As a grandparent you love your grandchildren. It’s a strong bond. But how can grandparents best help grandchildren financially? Some grandparents aren’t as smart as they could be about how they can best help. Here are the first 5 of 10 top ideas.
1. Start by assessing your own financial position.
Didn’t think we’d start here , did you? But you can’t help your grandchildren unless you first keep yourself financially healthy. If you’re a grandparent, before you make any statements or promises about financial help for your grandchildren, do a thorough analysis of your own financial needs. Be sure to not overpromise. Once you’re certain of what you can comfortably provide, have an honest conversation with your family about your decision. It’s better to offer your grandchildren less than you think you can afford than it is to offer an amount that two years or five years or sometime down the road becomes a burden for you.
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2. Help educate your grandchildren about money, budgeting and finances.
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You’ll feel better about any financial gift if you know your grandchildren are financially educated. Before you give, encourage older grandchildren to take personal finance courses in school. There are ways you can show younger grandchildren how to save money and budget. Help them make smart money choices but also let your grandchildren learn from their own (small) mistakes. And talk about your own beliefs about money.
3. Give when your grandchildren can use the money wisely.
Look beyond issues like the tax advantages of your gifting. Consider this question: “When my grandchildren have access to this money will they be wise enough to use is sensibly?”
Consider the values and priorities of the grandchildren’s parents, too. It’s wise to get the parents’ agreement before you announce any gift to your grandchildren.
4. Follow the mantra: Actions have consequences
Yes, you love your grandchildren. But if you have serious doubts about their ability to use your gifts wisely don’t give to them until those doubts are erased. You never want to encourage your grandchildren to be financial dependent on you. Set limits. Avoid titling your home, bank account or other assets in any child’s or grandchild’s name if they are not financially responsible. This follows the philosophy that we’re all responsible for our own actions. If your grandchildren’s actions show you that you can’t trust them to use money wisely then you should not give those grandchildren money.
5. Choose yourself first.
This sounds selfish but it isn’t. If you have any doubts about what a certain gift will do to your own financial future don’t give that gift. Be sure you won’t run out of money before you run out of breath.
You’re fortunate to be in a position to consider gifting to your grandchildren. Don’t jeopardize that position. The worst case scenario for you, your children and your grandchildren is for you to move from a financially secure position to a financially needy position. That’s not selfish. That’s protecting “the goose that laid the golden egg.”
In my next post I’ll give you five other tips on how grandparents can best help their grandchildren financially.
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