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Saving can bridge generation gap

Oops. You probably missed National Grandparents Day on Sept. 9. Don't worry. Most grandparents missed it, too — and anyway, they'd rather get a good night's sleep than a greeting card.

But the occasion was noteworthy for a survey done by AARP Financial on the financial relationship between grandparents and their grandchildren. Among the findings:

• The typical grandparent surveyed had a median income of $46,000 and four grandchildren, on whom Grandma or Grandpa spent about $150 each over the past year.

• Grandparents believe that their adult children do a better job providing for their grandkids than they do teaching them good money habits. In fact, 79 percent of grandparents agree that kids don't understand the value of a dollar.

Of course, grandparents are part of the problem. Nearly 60 percent admit that they worry about spoiling their grandchildren.

It's my experience that parents share this concern. Although they may appreciate Grandma's largesse, it doesn't help them teach their kids financial values when Grandma arrives bearing a Wii or a dozen new outfits.

The situation is even more complicated in blended families, where multiple sets of grandparents may be competing for the children's attention.

Yet grandparents do need to indulge their grandchildren just a little. In the AARP study, two out of three of those surveyed said they prefer grandparenting to parenting. And more than 80 percent said they give because it makes them happy.

Here's my advice on how to strike a balance and avoid family conflicts:

Gifts of time and thoughtfulness trump money. My children still remember that their New York grandparents kept a scrapbook of favorite comic strips to read aloud when the kids came to visit.

Meanwhile, their Pittsburgh grandparents kept them supplied with clippings about the Steelers, the kids' favorite football team.

Discuss big gifts with parents before you buy. Mom and Dad might not want Johnny to have a new video-game system. But when Johnny heads off to college, they'd appreciate it if you'd offer to pay for books or a computer (or, in the case of my freshman son's new roommate, a printer).

Invest in your grandchildren's future. It doesn't take much money to start a college fund with a Coverdell education savings account or a state-sponsored 529 plan. (For our choices of the best plans in all 50 states, go to

And while McDonald's gift certificates may make a great stocking stuffer, how about buying kids stock in the company (or another that piques their interest)?

In the AARP study, only 22 percent of grandparents gave their children an A for teaching their grandchildren about saving and investing. Yet only 22 percent of grandparents had ever opened a saving or investment account on behalf of a grandchild. A shared interest in investing can bridge the generation gap — and make your grandchild a millionaire.

Janet Bodnar is deputy editor of Kiplinger's Personal Finance magazine and the author of "Raising Money Smart Kids" (Kaplan, $17.95) and "Money Smart Women" (Kaplan, $15.95). Send your questions and comments to