It can be tempting for grandparents to spoil their grandchildren; after all, isn’t that part of the job description? But experts warn the money and financial habits passed down from generation to generation are long lasting.

The value of a dollar and an education are the top lessons boomers can share with their grandchildren, but their numbers might be a little old-school ideas when it comes to just how expensive college is today.  

According to a new TIAA-CREF study, conducted by an independent research firm, 20% of grandparents think a four-year college education costs $30,000 to $50,000 and 25% think it costs $50,000 to $75,000. In reality, a four-year public college costs about $100,000 and a private four-year school now averages $164,000, the study shows.

Joseph Stabnick, senior director, AARP College Savings Solutions from TIAA-CREF, offers the following tips for grandparents to positively impact their grandchildren’s money habits to ensure their financial security:

Boomer: How can boomers pass along good financial skills and money-saving habits? 

Stabnick: Boomers can make a positive impact on their grandchildren by sharing how their financial decisions – for better or worse – have affected their lives.

Only 8% of grandparents have conversations with their grandchildren about money and the importance of saving for college, compared to 85% of young adults who are open to having this conversation.

Only three in 10 grandparents think they can influence their grandchildren’s money habits. Yet, 73% of young adults indicate their grandparents actually do influence their saving and spending habits. Only 59% rate their grandparents as very good to excellent savers. 

Boomer:  What tips/advice do you have for boomers considering giving family members a loan? 

Stabnick:  If a family member is considering providing a loan to help fund a loved one’s college education, a good option may be to place this money in a 529 plan.  In the shadow of skyrocketing tuition costs, such an investment can provide tax-differed growth that may decrease or eliminate reliance upon student loans. 

Boomer:  For boomer grandparents wanting to leave a financial legacy to their family, what should they take into account?

Stabnick: A financial legacy comes in many forms. An education in “fiscal common sense” is important. Grandparents can achieve this by simply speaking with their grandchildren about basic principles of managing one’s money. The good news is this is not difficult: it is only a matter of consistently connecting with loved ones on this topic over time.

Arguably, of equal importance is access to higher education and its increased lifetime earnings potential. Unfortunately, college education is more expensive than it has ever been in the past. This means the traditional means of paying for college (e.g. student employment, parental assistance or borrowing) are no longer sufficient for many to fund the education without creating debt.

Because of these realities, grandparents can play an important role and create a legacy for generations by supporting the college education. While the reality of cost has changed dramatically, so have the tools available to address that cost.

Boomer: What are some affordable ways that grandparents can impact their grandchildren’s educational and financial future?   

Stabnick: Grandparents aren’t aware of simple and affordable ways to help grandkids save for college. The majority of grandparents don’t know how 529 college savings plans work. These plans are investment accounts that allows earnings on contributions to grow tax-deferred. You can start with as little as $25. Grandparents who purchase small special occasion gifts for their grandchildren might consider rerouting this money toward contributions into a 529 plan account. 

Since their inception in 1996, Qualified Tuition Plans (QTPs or 529s) have allowed families to save after-tax dollars with tax-deferred growth and tax-free withdrawals for college. 529s through AARP College Savings Solutions have low minimum contribution amounts and no frequency obligations, meaning participation is easy.  Grandparents can help at their own comfort level and pace.