- Celebrate National Grandparents Day with a nod to valuable financial lessons grandparents can offer.
- Realize that the basics of good financial habits remain the same from generation to generation.
- Learn seven tips to stay (or get) on track with your finances.
Grandparents may be known for spoiling their grandchildren, but they can also offer valuable life lessons – particularly when it comes to finances.
Some grandparents have lived a fiscally conservative life, saving for a rainy day and paying for purchases with cash, not credit. Many lived through recessions, periods of unemployment and excessive inflation. With National Grandparents Day on Sunday, Sept. 10, we’ve put together a collection of seven money tips your grandparents might offer to help you stay on track financially.
1. Live below your income. Many people who grew up in the 1940s, 1950s, 1960s and even 1970s learned first-hand to not spend more than they earned. It’s still one of the most valuable lessons people can learn to help their finances (and stress levels) throughout life.
2. Differentiate between wants and needs. Many grandparents lived through fuel shortages in the 1970s, and recessions in 1980-1981 and 2007-2008. They learned just how far an income would go, what expenses were truly necessary, and to take care of those needs before turning to any “wants.” They understand that a new shirt for the weekend, new home décor and a new flat-screen TV are not “needs.” On the other hand, paying for your home (rent or mortgage payment), food, utilities and medical care are.
3. Save for a rainy day. Many grandparents know the value of putting your pennies away. Make it a habit to save 10%, 20% or even more of every payment received, and build up a solid emergency fund. That money will make all the difference when the inevitable unexpected expense comes up. Then save consistently for retirement, through a 401(k) plan, self-funded IRA or other plan.
4. Be careful with credit. Baby boomers now carry higher credit card balances – an average of nearly $6,800 – than any other generation than Gen X. Many grandparents have learned the hard way that if you can’t afford to buy something outright, you can’t afford to buy it.
5. Remember that credit cards are not the only debt-creator. Along with credit cards, there are plenty of opportunities to amass debt today: student loans, home mortgages, home equity loans and home equity lines of credit, personal loans and vehicle loans (not to mention dangerous payday loans). It’s all too easy to end up in a spiral of debt. It’s critically important to maintain – and use – a budget and be sure you know exactly what you are getting into with any debt.
6. Use it up, wear it out, make it do or do without. Many grandparents and other members of older generations learned to “recycle, re-use and re-purpose” before it was trendy. They’d also be likely to say the practice starts at home, with simple things, like completely using up that bottle of shampoo before you buy a new one, or celebrate holiday meals with the family china instead of purchasing new seasonally themed dinnerware.
7. Cover yourself. Plenty of grandparents would urge grandchildren to learn from their experiences and make sure they carry the right insurance. An accident, injury or natural disaster can destroy a lifetime of work in an instant. For most people, health, auto and home (or renters’) insurance are key. Add in life insurance if you have financial dependents.
Life is different today than it was a generation or two ago. But the basics of good financial habits remain about the same. Grandparents and others from older generations can offer valuable lessons that will help improve anyone’s financial life. Adopting some of their healthy money habits will make any grandparent proud as they celebrate Grandparents Day this year.
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