Grandparent Money Matters
It's natural to want to spoil your grandkids, but you don't want to impede their parents' efforts to teach financial values. Here's how to strike a balance.
Oops. You probably missed National Grandparents Day, September 9. Don't worry. Most grandparents missed it, too -- and anyway, they'd rather get a good night's sleep than a greeting card.
But the occasion was noteworthy for a survey done by AARP Financial on the financial relationship between grandparents and their grandchildren. Among the findings:
- The typical grandparent surveyed had a median income of $46,000 and four grandchildren, on whom Grandma or Grandpa spent about $150 each over the past year.
- Grandparents believe that their adult children do a better job providing for their grandkids than they do teaching them good money habits. In fact, 79% of grandparents agree that kids don't understand the value of a dollar.
Of course, grandparents are part of the problem. Nearly 60% admit that they worry about spoiling their grandchildren.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
It's my experience that parents share this concern. Although they may appreciate Grandma's largess, it doesn't help them teach their kids financial values when Grandma arrives bearing a Wii or a dozen new outfits.
The situation is even more complicated in blended families, where multiple sets of grandparents may be competing for the children's attention.
Yet grandparents do need to indulge their grandchildren just a little. In the AARP study, two out of three of those surveyed said they prefer grandparenting to parenting. And more than 80% said they give because it makes them happy. Here's my advice on how to strike a balance and avoid family conflicts:
Gifts of time and thoughtfulness trump money. My children still remember that their New York grandparents kept a scrapbook of favorite comic strips to read aloud when the kids came to visit. Meanwhile, their Pittsburgh grandparents kept them supplied with clippings about the Steelers, the kids' favorite football team.
Discuss big gifts with parents before you buy. Mom and Dad might not want Johnny to have a new video-game system. But when Johnny heads off to college, they'd appreciate it if you'd offer to pay for books or a computer (or, in the case of my freshman son's new roommate, a printer).
Invest in your grandchildren's future. It doesn't take much money to start a college fund with a Coverdell education savings account or a state-sponsored 529 plan (see our choices of the best plans in all 50 states).
And while McDonald's gift certificates may make a great stocking stuffer, how about buying kids stock in the company (or another that piques their interest)?
In the AARP study, only 22% of grandparents gave their children an A for teaching their grandchildren about saving and investing. Yet only 22% of grandparents had ever opened a saving or investment account on behalf of a grandchild. A shared interest in investing can bridge the generation gap -- and make your grandchild a millionaire.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.
-
How to Assess the Impact of Your Charitable Giving
Here are five simple ways to 'do this, not that' when trying to find out from a nonprofit what kind of impact your donations are having.
By Catherine Crystal Foster Published
-
How a Two-Year Installment Sale Strategy Can Save on Taxes
When selling property or other substantially appreciated asset, you could spread the taxes over two years to save big bucks. Following the rules is critical, though.
By Derek A. Miser, Investment Adviser Published
-
7 Things Medicare Doesn’t Cover
Healthy Living on a Budget Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage. But Medicare Advantage has problems, too.
By Donna LeValley Last updated
-
How to Benefit From Rising Interest Rates
Financial Planning Savers will get the best rates from top-yielding savings and money market deposit accounts at online banks.
By Rivan V. Stinson Last updated
-
Donor-Advised Funds: The Gift That Keeps on Giving
Financial Planning Expert guidance on how this charitable vehicle can make a difference.
By Emma Patch Published
-
PODCAST: Tax Breaks for College Finance with Kalman Chany
Paying for College Paying for (ever-pricier) college is a challenge that this consultant meets head on with highly specific guidance.
By David Muhlbaum Published
-
Reading, Writing, and Personal Finance
Raising Money-Smart Kids A growing number of high schools are adding personal finance to their curriculum.
By Sandra Block Published
-
Backdoor Roth IRAs: Retirees, Make the Most of a Roth's Back Door
Financial Planning A backdoor Roth IRA enables wealthier individuals to to earn tax-free income. But how long will that back door remain open?
By David Rodeck Last updated
-
PODCAST: This Couple Tackles Love and Money as a Team
Getting Married Fyooz Financial, the husband and wife team of Dan and Natalie Slagle, have carved out a niche advising other couples with the money questions that come with pairing up. Also, where is this troubled stock market headed?
By David Muhlbaum Published
-
ABLE Accounts Give Disabled More Financial Freedom
Financial Planning People with disabilities, and their families, can save for a variety of expenses in these tax-advantaged accounts.
By Emma Patch Published