When you have loved ones that need money and you are in a position to be able to help them out then it can be tempting to do everything you can to help them. If you have grandchildren and their parents cannot help them out and they need money it is tempting to do what you can to help them. When you love someone, you want to do everything that you can to help them but sometimes doing too much can actually cause problems later. Lending money can come into this category and it can potentially cause other problems as well. It is therefore worth giving the situation a lot of thought.
By giving money to your grandchildren they may not learn about how to manage financially on their own. Obviously small gifts perhaps on birthdays or during the holidays are rather nice to give, but when they need larger amounts of money then this is different. If they are in debt and need help, want to go to college and need funds, want to buy a car or need a deposit for a home, then if you can help them, it can be really tempting to do so. This is likely to make you feel really good knowing that you have helped them out and hopefully they will be very grateful for it. However, it could cause problems.
If they get financial help, they may not learn about coping financially on their own. They might think that if they need money again, they will just be able to ask you for it. They may even not worry about how much they are spending because they know that they can get a loan to help them out when they need it. It could therefore lead to them being reckless with their money. They may not then learn about the values of saving or about when to choose a loan and how to borrow sensibly.
It can feel very hard to not help out like this but if you do so it may mean that they get so reliant on it that they form really bad habits. Then when you are no longer able to help, they could really struggle to cope. The may end up in a lot of debt as a result and it could mean that they will be even worse off than they would have been if they had not had the help in the first place.
Relationships with others
It could also create problems with other grandchildren or children. If you only give money to one of them, then how will the others feel? They may feel that they should have the same amount of money and even if you do give money to all of them the parents may feel it is unfair. It is unlikely that all of you children have the same number of children. This means that you may be giving money to three grandchildren belonging to one child and only one child belonging to another. This means that the children may be jealous of each other as one family has had three times the amount of money compared to another. If the money had gone to the children it would have been split evenly but going to grandchildren means that it is not.
There may even be jealousy from other family members who may feel that they should have benefitted as well. It is worth giving this some thought before you give away any money. You may try to keep it secret to prevent this sort of thing, but it can be really difficult to keep secrets and even if you do not tell anyone, there may be others that know about it that will.
Problems for yourself
You may also create problems for yourself if you need to have some money and you have given it away. Make sure that you have kept enough. It can be hard to think that you will need money, but you never know. It might be that you need health care or nursing care and your insurance may not cover it. You may wish to go into a care home and this could cost a significant amount of money and if you do not have any money then you may not be able to go to the place that you want to go to.
So, it is well worth thinking hard about what you should be doing with regards to giving away money. It can naturally feel like the very best idea in the world but when it comes down to it, it can actually cause more problems than it solves. Therefore, you will need to think carefully about the impact that it will have on your grandchild and your family as well as whether you will need the money.