Become an Influencer After 50! (and Teach Your Children and Grandchildren Valuable Financial Skills)

I’ll never forget the day when my husband and I were traveling with our pre-teen daughters (over 15 years ago), and we were shopping for clothes in an expensive department store. I played the role of the Wicked Witch of the West when I said, “We cannot afford $100 jeans!” I knew they were feeling peer pressure from classmates, and our society encourages us to “keep up with the Joneses” and live beyond our means. Yet, my middle-income values would not allow me to spend $100 for jeans.

I’ll also never forget when my grandmother put $20,000 in a checking account when I left for college at age 17, and I was told to “stretch it” so it would get me through four years of college and beyond. By living a frugal lifestyle for many years, she and my grandfather had saved that money (and another $20,000 for my sister). They had saved until he died at age 62, and she continued saving for another eight years. In today’s dollars, $20,000 would be over $125,000.

My grandmother taught me many valuable lessons about money, including saving for a long-term goal (such as paying for her granddaughter’s college education) and not caving into immediate gratification. She also taught me the concept of selective frugality and how to embrace change (which improved her life) after my grandfather died.

She taught me that we can have a positive impact on our family and friends.

How Can You Have a Positive Impact?

If you have children or grandchildren who are teenagers, tell them about your experience with money. They may roll their eyes, but don’t let that discourage you—they are listening!

Did you or your parents live through the Great Depression? What stories can you pass down? Did you suffer from the 2008 Recession? Talk about your career, including the jobs you liked, and those you did not like. Talk about saving money and how it’s important to start early and save at least 10 percent of your income. (Increase it to 15 percent or more when possible.) Talk about contributing to a retirement account and taking advantage of a matching contribution if your employer offers one.

Talk about your experiences with investing. What went well? What did not? Don’t hesitate to talk about your mistakes and what you wished you had done differently.

If your children or grandchildren are very young, use the attached photo to teach them the concept of saving, spending, and charity. Children as young as four or five can begin learning about money. Set up savings jars for them if they do not have them. Give them a small allowance each week, and help them separate the dollars or coins into the three jars.

Talk about charity and the importance of helping those less fortunate. Teach them how they can help locally, such as through homeless shelters or food banks. They can help folks in Ruidoso who were impacted by the recent fires, or donate to international charities that help provide medical care and nutritional food to war-torn areas.

If your children or grandchildren are older, discuss saving for a long-term goal, such as for college, a new bike, or smartphone. Teach them the value of money and the importance of saving. Explain the dangers of credit cards and living beyond their means. Talk about a variety of career paths and what interests them.

Hire them for small jobs and pay them fairly, so they can learn how to manage their money. If they have a job (that will be reported on a tax return), open a Roth IRA for them. You can contribute to it on their behalf. The contribution limit for 2024 is the lesser of the actual amount they earn, up to a maximum Roth contribution of $7,000. If a teenager earns $1,500 at a summer job, you can contribute $1,500 to their Roth IRA. If they earn $400 by working on weekends, you can contribute $400.

Parents, grandparents, or other family members can fund a Roth IRA on behalf of someone else, as long as the recipient had earned income. Because the 2024 gift tax exclusion is $18,000, there are not any taxes (or extra tax paperwork) necessary for the person who funded the Roth. Most tax preparers recommend you file a tax return for the child or grandchild because it will document the earnings that justifies the Roth contribution. The child or grandchild will likely not owe any taxes unless their adjusted gross income exceeds the standard deduction, which is $14,600 in 2024 for a single person. ?

If they are under age 18, the Roth IRA will need to be a “custodial” Roth IRA (with a parent or grandparent as the custodian), but when they reach the “age of maturity” (18 or 21 depending on the state) the custodial provision will be removed and the account will become their account. Funding a Roth IRA for a child or grandchild is a great way to get them interested in investing.

We tend to assume we do not have any valuable lessons for our children or grandchildren. My grandmother showed me that she had tremendous wisdom, which she generously shared with me. Decide you want to have a positive impact on your children or grandchildren—and start the conversation today! Becoming an influencer (at any age) is amazingly simple!

?#investing #finance #retirement