It’s natural to want to spoil your grandkids, but you don’t want to impede their parents’ efforts to teach financial values. Here’s how to strike a balance.

If you’re a grandparent, chances are you love to spoil your grandchildren. Maybe you feel a bit guilty about it? Don’t feel so bad, because according to a recent AARP survey, you’re not alone.

AARP Financial conducted the survey on the relationship between grandparents and their grandchildren. 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. The survey also found that 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% of grandparents agree that kids don’t understand the value of a dollar.

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

Kiplinger’s Janet Bodnar feels that parents share this concern. She says that while the parents may appreciate Grandma’s generosity, it doesn’t help them teach their kids financial values when Grandma arrives bearing a Nintendo 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.

However, Bodnar says grandparents do need to spoil their grandkids just a little. In the AARP study, two out of three of those surveyed said they prefer grandparenting to parenting. And more than 80% said they give gifts because it makes them happy.

Bodnar offers advice on how to strike a balance and avoid family conflicts:

1. Gifts of time and thoughtfulness trump money. Instead of writing out a check, put together a scrapbook or a collection of funny cartoons to share with your grandkids when they visit.
2. 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.
3. 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.
4. And while McDonald’s gift certificates may make a great stocking stuffer, buying your grandkids a savings bond or stock in a company would make more sense financially.

Interestingly enough, in the AARP study, only 22% of grandparents gave their children an “A” for teaching their grandchildren about saving and investing. Yet only 22% of grandparents had ever opened a saving or investment account on behalf of a grandchild.

Because of this, Bodnar encourages grandparents develop a shared interest in investing with their grandchildren, something that may make your grandchild a millionaire someday!