One of my grandma friends brings her granddaughter a gift every time she visits. She says it’s her way of showing her love and it’s the role of grandmas to spoil their grandchildren. I told her she’s treading in dangerous territory. First of all, she’s teaching the child to always expect a gift from grandma and secondly, she’s reinforcing a sense of entitlement by overindulging her.
Who Benefits From Spoiling?
According to Neale Godfrey author of Money Doesn’t Grow On Trees: A Parent’s Guide to Raising Financially Responsible Children and an expert on family and children’s finances, we’re doing a disservice to our loved ones when we overindulge them.
Yes, there’s nothing quite like the sounds of joy and appreciation we receive from indulging our grandchildren. But in truth, we are really indulging ourselves when try to buy their affection with gifts.
According to a 2012 AARP study, 89% of grandparents acknowledge they spoil their grandchildren. The survey also indicated that, next to TV or going to the movies, shopping came up as the most popular activity grandparents do with their grandchildren. Godfrey understands that we want to keep the “grand” in grandparent, but urges that we not have “over indulgence” be a part of that meaning. There are lessons we can teach, and who better to teach them than grandparents?
Godfrey says we have a vested interest in seeing that our grandchildren will know how to handle any inheritance we may leave them. They may be free to spend it as they like, but wouldn’t we be more comfortable knowing that they have the foundation to make competent choices? Wouldn’t it be great if our heirs actually choose to do what’s in their best, long-term, interest?
Teaching Financial Responsibility
Here are some of the ways Godfrey suggests we teach our grandchildren financial responsibility:
- If you can, start the education at a very early age.
- Take them to the bank, set up a college fund, or even a wedding fund, and explain long-term goals. Explain that you will make deposits to the account as part of holiday gift-giving, and you can show them how interest compounds and accrues.
- Always use the real world as your classroom. Explain the lunch check and tip. When you use a credit card in their presence, explain that you are billed monthly and you have to pay with real money from your bank account. If you write a check, show them how it’s done, how you record the transaction, and where the funds come from.
- If you make a purchase, explain sales tax. As we all know, taxes are a part of life. Explain that at their core, the idea of taxes is a great one.
- Teach the concept of charity. It’s an easy concept to explain to children, who are very aware that it’s good to help others. But, it doesn’t come naturally — it has to be taught.
- Get your affairs in order. Make sure your will and insurance beneficiaries are up to date. Leave instructions, important keys, lists of accounts for your heirs to easily follow.
Helping your grandchildren navigate the road to their financial future is one of the greatest gifts you can give. Make it a fun and natural component of your time together. Keep a journal and take photos of your journey, having the kids add notes along the way. They’re going to treasure it when they’re older and keep the tradition of financial education with their own children.