Family Money Tree

Moms and dads are relying more on their parents’ generosity while raising kids, says news on finances and family. As more families face increasing challenges in this difficult economy, grandparents have been pitching in to cover costs of tuition, clothes, and even provide cost-saving services like free day care, so that their kids’ families can stay afloat during tough times. Grandparents have also reported that they would rather contribute while still here to enjoy the effects of their gifts than leave a larger lump sum in their wills.

“Money equals power,” says Tina B. Tessina, PhD, psychotherapist and author of Money, Sex and Kids: Stop Fighting about the Three Things That Can Ruin Your Marriage.

While receiving and giving gifts may seem to be harmless enough, there can be complications along the way.

“If the grandparents give the money with strings attached, it can breed resentment,” she warns. “Also, if grandparents give to one child and not the others, resentment can build. Grandparents usually want to help, although some of them are manipulative and controlling.”

Although elder relatives enjoy lavishing gifts on their families, the key is do so diplomatically.

“Siblings can get competitive about help from the grandparents,” Tessina says.

As with any family issues, proper communication is vital to keeping relationships harmonious. Just as some people contribute money in a bid for control, others may give too much and feel unappreciated or taken for granted.

“Grandparents can feel taken advantage of, if they don't make a clear agreement with all concerned,” she adds.

The possibility that complacency can set in is also an concern, Tessina notes. “Younger family members can become dependent on the grandparents and not work to financially advance themselves,” she says. 

Experts like Lynne Finch, blogger and author of The No-Cash Allowance, agree that giving while fostering independence is important.

While grandparents enjoy being generous, Finch—herself a grandmother—encourages teaching children to manage their own money, so that they can avoid developing what she calls “the ‘give-me’ attitude.”

Too much giving, she warns, and “the relationship between generations can become more materialistic than intended.”

Most important is to start teaching children money-management lessons young, so that they can carry those skills into adulthood.

“While grandparents’ financial assistance does help grandchildren now, the same grandchildren are not learning how to manage money,” Finch argues.

“As for my grandchildren, my emphasis will be on encouraging their parents to continue to give their kids the opportunity to learn to manage money as they learned in their childhood,” she states.  “By helping them learn to manage money themselves, my grandchildren will be better prepared to manage their own lives without expectations that grandparents—or parent— will continue to chip in to help them through the years.”

In the event that grandparents do find themselves in a situation in which they feel they must contribute a significant amount of money to help out their children and grandchildren, Tessina advises handling these transactions “in a businesslike manner,” with legal contracts.

Overall, while people should exercise caution, diplomacy and delicacy in familial money matters, sometimes it is just best to enjoy the giving and receiving.