grandparenting
be reasonably expected to, over time, “payout more than you paid in.”—so stocks or a home purchase or even tuition would qualify, but not a car which would depreciate rather than appreciate.) This approach can ultimately make a big financial difference in a grandchild’s life by increasing the total amounts invested in the early years of compounding so it can grow for a much longer period. Summary Most of us grandparents do not have vast resources with which we can assist our grandchildren at every turn or with every need. And we would probably be unwise to do so even if we could. But whether we have a lot or a little, it is important to be deliberate and clear in our own minds about what our goals are and how we can help our grandkids materially and financially in ways that avoid entitlement and that are wise enough to increase rather than diminish their independence and sense of self-reliance—and that do not step on parents’ toes in the process.
We have found that the best approach to this is not a loan or a gift but simply to take a small equity posi- tion in your grandchild’s first home. If, with your help, they can get an 80% loan, you would make the down payment and thus become a 20% equity partner in their starter home. They would make mortgage pay- ments and have the advantage of leverage so that whatever profit was made when the house was sold would go 80% to them and 20% to you. This way they owe you no payments or interest and simply pay off your equity when they sell. Like any financial agree- ment within families, this should be carefully docu- mented and signed by you and by them. Setting up a family foundation and doing “expeditions” Setting up a Family Foundation, even if there is not a great deal of money in it, can be a powerful way to get children involved in looking for and meeting needs, particularly in poor communities or develop- ing countries. As grandkids get involved it can help teach the principle of “Where much is given, much is expected.” Many non-profit humanitarian organizations organ- ize family “expeditions” where family members can travel to remote locations and help to build schools or clinics and have a hands-on experience of help- ing those in need. In our own family, these expedi- tions, funded in part by our family foundation, have opened our children’s eyes to third-world needs and helped them feel empowered to do a little to help. One byproduct, of course, is greater appreciation and gratitude (and responsibility) for what they have.
Matching contributions in custodial Roth IRAs With a parent as custodian, a child of any age can have a Roth IRA where money grows tax-free toward retirement. (A grandchild 18 or older can open his or her own Roth.) And with a Roth, funds that have been put in can be taken out as desired without penalty. Consider offering a “savings match” to any grand- child who wants to put some of their “earned money” into a Roth. They can put in up to half of any earnings they can justify with a W-2 or an earnings record of some kind—up to 6,000 per year. Strike a deal where anything they put in up to 3,000 will be matched by you, dollar for dollar. Create your own rules and agreement, perhaps requiring that the money be used only for investment (defined as things that can
Richard and Linda Eyre’s parenting and life- balance books have reached millions and been translated into a dozen languages. As fellow Baby Boomers, their
passion and their writing focus has now shifted to the joy of Grandparenting. Linda’s latest book is Grandmothering , Richard’s is Being a Proactive grandfather , and their latest co-authored book is Life in Full. All three of these are now on sale on Amazon.
32 GRANDP arenting
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