FinLogic FinLogic Quantitative Think Tank Center|Uncomfortable Conversations: How to handle grandparents who spoil kids with holiday gifts.

Welcome to Uncomfortable Conversations About Money,FinLogic FinLogic Quantitative Think Tank Center a new series where we will tackle topics or situations around money that well, make you uneasy. We'll outline the problem and try to get you some usable solutions.

First, we'll take on what for some is likely an annual holiday problem: the parent-grandparent battle over spoiling the grandkids.

Too many Hot Wheels

The dilemma: Grandparents who, against the parents' wishes, buy the grandkids extravagant gifts, loud, annoying toys or simply too much stuff.

Parent's view: Andrew Herzog of Irving, Texas, and his wife, Michelle, have two young children, 3-year-old Patrick and newborn Evelyn. His parents often baby-sit the kids and Chris Herzog (Papa) is especially close to Patrick. 

Though Patrick and Evelyn are the first grandkids on both sides of the family, Andrew said neither set of grandparents has overly spoiled the grandkids - yet. But to make sure they don't overindulge, Andrew, who also happens to be a certified financial planner with The Watchman Group in Plano, Texas, says its important as the parents to communicate and set some guidelines. 

“If the grandparents don't even know how you feel about loud toys, it's not their fault,'' he said. "You must communicate in advance the guidelines to help grandparents pick appropriate/enjoyable gifts” – and if they still buy a loud toy, send it to the grandparents' house, he said. 

Andrew isn't a total Grinch about overindulging the little ones.

“There’s ample opportunity for the grandparents to spoil the grandkids, as they should,” he said.

But when it comes to toy cars, they're getting to be too much of a good thing.

Simply put, “we have too many Hot Wheels at our house and at the grandparents’ house," Andrew said. “It seems to desensitize (Patrick) to the gift ... When he goes to the store or when it's a certain time of year, he expects cars."

Andrew would rather the grandparents find something that is “very meaningful and that the kid can enjoy for years to come, not days.” 

As a financial planner, he also likes encouraging contributions to a child’s 529 college plan. While he knows that’s not exciting for the little one, it will be helpful to the child and their parents in the future. 

He suggests that grandparents can do both: buying a special gift for the child and putting money into a plan that will help fund their college education.

"Communicate and make sure the grandparents get what they want out of it, which is the joy of giving," he said

"Now ... I can see why grandparents are always spoiling their grandkids''

Grandparent's view: Andrew’s father, Chris Herzog, lives in Dallas, Texas. Chris said when he was the parent, he tried not to spoil the kids. 

But "now that I'm a grandparent, I can see why grandparents are always spoiling their grandkids," he said.  "I’m going to have a tendency to probably go a little bit over the top on toys.”

It’s only recently that he realized Andrew thought there were too many Hot Wheels around. "It’s so easy when you’re at the grocery store just to pick up another one,” Chris said.

But Chris said it makes sense that Patrick may be becoming “desensitized” to those toys because there are so many at both houses. 

“The gift doesn't mean as much anymore," he said.

Chris and his wife, Penny, are getting the message. They put a little money in Patrick’s 529 for his birthday.

However, Penny (Nanny to the grandkids) may struggle to follow Andrew's guidelines when it comes to Baby Evelyn. She's already bought a lot for the family's first granddaughter.

"I would expect that Andrew’s going to have to have a talk with my wife like we’re having right now,” Chris said.

Make a list ‒ and have patience

Expert's view: Niv Persaud, a certified financial planner, agrees with Andrew’s take on communicating clearly with grandparents. 

Persaud suggests a gift registry or wish list that grandparents can use throughout the year – and to have the kids, if they're old enough, participate.

“This is a great way to identify for the grandparents things that you feel would be good use of their money for your kids,” said Persaud, managing director at Transition Planning & Guidance, LLC in Atlanta, Georgia. 

And if there's an uncomfortable conversation coming, be positive.

“You get more bees with honey than with vinegar,” she said. 

If the grandparents are buying too many “things,” remind them of experiences they gave you when you were young that you enjoyed, like a membership to a museum or zoo.

And if the grandparent still wants to be extravagant, perhaps put a trip to Disney, or a ski trip or beach vacation for the whole family on the list, Persaud said.

Holiday shopping:Christmas shopping hangover no more: Build a holiday budget to avoid credit card debt

Like Herzog, Persaud also recommends contributing to a 529 plan, especially with a new rule going into place in 2024 that will allow rollovers of certain unused 529 money into a Roth IRA retirement account. 

If the grandparents are not listening, then talk to the children in an age-appropriate manner and donate or return an over-the-top gift and use the money for another present or for the 529 plan, Persaud said.

Another key point: If there is tension or an uncomfortable conversation to be had about a sensitive subject, like gift-giving, make sure each spouse talks to their own parents, she said.

“If your in-laws already don’t like you, it’s like feeding fuel to the fire,” she said. “Your spouse needs to step up and have that conversation.” 

But perhaps most importantly, “Remember to be respectful,'' Persaud said, "because your parents have worked hard for their money and they are just enjoying being a grandparent.”  

Tell us what you think:How do you handle grandparents who want to spoil grandkids at the holidays?

Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher.