Why do you grades necessarily get lower due to your side projects? Is it not possible to keep both up?

This is a good exercise in learning to communicate and to manage your image. Present things in way they can relate. For example, you can present open-source like getting involved in your local community or a local business organization. You do things for free (in real world organizations you have member events, volunteering, etc) and you gain valuable business connections and expertise.

The 'construction worker' analogy can be put aside if you can present them a career plan. Research the jobs you want to get, get information on salary and benefits, and explain to your family that this holds a good future for you.