WASHINGTON — Those $20 bills inside birthday cards can add up.
A CNBC report found that grandparents spend an average $2,383 a year on their grandchildren — on toys, outings, college savings, extracurricular lessons, school supplies and allowance.
But it’s not only money grandparents spend on their grandchildren, it’s also time. The report — which polled millennial parents and grandparents with millennial children — found that grandparents spend at least an hour of help each week on child care and other household assistance, with an average of 48 hours per week and an estimated value of $300 per week or $15,600 per year. Yikes.
A quarter of the millennial parents polled said that they would not be able to afford their lifestyle without the help of their parents; 40 percent of the grandparents said they offered to help; and 43 percent of grandparents said they do it because it makes them happy.
Financial planner Douglas Boneparth told CNBC that grandparents should make sure that helping their children and grandchildren does not result in financial difficulty for themselves in the process. Boneparth said that grandparents should establish their own financial plan first.
Ways to help grandchildren that could benefit themselves include contributing to a college plan or paying a medical provider directly for health expenses — these types of help can give a tax break or are exempt from gift taxes.
Moreover, it is important to set boundaries and be clear on expectations, said David Lynch, managing director at TD Ameritrade. “You hate to see money tear a family apart.”
WTOP’s Sae Robinson contributed to this report.