Growing up, I had the privilege of knowing one of my grandparents, Grandpa Louis. He lived with us during the last two years of his life. He had all the time in the world for me, teaching me patience, sharing his passion for politics, and emphasizing the importance of doing every task with care. My relationship with Grandpa Louis was different from the one I had with my parents, and that experience has shaped my perspective. As a financial advisor, I’ve seen firsthand how grandparents can influence the financial health and literacy of their grandchildren. I want to share these insights—both from my own experience and from the stories of others. Here are some practical ways that grandparents can contribute to their grandchildren’s financial well-being:
1. 529 Plans and The Grandparent Advantage
With the rising costs of college education, helping grandchildren reduce debt for higher education is a wonderful gift. These tax-advantaged savings plans encourage saving for future education expenses. Often, the “grandparent advantage” allows grandparents to contribute to these plans without affecting the student’s eligibility for financial aid, which can be a game-changer for families. Funds grow tax-free and can be withdrawn tax-free when used appropriately for education expenses from K-12 and college. Some plans and states also offer additional state tax benefits to contributors.
Through conversations with grandparents I know, I’m eager to share their favorite ways to financially help their grandchildren. One grandparent I spoke with contributes to their grandchildren’s 529 plans. In addition to the financial gift, they have individual discussions with each grandchild to ensure they understand the careers that require college education versus trade schooling. They also explain the different costs between public and private institutions and the availability of scholarships. This grandparent passes along their acceptance for their grandchildren to choose their own paths while understanding the financial implications of their decisions and family circumstances.
2. Funding Trusts
Setting up a trust can be a powerful way to ensure your grandchildren’s financial security. Trusts can be tailored to meet specific needs and goals, such as buying a first home or starting a business. For those with grandchildren who have special needs, creating a Special Needs Trust (SNT) can assist in supporting the grandchild without putting at risk access to government sponsored programs. By working with a trust attorney, you can create a trust that aligns with your family’s values and long-term objectives.
3. Teach the ABCs of Budgeting
Budgeting is a fundamental skill that can set your grandchildren up for financial success. Share your own budgeting strategies and tools with them and encourage them to create their own budgets. This can be as simple as tracking their allowance and expenses or as complex as planning for future financial goals. The key is to make budgeting a regular and enjoyable part of their lives.
Grandparent Brian emphasizes the importance of teaching two concepts: time value of money and compound interest. The earlier you start saving, the better. Brian encourages his grandchildren to take some of their allowance and gift money and invest it in a high-yield savings account. For instance, investing $100 today at a 4% interest rate will be worth $148.02 in 10 years.
Another way to explore budgeting with your grandchild is by taking them grocery shopping. Give them a set dollar amount to develop a dinner menu and see what they come up with. This activity should be done with a bit of humor, as you may end up with a shopping cart filled with ice cream!
4. Be Your Grandchildren’s Stockbroker or Banker
Consider opening a custodial brokerage account in their name. This hands-on approach allows you to guide grandchildren through the basics of investing, fostering a sense of financial responsibility from a young age and taking the mystery out of it. Let them select the funds/stocks and monitor how they do, giving the grandparents the opportunity to explain why stocks went up or down. With gains, decide how best to spend them.
For working age grandchildren, discuss the benefits of opening a Roth IRA. In 2025, up to $7,000 can be contributed, and it can be funded by either the grandchildren themselves or by the grandparents (note that the grandchildren must have earned income in the year of the contribution). The Roth IRA contribution cannot exceed a child’s modified adjusted gross income or $7,000, whichever is less. This is an excellent opportunity to discuss the value of tax-free growth and how it can impact their financial future.
5. Engage in Philanthropy
Philanthropy is a wonderful way to teach your grandchildren about the importance of giving back and sharing family values. Whether it’s through charitable donations, volunteering, or participating in community service projects, engaging in philanthropy can instill a sense of empathy, social responsibility, and joy.
Grandma Irene has a creative approach to teaching her young grandchildren about charity. At the end of each day spent with her, they are allowed to rummage through her pockets and pocketbook for coins. The change must be counted (teaching moment), then the coins get put into a “charity box.” When the box is full, they select how the money is to be used for charitable purposes. In some cases, they deliver it personally.
In my own upbringing, a similar tradition was observed for major birthdays or holidays where cash gifts were given. We were encouraged to give 10% of what we received to a good cause of our choice. I remember one year when Girl Scout cookies counted toward that 10%!
On a more sophisticated level, Jim McCann, Founder and CEO of 1-800-Flowers, shared on Wealthspire’s Great Aspirations podcast how he fosters philanthropy with his grandchildren. His primary focus is making it fun, even getting permission for his grandchildren to take time off from school to help with fundraising events, but he also wants to instill the value of creating a community which he does through his work with Smiles Farms Inc., a leader in creating meaningful employment solutions for people with disabilities. By demonstrating how their philanthropy brings joy and purpose to the broader community, their own family while helping the business, McCann emphasizes the importance of giving back.
6. Teach Patience
One grandparent I spoke to shared a heartfelt tradition of how they give their granddaughter a pearl every year on her birthday. Upon graduating from high school, she had enough pearls to make a necklace which was presented to her as a meaningful gift. This practice not only instilled a sense of patience but also allowed her to appreciate the value of building something over time. A similar idea might be to give a grandchild a stamp or baseball card each year, encouraging them to create their own collection.
Grandparent Power
There are many different approaches grandparents can take to enhance their grandchildren’s financial well-being, educate them on financial topics, and help them become financially savvy. Whether it’s a strategy that worked, one that didn’t, or just an experience that turned out to be fun, the key is to be actively involved and integrate financial education into grandchildren’s lives. This involvement can lead to them becoming adults with less debt who are active members of their community and possess a strong sense of confidence and well-being.
Let’s harness the power of grandparenting to shape the future, fostering a generation that values financial literacy, community engagement, and personal growth. Your ideas and experiences are invaluable—share them with me at stephanie.carmel@wealthspire.com.
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