Many of my clients are grandparents, while others look forward to the advent of the next generation of their bloodline in the not too distant future. Those that are already grandparents are convinced their offspring’s offspring are the most brilliant and talented the world has ever known. One can only hope these youngsters bring those traits with them right into adulthood. However, the one quality or attitude you as a grandparent do not want your progeny‘s progeny to bring into adulthood is entitlement, which can lead to laziness. You want them to put all that inherited brilliance to work, and have a wonderful life.
Of course, having worked hard for what you have and what you have to give and to perhaps leave behind, you want both your adult children and your grandchildren to enjoy things you could never afford. So as both a parent and a grandparent, it can – and for most of my clients it usually is – a difficult balancing act between wanting to shower your family members, especially those adorable grandchildren, with gifts of money to ease their path in life.
Will your generosity come back to bite you as time goes on? Or even haunt you in the afterlife? Letting your loved ones navigate the often choppy waters of life themselves while still providing a safety net and some assistance is perhaps the greatest gift you can give them. At the same time, if you are strategic with how you use your money, and follow my advice in where to provide for them (i.e. education), you can strike that balance, maintain a positive, loving relationship, and know that their ship of life is set on a positive course, no matter what lies ahead.
As a financial advisor, I don’t work from a cookie-cutter formula. I get to know each of my client’s unique wants, needs and resources, and together we come up with a strategy for a financial present and future that allows them to dream big and then achieve those goals. When there are grandchildren to consider, I help them determine the best ways to help them, whether the client’s grandchild or grandchildren are still infants, adolescents or young adults either preparing for college or already with one foot in the working world.
As I said, many of my clients want to be generous and provide support for their grandchildren – but some have a tendency to be too generous. It is my job to help them achieve the delicate balance between providing a solid backing for their grandchildren, without providing so much that they lose their incentive. While it is more than okay to give your grandchildren gifts for birthdays and holidays, and, if you can, even provide some support for their college educations and a future trust fund, continuing to provide monetary support once they are out of school and have their own jobs and families may inhibit their personal growth, and their ability to become self-sufficient adults. Even if they went to the best schools and have intelligence oozing out of their ears, if they know they can rely on their grandparents for support, their ambition might whither. You run the risk of spoiling them so much that they come to expect these regular checks, at times with a less than appreciative attitude. When you believe the world owes you something just for being alive, at some point reality is invariably going to slap you down hard. You don’t want that for your grandkids!
For my clients who are grandparents and own a family business, this can pose yet another challenge. Perhaps your grandchild thinks they can use their family business as a safety net. Who needs college when you’ve got a guaranteed job, right? Wrong! If your business is in a niche market, there’s no certainty that market trends won’t change. The financial tides may turn at any moment, and if you’re not prepared with a solid back-up plan, your business might drown. If you are a grandparent who owns your own business and you plan on hiring your grandchild to work with you, I strongly urge you to encourage them to go to college first. And only include them in the business if you feel they have the right stuff. Otherwise you are not doing them, or yourself, any favors.
As I fully explain to my clients each time we meet, making sound financial decisions for your family’s future as well as insuring your own needs are met—now and for the rest of your life— includes understanding estate planning options, such as irrevocable vs. revocable wills, the difference kinds of stocks and bonds, what kind of cash reserves one should have on hand for emergencies in that client’s situation, etc. By time we have gone through all of this, the sole client or couple I am working with is fully aware of what needs to be done and how it should be done.
Helping people in this way is what I live for.
Now, about those grandchildren photographs: please show me your little geniuses again!