There’s just that special bond grandparents have with their grandkids, don’t you agree? It starts as soon as the young ones are born, and continues throughout their lives. Lucky are those who get to adulthood when their grandparents are still alive, as they get to share in their wisdom.
Grandparents want the best for their grandkids in everything, and finances happen to be an important aspect of life. They, therefore, should take it upon themselves to help these young lads and lasses grow financially.
LA’s John Park, a financial planner, insists that financial gifts from grandparents to their grandchildren, if handled correctly, go a long way in instilling financial etiquette. So, what gifts are these?
In truth, it is never too early to learn how to save. If you have some extra cash you’d love to give to your grandchild, why not go about it in a smart way? Talk to their parents about opening a savings account for the kid, then use this amount to fund it.
You can keep funding it as regularly as you wish, and be sure that they thank you later for this. By the time they need a car, have to pay for college, or need a home, the amount in the account will definitely have matured to an enviable sum, and will go a long way in helping them achieve their dream.
What’s better than saving for a college education? By setting up your grandkid with a 529 plan, you’ll have done them a massive favor. No one needs a reminder of just how expensive college is nowadays and it’s an open secret that student loans are plaguing a significant portion of the population.
Open these savings plan accounts in the name of your grandchild, and the best thing about them is that anyone can contribute. You can even pass it up as a gift from the whole family to probably your youngest member, and should they ever end up not using the funds, they can be used by another beneficiary.
If your grandchild is already in college, then a 529 plan won’t be of any help. However, you can still help them along their educational journey, especially if you chip in some tuition money. To avoid extra charges such as taxation and whatnot, pay the cash directly to the institution in question.
Gifting amounts worth $15,000 and above will attract the gift tax, but if you were to send the cash directly to the school, it wouldn’t be thought of as a gift, and thus won’t be taxed.
If your grandkids happen to be adults who already own home, mortgage payments could be causing them sleepless nights. In such a case, you have every right to be concerned to the point of wanting to do something about it.
Paying off part of their payments would be a huge boost, and they’ll carry this gesture in their hearts forever. You’d have loved it if someone helped you pay off your mortgage too, wouldn’t you?
And while doing all the above is commendable, the icing on the cake has got to be teaching them everything you know about managing their money. In all honesty, you won’t be around forever, and it’s best to equip them with these skills while you are still around.