living now can help them make smarter choices in the future.
Start building financial literacy with your grandchildren so you can help set them up for a lifetime of success.
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