3 Interesting Ways to Help Grandkids Stay Out of DebtAug 01, 2018
Are you thinking about giving your grandchildren money for their university or college costs?
According to a recent U.S. study, grandparents spend on average over $2,300 U.S. a year on their grandkids. That includes gifts, toys, events and college contributions. Many grandparents are eager to help their grandkids reduce the costs of post-secondary education. But with living expenses and retirement considerations, how can you help your grandkids avoid debt without adding to your own?
Paying outright for all or part of a grandchild’s post secondary education can be a huge financial burden for any boomer or senior. But that isn’t the only way for grandparents to help. Here are three other ways.
- RESP contributions and other gifts of money
Registered Education Savings Plans are easy to set up and contribute to. Even small contributions over time can add up to big savings for the kids. With government matching contributions, RESPs are a good option — but they’re not the only option.
Setting up a trust, contributing to retirement plans for their future, or naming them as beneficiaries on life insurance policies can provide grandchildren with gifts of money that greatly reduce the financial burden of post-secondary expenses or other life events.
If you’re thinking about how to help your grandkids cut costs in the future and prepare for a secure retirement, this article from MoneySense could help. Get them to read it and start the retirement-planning wheels turning. It’s never too early to start thinking about retirement!
- Room and board
If you live near your grandchild’s school, offering them a rent-free place to live could cut their costs significantly. It also means you’ll be able to ensure they’re eating more than just packaged vending machine or pub food. And it never hurts to be able to check in with them and make sure they’re managing the many challenges and pressures of school.
- Life experience
The role of grandparents has changed a lot in the last decade or two. Grandparents are being depended on as financial providers and as caregivers. Daycare costs, post secondary education, sports and hobbies are all driving many Canadian families further into debt.
The demands that are put on grandparents, and the differences in parenting or grandparenting styles, can put strain on families, too.
But money isn’t the only way to contribute to your grandchild’s future, or to help them stay out of debt. Studies show that:
- Grandkids who are bonded to their grandparents have fewer problems with peers
- Kids whose grandparents were involved with their schooling had less behavioural issues
- Youth that openly discussed their future plans and career goals with their grandparents had less emotional problems.
Sharing your financial experiences and strategies can go a long way to preparing grandchildren to be debt free in the future. Setting goals, overcoming financial obstacles and the importance of setting up an emergency fund are important lessons that youth need when they decide to tackle post-secondary education.
Learning about money management can be a two-way street. While you’re sharing your years of wisdom, there are endless online resources and apps that your grandkids can teach you about. And, using tech is a great way to get them engaged.
Mint’s online and mobile budgeting tools could be interesting for grandkids — helping them prepare and keep a budget could help them avoid consumer debt in the future. And you might learn some new digital strategies that help you with your day-to-day finances, too.
There are more ways than you might think to contribute to your grandchildren’s futures. When they strike out on their own, avoiding and reducing debt will be a big part of their everyday life. Providing your emotional support and well-earned advice can go a long way towards securing their financial good health.