The effects of the fiscal cliff seem to have reached as far as the North Pole. But the tightening economy gives some grandparents an opportunity to step in and help their grandchildren experience all the joys of the season. Still, helping adult children with money matters requires sensitivity and is always best done with discretion, says Leslie Strebel, a financial planner in Ithaca, N.Y.
Don't Push. If you think your grandchildren's families need some help this season, first consider the kind of relationship you have had with your adult children when it comes to money. If you’ve never provided them with financial help before, it's hard to predict how welcome your offer will be, even in the current climate. "It's best to be casual about it," Strebel says. "It's about expressing concern versus expressing curiosity. Say something like, 'We have some extra savings lying around and we were wondering if there is anything in particular we can do to help you.'"
Stay Behind the Scenes. Giving direct monetary help to your adult children can make holiday gatherings awkward in ways you may not anticipate, warns Lynne Reeves Griffin, a family-dynamics expert in Boston and author of Negotiation Generation: Take Back Your Parental Authority Without Punishment (Penguin). Griffin advises doing all you can to help in material ways, before giving cash. For example, offer to supply the mainstays of the holiday meal, like a turkey with all the fixings. Better yet, offer to host the dinner and save the family all the expenses.
If you do end up giving money to the family, think about who you want to know about it. Some of Strebel's clients tell her they want to make sure their grandchildren don’t know they’re helping out from behind the scenes. Others are willing to be more open about their assistance.
Make It a Rich Experience. This may be a year to go easy on big-ticket gifts that have limited shelf lives and instead make purchases that will create tighter family bonds, like taking the grandchildren to see a production of The Nutcracker, or inviting the family on a vacation. "Material things, especially video games, lose value quickly," Strebel says. "But the memories from a vacation last forever. It also gives adult children a way to get out of the pressures of having to plan their own expensive vacation this year."
Think Long-Term. If your children's families have been hit by the financial crisis, think about the help you can offer both short-term, during the holidays, and long-term, to shore up their overall finances. For example, grandparents can open 529 college savings plans for their grandchildren, or contribute to the kids' existing plans, and continue to make cash contributions at future holidays, on birthdays, or whenever they like. This allows parents to put the money they'd otherwise have set aside for 529s to more immediate use — for example, to pay for their mortgage, gas, or groceries.
How well do you get along with your grandchild and other family members? Want to know if your personalities mesh?Find out here.