Could grandparents be our biggest financial influencers?


Grandparents play an enormous role in securing their grandkids’ financial future. Plenty of them take their role very seriously too, seeing it as their guiding role to teach their grandkids how money works, and contributing to savings and investments for their grandchildren that can make an enormous difference later in their lives.

My own grandparents were key in shaping my financial literacy, teaching me how to do jobs in their yard and home, making me negotiate a rate for each job, and paying me with little piles of 20 cent and 50 cent pieces that I had to count out and take to the bank.

Teaching the younger generation how to be frugal with their cash can be valuable wisdom for grandparents to impart.

Teaching the younger generation how to be frugal with their cash can be valuable wisdom for grandparents to impart.Credit: Simon Letch

Using that cash, they taught me about savings, interest, and compounding too. They also taught me how to spend, encouraging me to spend a little of my pocket money, carefully, at the local lolly shop, but not to go overboard.

And they showed me how to be frugal, or careful with money, like they were, by modelling sensible behaviours like shopping for gifts at the sales and tucking them away months before Christmas.

I know now, but I didn’t know then, that in the times when my parents faced financial strain, they quietly supported my education helping my parents juggle those difficult middle years too.


It’s a role more and more grandparents want to play, especially if they’ve got a little more financial certainty than their adult children, but it’s not as easy as it used to be.

With the decline of cash, the ability to make money tangible is harder. Investing on behalf of your grandkids can cause tax issues and grandparents, frankly, aren’t all living frugal lives like mine had to in their generation, so they’re not always modelling the behaviour kids can learn from any more.

So this week, I’ve got some suggestions and lessons for playing that role in your grandchildren’s lives in a much more cashless world.

Teaching kids early in life

As the use of cash declines we’re going to have to get more creative in how we make money tangible for kids early in life.

The fundamentals stay the same – you can help your kids open their first bank account, even become a supervisor on their account alongside their parents, and teach them to use it, the same way my grandparents taught me to use my bank book.

As a supervisor, you can allocate limits for spending and approve money for use. Then, once you have your banking and digital currency tools set up, you can set them jobs they can do, negotiate the rate of payment, teaching them to seek a fair amount, and then pay them diligently once the role has been performed.

Then, you can together set up goals for the savings, allowing a small portion for spending on little joys, and a larger portion for a more strategic goal. You could even be clever, and make one of the rewards an outing to purchase a strategic item together or a trip they need spending money for – a true bonding moment for grandparent and grandchild.

Help build a nest egg

Back in the ’70s, when most grandparents were getting on the property ladder, an average annual wage was about $6300 and the average house price in Sydney was $18,700 – a multiple of about 2.9 times.

The price to wage ratio is now up to 12 times a person’s salary with the average house price in our capital cities now $1,145,000 and the average wage about $90,000 per annum. That means the multiple for a capital city dwelling is something in the league of 12.7 times.

By being a guiding hand with financial literacy, you’re investing in their own future happiness.

Owning your own home is one of the principles of financial security later in life. So, it makes sense that we do whatever we can to help kids to get there as early as possible. The power of compound investing in Australian property has rewarded many and disappointed few. But it’s hard to get started.

Some sources say it can take a young couple or a single person today between six and 12 years to save the deposit for their first home if they are saving about 25 per cent of their income a month to aim for a target of a 20 per cent home deposit.


This is where grandparents are playing a powerful role, setting up carefully constructed investment assets and contributing to them early in a child’s life. The objective is to make an investment that can, over the 20-30 years before a child matures and wants their own home, really be left untouched to grow or added to over time, and can offer them a valuable start in life.

However, grandparents who are saving for their grandchildren under 18 years of age need to be aware of the tax implications which can be complicated depending on your personal circumstance and the child’s.

You may find, after talking to an accountant, that it’s better to consider a growth asset than an income strategy, as income tax laws are designed to limit the amount of money a minor can earn from dividends and interest and other passive sources to avoid adults diverting income to their children’s accounts.

And, if setting up a bank account, you’ll also want to get a tax file number in the child’s name to avoid the bank withholding tax unnecessarily, something that is often forgotten or overlooked.

Teaching kids how to spend money

This is a really tough one for many of today’s retirees who are in the midst of the best years of their lives, spending with a greater sense of excitement than the silent generation ever did.

It’s an interesting contemplation to consider how we teach our kids sensibility and financial awareness when not all their primary role models are all doing it tough. In fact, many are happy to splurge on the grandkids knowing it brings them personal joy.

So, for those who don’t think they can model sensible financial balance any more, it might be better to look at the process as one of teaching how to get to success. We have to remember, they didn’t see how hard you worked to earn it – they just see how easily you now spend it.

Grandparents with financial confidence, and grandparents who have to juggle their money to make ends meet after retirement are both the perfect people to teach their grandkids how they got there, educating on the fundamentals of living within your means in your youth to build savings, buy a home and benefit from compound investing.

They can talk openly about the necessary steps that kids have to take to get to the stage of life their grandparents can now live – or wish they could live – and they can point out that that money the kids enjoy their grandparents having didn’t grow on trees it was built through hard work, discipline and years of sensibility.

How do you do that? Start by teaching the fundamentals of budgeting, understanding income and expenses, assets and liabilities. Become their trusted confidant on their financial goals, inspiring them to set some, and celebrating their achievements.

By being a guiding hand with financial literacy, you’re investing in their own future happiness. And on the upside, you get to be there to share it with them.

Bec Wilson is the author of the bestseller How to Have an Epic Retirement. She writes a weekly newsletter at and she is the host of the Prime Time podcast.

  • Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

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