Dear Grandparents, Stop Buying Your Grandkids Stuff

July 19, 2016

Dear Grandparents, Stop Buying Your Grandkids Stuff

I am not a grandparent, but one day I hope to be. While I am in no way rushing that status, I do sometimes wonder about what type of grandparent I will be.

One of the “rights” of grandparenting is to spoil grandchildren. To lavish them with treats, gifts, big Christmases, exciting birthdays — to load them up with STUFF.

While that is fun and most-welcomed by the recipients, the one thing I dream the most about spoiling my grandchildren with, is a college fund.

An AARP survey shows that 40% of grandparents spend more than $500, and 25% spend more than $1000 on their grandchildren throughout the year. While a percentage of that spending is on education, childcare, and day-to-day living expenses, a good portion of it is on stuff. The survey shows that almost all grandparents — 95% — purchase birthday and Christmas gifts for their grandchildren.

Less Stuff Could Mean Less Student Loans

We are all aware of our student loan crisis, and you have likely heard the statistics that go along with it. Over 70% of undergrads graduate with student loan debt, with 2016 graduates leaving school with $37,173 on average. Unfortunately, with the rising costs of college, these numbers are only expected to increase.

I wonder, though, what would happen if grandparents bought less stuff and instead put the money towards college funding? Could grandparents help mitigate our student loan crisis?

Let’s take a reasonable amount and say the average grandparent spends $400 (which is $33/month) throughout the year on tangible gifts, cash gifts, and other items for their grandchildren. Even if that money were put in a cookie jar and allowed to accumulate for eighteen years instead of spent on stuff, “Grandchild” would have $7,200 at graduation time. That would cover a decent chunk of the current average yearly tuition at a four-year public college.

If the $400 was put into a vehicle such as a Coverdell ESA or 529 Savings Plan, that $400 worth of stuff could become $14,452 (based on an annual rate of return of 7%). And because some grandparents spend $400+ on Christmas alone, the 25% of grandparents that spend $1000 (or more) per year, would have $18,000 in their cookie jar or $36,379 in a college savings plan.

That amount is right around the average debt level of current graduates.

Your grandkids don’t need more stuff. They need a college fund.

The Gift That Lasts

Now, of course, this gets a little tricky when several grandchildren are involved, but most likely, “Grandchildren” have more than one set of grandparents. In any case, a contribution of any amount will make a difference.

Not every grandparent is in a position to purchase an enormous amount of stuff or to contribute to their grandchildren’s education, and neither should be done at the expense of their own financial stability.

But if you are a grandparent and you ARE in a position to lavish your grandchildren with big birthdays and Christmases, vacations, and gifts throughout the year, consider spending some of the money on their college education instead.

Your grandkids don’t need more stuff. They need a college fund.

By the time college rolls around, “Grandchild” would have long-forgotten most of the stuff that’s been gifted over the years, but will certainly value the long-lasting gift of a sizeable contribution to their education. (That’s assuming “Grandchild” is well-behaved and grateful, and if they aren’t, they don’t get the money.)

You may have to sacrifice your reputation as favorite grandparent while they’re young if receiving presents from you is the qualifying factor, but they will appreciate your gift later in life when they get to start off adulthood without student loans.

I know someone who is fortunate enough to be able to lavish their adult children and grandchildren with presents, vacations, AND contributes to their college education. I LOVE that, and I want to be her when I grow up. I do hope to be in a position to do all that, but if I’m not, setting the little ones up for college is the one thing I will prioritize.

Consider This

It is often said that grandparenting is a second chance at parenting. One of my biggest parenting regrets is not establishing college funds for my children while they were young. I do plan to get revenge on my younger, unwise self by kicking off college saving for my grandchildren the minute they are born.

So, if you are a grandparent and are able to do so, consider buying your grandkids less stuff and more college.

If you are a parent and don’t have a plan for paying for your kids’ college education yet, consider asking your parents and your in-laws to establish or contribute to a college fund in lieu of future gifts.

Maybe this is a dream, but if every grandparent (who is able to) started a college fund for their grandchildren at birth or while they are young, the need for student loans could significantly be reduced.

What if that became the statistic we talked about?