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Grandkids and money
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April 24, 2000: 10:59 a.m. ET
Grandparents can teach youngsters practical ways to save their pennies
By Staff Writer Jennifer Karchmer
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NEW YORK (CNNfn) - When Larry Chimerine's granddaughter Molly puts spare change in the piggy bank he gave her, she scrunches her face and says "oink, oink." At only two years old, Molly is light years away from retirement, but financial planners say it's a great idea for a grandparent to start teaching her good long-term saving habits.
"Grandparents have a longer-term view than parents do of retirement," said Steve Barsh, chief executive officer of the online site iGrandparents.com. "Grandparents are into the financial well-being of their grandchildren."
So for grandparents, who often arrive only on the weekend with bags of gifts, they can play a meaningful role in shaping their grandchildren's long-term savings habits.
Where to start saving?
Maybe you don't see your grandkids too often because you live in different cities, or you're not sure how to bring up the subject of money.
 Talking to the kids' parents first to make sure that they don't already have a savings plan in place is the best place to start, said Amy Goyer, program coordinator for the American Association of Retired Persons' (AARP) grandparent information center in Washington. If the parents already have an established plan, you can work together to help your grandchildren start saving.
And apparently, many grandparents want to play a role in teaching children how to save. According to a recent AARP survey, 27 percent of grandparents said that setting up a savings or investment plan for their grandchildren was important to them.
Small steps now go a long way
When John Neumann, 70, sees his grandsons, Mack and Riley, they're usually on their way to soccer practice, which doesn't leave much time for Neumann to teach them about long-term savings.
Neumann and his wife, Susan, opened education IRAs for each of the children, but he'd like to do more to teach them how to save for the long haul.
"It's hard for grandparents to teach kids about money and saving because they have that role of giving gifts and being generous," Goyer said.
So financial experts give the following advice on how grandparents can teach youngsters to save.
Piggy bank it. For young children, Goyer suggests giving them a piggy bank or even empty coffee can to begin their savings. Chimerine, for example, sat down with Molly every week and gave her quarters, nickels, and dimes to slip into the top of her piggy bank.
 "Grandparents generally don't see grandkids everyday, but if you give them loose change to keep in a bank once a week, they see it grow and they love it," said Chimerine, 59, an economist who helped create iGrandparents.com.
Open a savings account. If your grandkids are old enough to receive an allowance, take them to the local bank and introduce them to the teller to open a basic account.
In addition, experts suggest you put together a plan of long-term goals so the child has incentive to save.
"For grandparents to teach the (grand)kids about saving, they have to show them what they own," said certified financial planner (CFP) Tom McFarland in Concord, Mass. "A statement is boring to a kid. A bank account that earns 92 cents -- why bother to even look at it?"
But kids are more likely to get excited about a 10-speed bike or roller skates than a bank statement, so Goyer suggests they cut out pictures of their long-term goals as a reminder of what lies ahead.
Matching funds. Grandparents can match their grandchildren's contributions to a savings account similar to an employer-sponsored 401(k) retirement account.
"This is a strong incentive for (grandkids) to do saving," Chimerine said. "If you save it now and get more from me, you can get something down the road."
Pay yourself first. As adults, we've been told to put 10 percent of our take-home pay into an account for a rainy day or some frivolous purchases. Financial planners suggest teaching youngsters, too, to set aside some of their allowance in addition to long-term savings.
Start early
Above all, McFarland advises grandparents to get their grandchildren excited early on about investing. "They'll think about making choices and say, 'Why should I invest any money now?'" he said.
That may be even before the child is born. Neumann, for example, is preparing to open a college fund for his fifth grandchild -- due any day now. 
-- Click here to send email about this story to Staff Writer Jennifer Karchmer.
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