A License to Spoil the Grandkids

I recently became a grandparent for the first time. My family and friends have offered me warm congratulations, as well as the nearly unanimous advice to, as one of my coworkers put it, "Go forth and spoil." I’m happy to spoil my grandchildren, but as the editor of a personal finance magazine, I’m supposed to encourage fiscal restraint. And that responsibility weighs even more heavily because I’ve also devoted much of my career to teaching kids the value of money. I’ve written several books on the subject, and my Money-Smart Kids column appears regularly on Kiplinger.com.

Laura Vault, a lovely woman in my exercise class who confesses that she still sends her college-age grandson care packages, offered me this advice: She makes her grandchildren save 10% of all the money gifts she gives them. And in this issue, we include a story on how grandparents can help grandchildren pay for college.

That’s a good start. But as a rookie, I’d still like to know how grandparents can indulge their grandkids without going overboard (a topic that I’m sure will come up in future Money-Smart Kids columns). For guidance, I went straight to trusted, expert sources: my own three (now adult) children, who have counseled me over the years as I’ve practiced on them. I asked them what their most vivid memories were of their own grandparents (financial or otherwise) and what they learned from them about managing money. And the big one: Were they spoiled?

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"I think we were all pretty spoiled," says my daughter, Claire. "But it wasn’t with lots of gifts and toys and stuff. Grandma B would always have those jelly cookies we liked, and Grandma L would always bake blondies or lemon bars."

When they got gifts of money, it was a special occasion: "At Christmas, Grandma B gave us mad money that we could spend on whatever we wanted," Claire recalls. And every summer at the beach, Grandma L had a special gift for each of the six cousins; one year it was 10 silver dollars. "I remember she made a bit of a ceremony of it," says Claire. "And even though it was only $10, it felt really special." When the kids went off to college, recalls son John, she took them off to the side to give them money for books—and a little talk about bringing honor to the family name.

Despite such occasions, "I never associated our grandparents with money," says son Peter. "I don’t think I ever found it appropriate to try to get them to buy stuff for us."

Lifetime lessons. The kids picked up other lessons that didn’t kick in until they grew up. "I remember Pop-Pop B always said that if you’re going on vacation, you’re going to spend money," says Claire, who’s now married. "I think about that when we go away, and it makes me feel better about spending money."

Now she understands what her grandparents meant when they talked about the good investment they had made in ExxonMobil. And all the kids agree that both sets of grandparents set a good example of the benefits of saving for retirement. "It’s not as if they lived extravagantly, but they always seemed to be happy and comfortable and were able to do what they wanted."

Perhaps not surprisingly, my kids’ most vivid memories have nothing to do with money. As Claire put it, "All our grandparents had a presence in our lives. We spent holidays and vacations together, played cards and read books. Both sides of our family are still very close, and I think it probably has a lot to do with their example."

Which is probably the best way to spoil your grandkids.

P.S. If you have advice for a new grandparent, I’d love to share it.