What If Grandparents Helped Fund a First Home Instead of Buying More Toys?

Toys create wonderful smiles and sweet memories, but what if one gift each year could also help open the door to a grandchild’s first home?

As a mom, grandmother and Rochester real estate agent, I know just how quickly the toys can pile up. Our children love them, play with them and eventually outgrow them. But imagine taking a portion of the money normally spent on birthday and holiday gifts and placing it into a thoughtfully planned “First Home Fund.”

That gift may not create the biggest reaction today, but it could become life-changing 18 years from now.

A Small Gift Today Could Create a Big Head Start

Let’s imagine that a grandparent invests $1,000 each year from the time a grandchild is born until age 18.

That is approximately:

• $83 per month

• $19 per week

• $18,000 contributed over 18 years

Assuming a hypothetical average annual return of 7%, those contributions could potentially grow to approximately $34,000 to $36,000 by the time the child turns 18. The exact amount would depend on when the contributions were made, investment performance, fees and taxes.

That money could become a meaningful contribution toward:

• A future down payment

• Closing costs

• Moving expenses

• Initial home repairs

• Furniture and household necessities

• An emergency fund for the new homeowner

It may not purchase the entire home, but it could give a young adult an incredible head start.

The Power of Starting Early

Compound growth means that an investment has the opportunity to earn returns, and then those returns may begin earning returns of their own.

For example, if a one-time gift were invested for 18 years with a hypothetical average annual return of 7%:

• A $100 gift could grow to approximately $340

• A $250 gift could grow to approximately $850

• A $500 gift could grow to approximately $1,700

• A $1,000 gift could grow to approximately $3,400

These examples are not guarantees, but they demonstrate why time can be one of the most valuable ingredients in building wealth.

The earlier a family begins, the more time the investment has to potentially grow.

Why This Conversation Matters More Than Ever

Homeownership has become increasingly difficult for younger buyers. According to the National Association of REALTORS®, the median age of a first-time homebuyer reached 40 in its 2025 Profile of Home Buyers and Sellers.

Many buyers are balancing rising home prices, rent, student loans, childcare costs and everyday expenses while trying to save for a down payment.

A First Home Fund will not solve every affordability challenge, but it could help the next generation begin preparing before those financial pressures arrive.

It could mean:

• Purchasing a first home sooner

• Borrowing less money

• Having more financial breathing room

• Beginning to build equity earlier

• Creating greater stability for a future family

That is where a thoughtful gift can become part of a lasting family legacy.

Does This Mean Grandparents Should Stop Buying Toys?

Absolutely not!

Birthdays and holidays should still be fun, joyful and filled with special memories. A First Home Fund does not have to replace every present.

Families could consider a combination approach:

• Purchase one meaningful toy or experience

• Contribute a smaller amount to the child’s future

• Ask relatives to contribute to the fund for special occasions

• Increase contributions during years when it is financially comfortable

• Invite the child to participate as they get older

Once the child begins earning money, families could even encourage them to contribute a portion of birthday money, summer job income or graduation gifts.

The goal is not to take away the fun. It is to add a little future planning to the celebration.

Choosing the Right Type of Account

There is no single account that is right for every family. The best option may depend on the child’s age, the family’s financial goals, tax considerations, investment choices and how the money will eventually be used.

Before opening an account, speak with a qualified financial advisor or tax professional. They can help explain the available options and determine which approach fits your family’s needs.

The U.S. Securities and Exchange Commission also offers a free compound interest calculator that families can use to explore different contribution amounts, timelines and hypothetical rates of return.

The Greatest Gifts Can Take Time to Open

The greatest gift is not always the one that creates the biggest smile on Christmas morning.

Sometimes, it is the gift that creates stability, opportunity and peace of mind many years later.

Helping a child or grandchild move toward homeownership can give them more than an address. It can provide a place to build memories, raise a family, put down roots and begin creating wealth of their own.

That is a gift that keeps growing long after the toy box is empty.

Would you consider creating a First Home Fund for a child or grandchild? It may be a conversation worth having at your next family gathering.

And when that future homebuyer is ready to explore their options in Rochester, Monroe County or the surrounding communities, I would be honored to help make the process fabulous from the first conversation to the closing table.

Karin Morabito, REALTOR®
Karin Morabito Homes
585.290.6410
karinmorabitohomes.com

This article is provided for general educational purposes only and is not financial, investment, tax or legal advice. Investment returns are not guaranteed, and all investments involve risk. Consult qualified financial and tax professionals before making investment decisions.