Money in the Middle

Sandwich Generation Talking About Money Up, Down and Across Generations

Grandparents, grandchildren and money. What’s the right thing to do?

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Is it right for grandparent to financially help grandchildren, if that puts their own financial security at risk? 

 A new survey from the MetLife Mature Market Institute says grandparents are providing more financial support than ever to their grandchildren, yet one in five reports that the generosity has had a negative impact on their own finances.

 Over $370 billion changed hands between grandparents and grandchildren over the past five years—an average of $8,661.  Most of it was in cash (83%). Yet with the cash, came little advice –only a small portion said they talk to their grandchildren about the importance of hard work, saving for a rainy day and intelligent use of credit.  Hmmmm

 That’s an opportunity missed.  It’s a perfect time to impart a bit of financial wisdom about the importance of saving early and often and the dangers of debt.  “Grandparents are in a unique position to provide another valuable legacy, that of helping grandchildren to understand the value of a dollar and the importance of saving money,” said MetLife Mature Market Institute director Dr. Sandra Timmermann.

 Many of our college students and recent graduates followed the advice to borrow for college to get that high paying job.  Leaving school with huge amounts of debt, they now find themselves unable to find jobs that will pay the bills – and they are looking at a lifetime of payment.  So maybe a bit of perspective on a debt going forward would be helpful.

 And grandparents, if giving your grandchildren puts you at financial risk – how has that helped the family?  Are you now going to turn to your children for financial help?  That’s probably not what you want to do, but giving to your grandchildren may end up doing more harm than good for the entire family.

 These are highly charged, emotional issues.  And there is no right or wrong answer.  But if you find yourself in this position, think the financial impact all the way through.  If you can provide the financial support – great!.Enjoy it and consider, as many are, of giving smaller gifts throughout your lifetime as needed, rather than a larger legacy.  It’s a thrill to see how the kids use the help you’ve provided. And do take the time to talk with them about your financial values — the more they hear, the more perspective they get.

 But if that squeezes your finances even further than they already are then maybe it’s time to provide emotional and not financial support. And some wise sage about how to save for their future retirement.

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Written by Laura Rossman

July 21, 2009 at 7:17 pm

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