You could be missing out on a great opportunity to influence your grandchildren's lives if you aren't talking to them about money, according to a new study from financial services firm TIAA-CREF.
The survey of grandparents older than age 50 and grandchildren between the ages of 18 and 24 showed that while only 8 percent of grandparents talk about money with their grandchildren, 85 percent of young adult grandkids are open to that conversation.
"Wow, this generation might be the first to bridge the generation gap," says Joe Coughlin, director of the Massachusetts Institute of Technology AgeLab and a consultant for the project. "It was pretty startling to see how many grandchildren valued their grandparents' spending habits and wanted to hear from them about money."
The reason for this openness might be the high cost of college. Thirty percent of the young adults say that they had nothing saved for post-secondary education, but 29 percent say their grandparents are helping with their educational expenses.
At the same time, many grandparents revealed that they are naive about the cost of a four-year college education, with 26 percent saying they believe it costs $50,000 to $75,000, when it is actually about $100,000 at a public institution and $164,000 at a private school, according to the College Board.
Coughlin, who just finished sending his own daughter to a private college, says, "I think the world of finance has gotten so complex that it takes the whole family to navigate it -- especially paying for college."
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He recommends that grandparents share their own financial experiences in non-challenging ways. "As we age, I think we stop being authoritative, and we start telling stories that aren't hard-edged, so kids are more willing to listen to us."
He thinks it is particularly valuable for grandparents to offer various alternatives -- "Don't dictate, describe" -- including communicating the notion that you don't have to get a four-year degree to earn a good living. "I just paid my plumber $250 an hour," Coughlin said, laughing.
He also urges grandparents to recognize that today's youth are postponing life events -- and acknowledge that it doesn't mean they'll never get to those stages. "We're looking at kids who aren't getting married, or moving out of a studio apartment, or buying houses or cars at the same rate that their parents did. Much of the delay has to do with uncertainty. If you are 60 or 70 or 80 years old, you have seen lots of uncertainty and you can reassure a kid that it will take patience, but they can muddle through."
If you do decide to give your grandchild money, Coughlin recommends that you do it carefully and only if it won't impact your own retirement security. "You don't have to pay the whole thing. A little goes a long way. Help them establish a direction, then encourage them to get a job and match the money they earn," he suggests. "It gives them skin in the game."