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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free 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.
-
Stocks Chop as the Unemployment Rate Jumps: Stock Market TodayNovember job growth was stronger than expected, but sharp losses in October and a rising unemployment rate are worrying market participants.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Smart Strategies for Paying Your Child an AllowanceBy giving your kids money to spend and save, you’ll help them sharpen their financial skills at an early age.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Key 2025 Tax Changes for Parents in Trump's MegabillTax Changes Are you a parent? The so-called ‘One Big Beautiful Bill’ (OBBB) impacts several key tax incentives that can affect your family this year and beyond.
-
What Does Medicare Not Cover? Eight Things You Should KnowMedicare Part A and Part B leave gaps in your healthcare coverage. But Medicare Advantage has problems, too.
-
How to Benefit From Rising Interest RatesFinancial Planning Savers will get the best rates from top-yielding savings and money market deposit accounts at online banks.
-
Donor-Advised Funds: The Gift That Keeps on GivingFinancial Planning Expert guidance on how this charitable vehicle can make a difference.
-
PODCAST: Tax Breaks for College Finance with Kalman ChanyPaying for College Paying for (ever-pricier) college is a challenge that this consultant meets head on with highly specific guidance.
-
Reading, Writing, and Personal FinanceRaising Money-Smart Kids A growing number of high schools are adding personal finance to their curriculum.
