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Using Christmas Gifts to Teach Grandchildren about Money

by Gary Foreman

We certainly spend a lot on Christmas gifts for our children. According to data from T. Rowe Price, "parents are spending an average of $422 per child on holiday gifts, with 34% of parents spending $500 or more per child." (source:

To help us consider ways to use our Christmas gift spending to help teach our grandchildren about money, we spoke with Matt Reiner, CEO and co-founder of Wela. Mr. Reiner is a CFA (Certified Financial Analysit) and CFP (Certified Financial Planner). Wela is a personal financial planning app.

Q: While we love to see our grandkids enjoy a new toy, we also want a good future for them. Why is it important for grandparents to help with financial education?

Mr. Reiner: It's important for everyone in a kid's life to help with financial education. Grandparents have had experience going through both good and bad times financially and can impart wisdom on the youth. The challenge that we face is to make sure that the information and knowledge that is passed along to the younger generation is being heard. It is important for grandparents to not only focus on providing financial education, but also work extremely hard to make sure the wisdom they impart on the youth is relatable. We must change the conversation when it comes to financial advice. The advice should never change, just how we communicate it should.

Using Christmas Gifts to Teach Grandchildren about Money

Q: Many $50 and $75 toys will be discarded within hours. Is it feasible to think that money could be spent for a gift that would help educate a child on personal finance?

Mr. Reiner: Using the money that could be spent on a $50 or $75 gift can definitely be feasibly spent on a financially educational gift, but many of the things that are out there that can be bought for financial education will be discarded shortly after being given, just like the other toys. Another option would be to make the child part of the gift and the process. We all know that our life is the sum of our experiences, as opposed to the sum of the "things" we receive. Thus, we should provide the child different experiences that help them grow and make them part of the experience to understand the costs and what is needed from a savings standpoint. One way to do this is to provide options they can choose from to help build their own experience and make each decision dependent on the other based on cost. This helps the child get something they want, but also learn the valuable lesson of a tradeoff and that money isn't endless.

Related: 6 Times Boomers Spend Too Much Money

Q: Are some investments more appropriate for younger or older grandkids?

Mr. Reiner: I think the main difference is that when kids get older, they start understanding brands, companies, etc. It makes more sense to start buying more individual stocks (in a diversified portfolio) for older grandkids, as they can have a better emotional connection to the brand and understand that when they buy or visit the brand, they are enhancing their investment. This is a way to teach them how investments work and grow.

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Q: What do adults need to know about titling securities for minors?

Mr. Reiner: Mainly they should know that the accounts will be custodial accounts with the parent's name as the account owner and the account would be in custody for the minor. Depending on the state, the account will need to transition to the minor at the age of either 18 or 21.

Q: Is there any advantage to letting the youngster help choose the investment?

Mr. Reiner: Of course! Letting the child choose creates an emotional connection to the investment. Having them be a part of the process in anything that is done from a financial standpoint is a learning opportunity for the elder to teach the younger generation. This lets them grow in terms of understanding why they choose an investment and how that analysis helps them or doesn't.

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Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, and Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.

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