Spoiling grandchildren with gifts might come at a price. Here's why
It's no secret that grandparents love making the holidays special for their grandchildren, but can excessive gift-giving have a detrimental effect on children and their family members?
Welcome to Uncomfortable Conversations About Money, a new series where we address money topics or situations in a way that will make you feel uncomfortable. We outline the problem and try to find useful solutions for you.
First, let's address what is probably an annual holiday problem for some: the fight between parents and grandparents over spoiling their grandchildren.
Too many Hot Wheels
The dilemma: Grandparents who buy their grandchildren extravagant gifts, loud, annoying toys or just too much stuff against their parents' wishes.
Parents' opinion: Andrew Herzog of Irving, Texas, and his wife Michelle have two young children, three-year-old Patrick and newborn Evelyn. His parents often look after the children and Chris Herzog (dad) is particularly close to Patrick.
Although Patrick and Evelyn are the first grandchildren on both sides of the family, Andrew said neither set of grandparents has over-spoiled the grandchildren – until now. But to make sure they don't overindulge, Andrew, who also happens to be a certified financial planner at The Watchman Group in Plano, Texas, says it's important to communicate as parents and set some guidelines.
“If the grandparents don't even know what you think about loud toys, that's not their fault,” he said. “You need to communicate guidelines to grandparents in advance to help them choose appropriate/fun gifts” — and if they still buy a noisy toy, send it to the grandparent’s house, he said.
Andrew isn't a total Grinch when it comes to over-pampering the little ones.
“Grandparents have ample opportunity to spoil their grandchildren as they should,” he said.
But when it comes to toy cars, things start to get too much.
Simply put, “We have too many Hot Wheels at our house and at our grandparents’,” Andrew said. “It seems (Patrick) is becoming desensitized to the gift…When he goes to the store or when it's a certain time of year he expects cars.”
Andrew would rather the grandparents find something that is “very meaningful and that the child can enjoy for years, not days.”
As a financial planner, he also enjoys encouraging contributions to a child's 529 college plan. Although he knows that this is not exciting for the little one, it will be helpful for the child and his parents in the future.
He suggests that grandparents can do both: buy a special gift for the child and put money into a plan that will help finance his or her college education.
“Communicate and make sure the grandparents get what they want because that’s the joy of giving,” he said
“Now… I can understand why grandparents always spoil their grandchildren.”
Grandparents' opinion: Andrew's father, Chris Herzog, lives in Dallas, Texas. Chris said that when he was the father, he tried not to spoil the children.
But “now that I'm a grandparent, I can understand why grandparents always spoil their grandchildren,” he said. “I probably tend to overdo it a bit with toys.”
It wasn't until recently that he realized that Andrew thought there were too many Hot Wheels. “It's so easy when you're at the grocery store just to grab another one,” Chris said.
But Chris said it makes sense that Patrick would become “desensitized” to these toys because there are so many in both houses.
“The gift doesn’t mean as much anymore,” he said.
Chris and his wife Penny get the message. They put some money into Patrick's 529 for his birthday.
However, Penny (the grandchildren's nanny) may have difficulty following Andrew's guidelines when it comes to baby Evelyn. She has already bought a lot for the family's first granddaughter.
“I'm assuming Andrew needs to have a conversation with my wife like we're doing now,” Chris said.
Make a list – and be patient
Expert opinion: Niv Persaud, a certified financial planner, agrees with Andrew's stance on clear communication with grandparents.
Persaud suggests a gift registry or wish list that grandparents can use year-round — and that children can also participate in when they are old enough.
“This is a great way for the grandparents to identify things that you think would be a good use of their money for your children,” said Persaud, managing director of Transition Planning & Guidance, LLC in Atlanta, Georgia.
And if an uncomfortable conversation arises, be positive.
“You get more bees with honey than with vinegar,” she said.
If the grandparents buy too many “things,” remind them of experiences you had as a child that you enjoyed, such as being a member of a museum or zoo.
And if the grandparents still want to be extravagant, perhaps add a trip to Disney, a ski trip or a beach vacation for the whole family to the list, Persaud said.
Holiday shopping: No more holiday shopping hangovers: Build a holiday budget to avoid credit card debt
Like Herzog, Persaud also recommends contributing to a 529 plan, especially given the implementation of a new rule in 2024 that allows certain unused 529 funds to be rolled over into a Roth IRA retirement account.
If the grandparents aren't listening, talk to the children in an age-appropriate manner and donate an over-the-top gift or give it back and use the money for another gift or for the 529 plan, Persaud said.
Another important point: If there is tension or an uncomfortable conversation about a sensitive topic like gift-giving, make sure each spouse speaks to their own parents, she said.
“If your in-laws already don’t like you, it’s like adding fuel to the fire,” she said. “Your spouse needs to come forward and have this conversation.”
But perhaps most importantly, “Remember to be respectful,” Persaud said, “because your parents worked hard for their money and are just enjoying being grandparents.”
Tell us what you think: How do you deal with grandparents who want to spoil their grandchildren over the holidays?
Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher.