Money for the kids aside from Education..................... (payments, taxes, account)
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I'm generally not a fan of large gifts from parents to children. I wouldn't tell them about it for a long time, and if/when you decide to give them some money you need to be equitable and open about it. I also wouldn't bother earmarking it for something specific. Tell them what they are going to get, either a one-time amount, or some amount each year for a set number of years... to help them "get started" in life.
The dilemma that could arise is if not all of them are responsible with money. You know that one of them will put it in an IRA or into a house, but the money given to the other one will all end up in the cash register at the pub. What do you do then?
I'm generally not a fan of large gifts from parents to children. I wouldn't tell them about it for a long time, and if/when you decide to give them some money you need to be equitable and open about it. I also wouldn't bother earmarking it for something specific. Tell them what they are going to get, either a one-time amount, or some amount each year for a set number of years... to help them "get started" in life.
The dilemma that could arise is if not all of them are responsible with money. You know that one of them will put it in an IRA or into a house, but the money given to the other one will all end up in the cash register at the pub. What do you do then?
I know a parent that is fighting that problem right now. It is a real problem for her. She does not think that it is fair to help out one adult child and ignore the other one.
One child is very reliable about money but could use some help with some expenses (especially related to her grandchildren).
But, any money just "slips away" from the other one. He has already had not one, but two houses, that he couldn't afford and lost them to foreclosure and he recently bought another house that he can barely, barely afford.
Kids who work hard and don't expect to be given anything? Well I completely understand why their parents (or anyone else around them) want to give them money without conditions.
Kids who are brats and expect the world to give them everything? Well I wouldn't give them a penny.
If you were to save some money for the kids aside from their education, what would it be for?
I'm talking only a 100 to 200 a month. nothing crazy. (but the timeline is between 15 and 25 years from now. so great opportunity for growth in the market)
The money would come from odd jobs or selling things on Craigslist, or uber-ing here and there, etc. nothing that would make a huge impact one way or another.
some options that come to mind include:
- their Wedding....
- their first car....
- once in a lifetime family vacation....
???
What would you 'save for' given the hypothetical scenario above.
In addition to fully funding their undergrad degrees (they paid for their Masters), we saved 25K for both of ours to be used on a wedding and/or a down payment on a house. One chose to spend it on a down payment and one on her wedding. Didn’t matter to us which they chose since it was purely a gift. They didn’t even know about the money until we told them it was as available for those things. It was fun to surprise them since they’re the kind of kids who never ask for anything.
I know a parent that is fighting that problem right now. It is a real problem for her. She does not think that it is fair to help out one adult child and ignore the other one.
One child is very reliable about money but could use some help with some expenses (especially related to her grandchildren).
But, any money just "slips away" from the other one. He has already had not one, but two houses, that he couldn't afford and lost them to foreclosure and he recently bought another house that he can barely, barely afford.
What to do?
It's definitely a lot easier if they are all responsible, or I suppose if they are all irresponsible
My opinion is that one needs to be equitable, otherwise there will be hard feelings among all parties for a long time... perhaps forever. So make the gift a modest one, and let the recipients use the money as they wish.
I always wonder do parents talk to their kids about money and other issues???
My brothers and I knew exactly where my parents stood on money (lol, my mother could quote you down to the penny how much your tuition was costing her, heck she would tell me all the time how much my high school tuition cost).
For example my mom was a devout born again Christian. so when one of my older brothers decided to move in with his girlfriend, my mom told him flat out how she felt about it. She paid his tuition but she was not paying for his room and board. He didn't have any hard feelings, my other siblings and I told him "you know mom and dad are going to have a heart attack".
I don't understand this thing where kids feel just because one gets they can do whatever they want and still get the same treatment.
One of my kids decided at one time he was going to smoke weed. humm ok, if you've got money to blow on an illegal activity then you can start paying rent, your own cell phone, your own entire car insurance etc etc.
I wasn't going to stop paying for his siblings because he started acting like a moron?
I think by the time my kids were 13 they knew exactly what my late husband and mine views were and what our expectations were.
In my personal life experience, parental welfare creates an awful lot of train wrecks. If you never have to work for anything, it's kind of rational that you never work hard.
Yes, absolutely. The book The Millionaire Next Door talked about this. They found in their research that the more money adult children got from their parents, the less financial assets they actually had. I'm not talking about paying for college or medical bills or stuff like that, but lifestyle funding such as cash and down payments on houses.
I didn't get that deal. I worked/borrowed half. My dad paid half. He rightly felt that I needed to have some skin in the game. I got the endless lecture of: "If you like this lifestyle, you'd better study hard, get a good degree, and land yourself a good job in a good career. I'm not going to hand it to you. I'm going to spend every dime so don't expect a big inheritance." Since I kind-a liked the lifestyle, I mostly followed that advice and got the useful STEM degree and successful STEM career. I didn't inherit a dime.
I think that if you've 100% funded a very comfortable retirement, you can start thinking about asset transfers for real assets. Wedding, ring, honeymoon? Absolutely not. A house or big down payment in a town with a strong school system to provide an advantage to the grandchildren? Sure.
In my personal life experience, parental welfare creates an awful lot of train wrecks. If you never have to work for anything, it's kind of rational that you never work hard.
I'd be delighted if my kids chipped in and I will encourage them to have jobs starting their junior or senior years in high school. Well, maybe just the younger one. Might be a tall order for our older kiddo high up on the autism spectrum.
Both my husband and I had our undergraduates paid for by our parents and my father-in-law assisted with my husband's graduate programs until he was able to secure fellowships and internal funding through his program. Then, a few years later, he gifted us a down payment for a home in the midwest.. And then two years after that, helped us with the much larger down payment for a condo in the PNW.
And you know what.. he's going to help us out yet again to buy either another primary residence or investment real estate (TBD).
Yes, absolutely. The book The Millionaire Next Door talked about this. They found in their research that the more money adult children got from their parents, the less financial assets they actually had. I'm not talking about paying for college or medical bills or stuff like that, but lifestyle funding such as cash and down payments on houses.
I don't necessarily think of down payments as a lifestyle thing... You have to have a place to sleep, but you can choose between a wide range of accommodations. You might need a car, but you can choose to drive luxury or a second-hand Honda accord. You need to wear clothes, but you don't have to have the latest style of clothing and designer handbags.
I always wonder do parents talk to their kids about money and other issues???
my goal is to be as open as possible. it is not my desire to surprise my children with financial assistance if i choose to later on. i want them to know what they have coming to them and be able to count on it for long term planning.
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