Yusra3
VIP Contributor
One of the joys of grandparenting is being able to help your grandchildren financially as they grow. However, some approaches are smarter than handing over cash gifts. Consider these steps for effectively assisting your grandchildren financially:
Start a Savings Account
Opening a savings account in your grandchild’s name gives them a solid financial foundation from a young age. Make regular small deposits each month and for birthdays/holidays. Watching the account grow will teach valuable lessons on saving. Agree to match their own contributions as they start earning money to encourage good habits.
Invest in a 529 Plan
A 529 college savings plan is a smart gift that can really impact your grandchildren’s future. 529 plans enjoy tax-advantaged growth. Name your grandchild as beneficiary and retain control as owner. Set up recurring contributions. Give larger gifts as major milestones approach.
Pay Down Expenses
Rather than cash, offer to cover specific expenses for your grandchildren directly. For example, pay a semester’s tuition bill or activity fees for the year. Offer to host them on a special trip. Pay for driving lessons. This is often more impactful than general gifts.
Give Financial Mentoring
Alongside any monetary contributions, provide continuous mentoring on smart personal finance habits. Offer advice on budgeting, saving and avoiding debt that sets them up for success. Give guidance on managing “first” accounts and credit responsibly. Share your financial experience.
Communicate Intentions
Be transparent with parents about any financial gifts or inheritance plans for grandchildren. Make sure gifts align with the family’s values around work ethic and money management. Gifts shouldn’t be “expected”.
With careful execution, grandparents can make a big difference financially in the lives of their treasured grandchildren. Seek a balance between generosity and guidance. Financial support coupled with mentoring does a world of good.
Start a Savings Account
Opening a savings account in your grandchild’s name gives them a solid financial foundation from a young age. Make regular small deposits each month and for birthdays/holidays. Watching the account grow will teach valuable lessons on saving. Agree to match their own contributions as they start earning money to encourage good habits.
Invest in a 529 Plan
A 529 college savings plan is a smart gift that can really impact your grandchildren’s future. 529 plans enjoy tax-advantaged growth. Name your grandchild as beneficiary and retain control as owner. Set up recurring contributions. Give larger gifts as major milestones approach.
Pay Down Expenses
Rather than cash, offer to cover specific expenses for your grandchildren directly. For example, pay a semester’s tuition bill or activity fees for the year. Offer to host them on a special trip. Pay for driving lessons. This is often more impactful than general gifts.
Give Financial Mentoring
Alongside any monetary contributions, provide continuous mentoring on smart personal finance habits. Offer advice on budgeting, saving and avoiding debt that sets them up for success. Give guidance on managing “first” accounts and credit responsibly. Share your financial experience.
Communicate Intentions
Be transparent with parents about any financial gifts or inheritance plans for grandchildren. Make sure gifts align with the family’s values around work ethic and money management. Gifts shouldn’t be “expected”.
With careful execution, grandparents can make a big difference financially in the lives of their treasured grandchildren. Seek a balance between generosity and guidance. Financial support coupled with mentoring does a world of good.
