#BackToSchool: How to Help Your Grandkids Stay Debt FreeAug 15, 2018
Grandparents are vital to many Canadian households. They’re emotional and financial contributors in their grandchildren’s lives. If you have university-bound grandkids, now might be the best time to offer some financial advice to help keep them out of debt.
If you’re a grandparent, this episode of our BDO Debt Solutions Podcast is all about you and how you fit into your family’s back-to-school financial scenario.
We cover a few areas:
- How your financial contributions to your grown kids and grandchildren could impact your ability to save for retirement or reduce debt
- Questions you should ask before offering financial support
- Advice and tips for helping your grown kids with the costs or responsibilities of raising their own children
- What to give your university-aged grandkids when you can’t give cash
Let’s expand a bit more on that last bulleted point — how can grandparents help their grandkids with university if they can’t afford to contribute money?
By this point in your life, you’ve learned some valuable money lessons. Those pearls of wisdom can come in handy when your grandkids become young adults, juggling the financial responsibilities of university.
A good place to start: talk to your grandkids about how credit cards and budgets can impact your their lives, and their futures.
A credit history is important, but credit should be used wisely
Credit cards may be convenient, but they also charge some heavy interest rates that easily lead to consumer debt if you’re not paying your balance in full each month.
Lines of credit often have lower interest rates, but there’s a catch. They’re susceptible to interest rate hikes. That means it can suddenly get a lot harder, if not impossible, to reduce that consumer debt.
Credit scores are important, however, and they depend on having a credit history. That means that outright avoiding the use of credit isn’t necessarily the answer. The key is using credit wisely, and only charging what you know you can pay off. That will help build a solid credit history without creating overwhelming debt.
This credit card advice from Maple Money is a good primer.
In your years of money management and credit usage you may have made a few mistakes, like taking on too much consumer debt and having to pay it off later.
Sharing those experiences can be helpful to your grandkids. Let them know what month-to-month financial struggle looks like so they can make more informed decisions knowing the potential long-term impacts.
And, being honest about your mistakes can make them feel more comfortable coming to you if they run into financial trouble in the future.
A lot of young adults might roll their eyes or yawn at the idea of budgeting. But budgeting really works. The first years of post-secondary may be the first time your grandkids will manage financial responsibilities like loans, credit cards, tuition, and monthly bills on their own. Budgeting can really help them stay on track and avoid unexpected debt.
Whatever budgeting and tracking tricks and tips you have, share them. Your grandkids will be better for it. And “modern” budgeting is the easiest it’s ever been: there are so many budget formats for different lifestyles and preferences.
Look at this Futurfund article on budgeting to see how many ways you can budget with ease.
Grandkids want to be mobile. Budgeting is a breeze with a money management app.
My Money Coach is thinking of your university-bound grandkid — they offer a semester-by-semester approach budget template.
Money isn’t everything. A grandparent’s life experiences can be more valuable than any cash gift. Offering your grandkids advice on critical financial topics like budgeting and credit usage could be the difference between them focusing on their studies, or worrying about their debt.