Grandparents are Spoiling Their Grandchildren Like Never Before

Last Updated Jul 16, 2009 4:08 PM EDT

Spoiling the grandchildren is a time honored tradition passed down from one generation to the next. But if you think a grandparent's generosity typically stops with a new tricycle or even the latest video game system, you're wrong. For better or for worse, our parents are shelling out billions of dollars on our kids. While you might think this is great -- raising little ones is expensive, after all -- I'm a bit concerned that all this financial help could do some harm.

According to a recent MetLife Mature Market Institute survey, almost two-thirds of grandparents provided their grandchildren with financial support totaling more than $370 billion (or an average of $8,661) over the past five years. Forty percent of that money went toward general purposes and twenty six percent was earmarked for education.

Since the recession started, I've noticed my parents and many of my friends' parents are a bit less generous than they used to be. No complaints here. I understand that we've all been hit pretty hard by the recession. And while I've got time for my stock portfolio to recover, my parents (who are in their late 60s) don't.

This trend, however, is not universal. According to MetLife's survey, a quarter of grandparents say they've actually dug a little deeper into their pockets since the financial crisis started. Indeed, MetLife's data indicates that those with less income and net worth are giving more than they did before the economic downturn started. This is troubling considering one in five survey participants say that their giving has had a negative impact on their own finances.

But what I find even more concerning is that only a minority of grandparents are talking to their grandchildren about money, according to the survey. It seems to me that anyone who gives kids money -- be it parents or grandparents -- can use the gift as an opportunity to share some of their own financial wisdom. And in some ways, Grandma may be just the right person to teach kids about the importance of saving and living within one's means. We all know children tend to tune out their mothers and fathers, yet experts agree that teenagers, in particular, tend to have more patience with their grandparents.

For some reason many grandparents remain resistant and don't embrace these "teachable moments". I've actually had a conversation recently with my parents encouraging them to talk to their 13-year-old grandson (my nephew) about money. While they agreed it could be helpful, I know they aren't planning on sitting down with him anytime soon. The only reason I can come up with is that they want to be viewed as the "fun" grandparents and don't want their limited time with their grandson tarnished with such serious talk.

While they may not be trying to impart any lessons, I have this sneaking suspicion that generous grandparents are sending a very clear message to their adult children and grandchildren...and not the right one. The recipients of all this cash are learning that grandma will always be there to bail them out. I'm not so sure that's a lesson I want my daughter to learn. While it might be tough for my toddler to turn down gifts from her Nana, I think I'd rather my daughter get a little less help and a little more financial wisdom from her Papa so she grows up to be independent.

Do your parents help support your children? Are you grateful for the help? Please share your thoughts with other parents.

Alec and his Grandma image by .Dianna., CC 2.0.