Spoil Your Grandchildren With Money
It has been said that the best thing about grandchildren is that you get to spoil them and then send them back home to their parents. Grandparents love to spoil their grandchildren. They especially love to shower them with gifts, including toys and clothes. As I look on social media and see many excited new grandparents, they tell of their eagerness to spoil their grandchildren. A few days or a few weeks later I see that them sharing pictures of gifts they have purchased for their grandchildren. Holidays are especially happy times for many grandparents because they have the opportunity to purchase even more “stuff” for their grandchildren to show them how much they love them.
A day or two after Easter my wife visited a national drug store chain and saw that Easter baskets were discounted by 50%. She loves a good sale and loves every opportunity she gets to spoil our grandchildren. Especially since none of them live close to us. She came home and told me about the sale. She explained her plans to me. “I can buy them for 50% off and then mail each of them an Easter basket.” She expressed a sense of happiness and sadness at the same time. I explained that it would be expensive to do that. Once she purchased the Easter basket and paid the postage to mail it, it would cost at least $20 or $25 each. I suggested that she make a deposit into the savings accounts we had opened for each of them instead. I asked, “When they are 18 do you think they will appreciate the Easter baskets you sent to them or the money that has accumulated in their savings accounts?” She agreed that it would be a good idea to make the deposits and suggested that I write this post. *(See below why it is important to start saving early)
Sure, it is nice to give gifts to our grandchildren. I am not opposed to doing that. However, most of us remember our children having way more gifts than they could ever play with and clothes they outgrew – sometimes before they had a chance to wear them. I would like to suggest that they will never have too much money for college and they will never outgrow the money in their savings account. Gifts and clothes are cute but money is more practical. Your grandchildren will appreciate either gift. Trust me, when it comes to the money, they will thank you later. All the best.
*Suppose your parents had deposited $1,000 on the day you were born. If you left the account untouched until you turned 67, that $1,000 would have grown to $406,466 — without you ever having to add another penny!
If you’re like most people, you may not have a lot of money. That’s why time is so critical. When you’re young or your grandchildren are young, you can save small amounts and still end up with thousands of dollars. If you wait to begin saving, you must save much more. If you want to be financially independent, you have no choice — you must start now, or later you must save more. One thing is certain: You can’t afford the high cost of waiting.
The $1,000 example is for illustrative purposes only and does not represent an actual investment.This example uses a constant rate of return. Actual investments will fluctuate in value. The illustration does not include fees and taxes that would lower results. The illustration assumes a 9% rate of return compounded on a monthly basis. Investing entails risk, including loss of principal. Shares, when redeemed,may be worth more or less than their original value.
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