Barefoot Investor: Why Aussies need to talk to grandparents about money matters

More than one in three Aussies look to their family for financial advice, and the Barefoot Investor Scott Pape says there’s good reason they should be turning to their grandparents.

Older Australians are in the perfect position to ensure their grandchildren become good money managers, the Barefoot Investor says.

This comes as new research revealed that 42 per cent of Australian look to family for advice over financial advisors.

Award-winning author, Scott Pape, whose latest book focuses on teaching kids about cash, said time-poor parents simply don’t have the hours in the day to help their children understand how to handle their finances.

This has resulted in grandparents being forced to take the reins and help children understand the best ways to manage cash.

“Parents can be really busy and there’s never enough time, we have record household debts and we have families that are working who are pushed to breaking point and are sometimes working two or three jobs,” he said.

“Grandparents can be a really great source because they have the time to teach them the pocket money system or about the value of work and cash.

“It can be a special bond between grandparents and grandkids.”

Scott Pape says time-poor parent don’t have the hours in the day to help their children understand how to handle their finances, so grandparents were stepping in. Picture: Nicole Cleary

New research from Finder.com.au shows 42 per cent of Australians turn to parents, grandparents and relatives for financial advice, while only 20 per cent go to a financial advisor.

Women were more likely to ask for help, with 49 per cent saying they would turn to a family member, compared with 35 per cent of men.

Mr Pape said grandparents could clearly explain to the younger and more tech-savvy generations they did not have access to things such as the internet when they were growing up, times were very different.

He also recalled as a youngster “getting a $5 note in card” from his grandparents which was a common gift for kids to receive several decades ago.

“It gives them perspective about what life was like prior to us becoming one of the wealthiest nations on earth where we had,” Mr Pape said.

Melbourne grandmother Bronwyn Beeson said she wanted to teach her grandkids a commonsense approach to saving money. Picture: Alex Coppel

Melbourne grandmother Bronwyn Beeson says it’s essential that children understand “the value of a dollar”.

Ms Beeson used this philosophy when raising her own two sons and now wants to instil it in her grandchildren — Anja, 3, and two-year-old Tomas — when they are older.

“It’s really about teaching them that nothing is free and you have to work hard,” she says.

“We used to say to our sons, if you want a bike you have to save up for it,” she says.

“You can put some money aside, do some extra chores or when they’re teenagers get part-time jobs.”

Ms Beeson, from Blackburn in Melbourne’s east, looks back to the commonsense approach of her own grandparents, who lived through the Great Depression.

“Back then, they used to save their money in jars. They could see exactly what they had and they never lived beyond their means,” she says.

Ms Beeson says her own sons grew up with a sensible approach to money and budgeting. As a result, they were both able to purchase their own homes as young adults.

When it comes to her grandchildren, she will emphasise the importance of saving money each week and also warn against impulse buying, encouraging them to think carefully about large purchases.

National Seniors CEO Professor John McCallum said there were many benefits in grandparents imparting financial advice with their grandchildren, or helping out with expenses.

Prof McCallum, 70, who has three young grandchildren himself, said it was “never too early” to start teaching children about monetary matters, but it depended on the expertise of the grandparent.

“The grandmother of my daughter-in-law has tutored her in the stock exchange and managing money from a very early age. It taught her a lot. She’s extremely analytical and thorough, and those skills have given her the ability to manage on a relatively low income while contending with the expensive Sydney property market,” he said.

National Seniors CEO John McCallum said it was important grandparents imparted financial advice with their grandchildren. Picture: Supplied

Grandparents were much more technologically-savvy these days, Prof McCallum said, and that meant they could consider using educational apps that helped teach financial skills.

Even exposing grandchildren to online shopping could create good habits. He said for parents it might just be the default option to buy something new. But older Australians had lead a “leaner and meaner” lifestyle, where saving money was important.

“You can show them websites like Gumtree where they can buy things secondhand. There are so many websites for that now, but you need the guidance and discipline to choose the right ones.

And of course, there were other skills like sewing elders could teach their grandchildren, which might mean young ones could learn to patch a hole in their jeans rather than heading out to buy a new pair, he said.

Professor McCallum and his granddaughter. Picture: Supplied

Prof McCallum added there was a “great fear” among younger generations that they would not do as well as older Australians.

“If that is true, it’s something the experience of people who lived through the 40s and 50s know how to deal with. And frankly, they had to do that themselves,” he said.

“They’ve lived through these periods where there hasn’t been sustained growth like there has since the 1990s. And that sense of history and managing it can translate to great advice for younger generations.”

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Certified financial planner at Specialist Financial Solutions Stevie-Jade Turner said grandparents were an important source of wisdom for financial matters.

“It’s not just because they’ve done well financially, but because they’ve made mistakes and they’ve had time to learn and grow from them,” Ms Turner said.

“Older clients often say they want to see their children and grandchildren to do well because they grew up during a tough era, and often didn’t have much money themselves.

“One of the most common pieces of advice I hear is that they don’t want to see younger family members take on too much debt, to the point where they can’t get out of it and are living to service that debt,” she said.

She added it was important for grandchildren to show an interest in monetary matters as it grandparents were keen to see their financial legacy passed in to good hands.

“I was working with a client not long ago who said his family showed very little interest in managing what would become their inheritance. He feared they would blow it all.” she said.

“Because of this, we investigated leaving the money to charity instead.”

Pape’s latest book, Barefoot Investor for Families: The Only Kids’ Money Guide You’ll Ever Need, was released in 2018 and has sold more than 263,000 copies.

In the book he famously created the simple jars concept - where children have spend, save and give jars to carefully manage their money.

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Originally published as Barefoot Investor: Why Aussies need to talk to grandparents about money matters