Making your children wealthy

[HonoluluMom]

I met with my financial planner who I've worked with for well over a decade. During the course of our meeting while talking about retirement/long-term planning, he mentioned that I may want to buy DD a house and wouldn't I want her to be wealthy (well, he said it more like DD not having to struggle to buy a house, get a family started, etc.).

I was a bit taken aback. It never crossed my mind that I should consider buying DD a house or that I should try to make her wealthy. One of my main financial goals is to make sure DD has a wide variety of options when it comes to her education, from public to private to Ivy League. If I'm able to help her buy her first place, then I will. However, as I sit here today, I don't think I'm working and saving to make DD wealthy or to provide her with significant financial support after she's an adult.

Do you plan on leaving an "inheritance" to your children, or helping them financially after they graduate from college?

[katydid1971]

I don't think that we have enough money to do something like that. We have a very wealthy family member who has bought all of his daughters homes and gives them an allowance every month even though one is a doctor and one is a lawyer (two are stay at home moms so I think the money is more needed at their homes). If we had enough to ensure our retirement then I would help my kids out.

[codex57]

If you do, what incentive does she have to work?

Also, what if she doesn't want the house where you bought it (moved for job, love, school, etc)?

Finally, you lose the step up in basis on leaving a house (or other appreciable asset) upon death.

Most people delay life due to school loans, not cuz they can't qualify for a house. If you want to help her out and buy real estate at the same time, don't do it intending to give it to her, do it as an investment the same as buying some stock, hope it appreciates, then cash out and use the profit to help her out however she needs it (pay down school loans, pay for a down payment on a house, start up costs for a business, whatever).

Maybe it was just idle chit chat stream of consciousness from the guy, but I'm naturally suspicious of financial planners and this one is popping up all sorts of red flags in my head. Just warnings and it doesn't mean he's up to no good, but from the little you wrote, lots of warnings popped up for me about him.

[hillview]

um .. no. If we end up with a lot of $ when we die the kids will get some of it when they are 30.

[Simon]

There is some very interesting research about young adults who get more hand-outs from their parents whether its in the form of paying off loans, credit cards, chipping in for rent, regular grocery money, buying a car, paying insurance, etc., etc..

The short version is: young adults who get more $ help from their parents are financially irresponsible with their own money. They save less, spend beyond their actual means, are more likely to have longer periods of unemployment, fail to finish a degree, and eventually struggle more with managing their finances.

[Kestrel]

It's kind of a nice thought if you've got lots of money, but...

- saving for your retirement is more important. You can always leave your kids money/property in your will.

- an education fund would be a better investment, I would think.. so many people today have crushing student loan debt or not able to go to college at all.

- If you do have that kind of money, a down payment gift would be nice, but I certainly wouldn't want my mother choosing my house!!!

[Snow mom]

I imagine he was talking about helping her financially to buy a home, not choosing a home for her or buying it now. I bet he was thinking more along the lines of in 20 years you want $x for a down payment for her. Yes, I'd like to be able to do this for my children. My parents loaned (not gifted) me money for my first home. I've been very fortunate with the resources my parents have provided me. It hasn't made me financially irresponsible or work less hard. It has given me freedom.

[Cam&Clay]

I would love to have something to leave them when I die, but I don't feel that I am in any way supposed to provide for them after college, except in emergency situations.

I had an argument with my assistant at work a few years ago over this. She and her husband were paying for their three daughters' (all unmarried/out of college/working full-time) cell phones, clothes, cars, insurance, rent, and even all of their doctor/dentist copays. I tried to explain that she wasn't teaching them to be responsible at all, but she felt if she had the money (and they had enough to do this but no extra for themselves), she should give it to her girls. She was 55 years old and eating peanut butter for lunch while her girls walked around in top name brands. I remember freaking out one day when one girl stopped by to get the money to get a new pair of Uggs. She was 27 years old!

[rlu]

My folks put aside money for me to use for college and whatever else (if anything) it would cover. It was not alot (less than $10k) but between that bankroll and working (summer job between junior and senior year and then working fulltime since high school gradution) it paid for a BS, (my employer paid for my MST), a used car, our wedding & honeymoon and a deposit on a house.

My sister had the same deal and used it for one year at a UC. She then xferred to junior colleges and worked her way through her degree and masters (2).

When we moved to TX we borrowed the down payment for our TX house from MIL but paid her back within 6 months when we sold our CA home.

My folks gave my sister one month rent, and then us one month rent when we truly needed it. That was an outright gift.

SIL gave us her old car when she got a wheelchair lift vehicle.

It all comes down to choices and being responsible. We've been fortunate our family was able to assist when we needed it, but we don't rely on it.

My folks and MIL have planned their finances so that they can probably care for themselves financially for the rest of their lives and that is a truly great gift. I don't expect any great sums of money to come our way nor do I plan out my life expecting to hand my son his life on a silver platter and I don't feel bad about that. He comes from strong stock, he'll make it.

[georgiegirl]

Yikes! Our financial goals for our children are to fully fund undergraduate (hopefully at a state school) and if we can afford it, a graduate program that has good job prospects, like medical school, business school, etc.

If we are in a financial position to help our kids out when they want to buy a house, I don't have any problem with giving them some money to help with a down payment, provided they are responsible adults.

We both had significant student loans, and we were envious of friend whose parents paid for their med school and law school. I think you can make different career choices if you aren't saddled with grad student debt, (like go into public interest law.)

However, providing ourselves with a nice retirement takes precedence over providing for the kids after high school.

[kijip]

Achieving wealth for kids or ourselves is not on our to-do list of life. We are comfortable and will be even more comfortable down the road but aside from helping with educational costs and in other ways as needed, I am not planning on earning enough to leave them a sizable inheritance unless we die young and they get most of our retirement savings. Wealth is just not a goal for us.

[sweetsue98]

My #1 priority is to save for my retirement and if there is anything left when I pass, my dc will inherit it.

I have 2 DDs and I'm already saving for their college education. They will be able to go to a nice college but I can not provide for Ivy League so they will have to chip in. I assume I will be helping with their first car, college expenses beyond tuition, weddings etc. when they are ready to make a purchasing decision on a home, they are on their own. I will buy them a house warming gift!

[crl]

Not a goal of mine. I would like to be able to fund their undergraduate education. And completely cover our own retirement/long-term care needs. Beyond that they are on their own. If they inherit something, great, if not, oh well.

Catherine

[anonomom]

I love my kids, but I have no intention of supporting them beyond undergrad (and even then, I will expect them to work for their spending money and non-essentials). My job as a parent isn't to give them money, it's to raise them with the skills to let them make their own money. If I have money left when I die, then of course it will go to them. But I wouldn't deny them the pride of earning the money for their own homes/families/lives.

[boolady]

Not a goal of mine. I would like to be able to fund their undergraduate education. And completely cover our own retirement/long-term care needs. Beyond that they are on their own. If they inherit something, great, if not, oh well.

Catherine

This, exactly.

[cilantromapuche]

we give them experiences now in the short time we have until they go to college. we aren't even telling them that they have money for college. We fully expect that they will work hard and do their best.

[larig]

It's a goal of mine, but partly because I don't know how and if DS will be able to provide for himself. We hope to buy a couple of houses to provide some sort of income for him as rental homes, in case he is unable to work.

[scrooks]

Not a goal of mine. I would like to be able to fund their undergraduate education. And completely cover our own retirement/long-term care needs. Beyond that they are on their own. If they inherit something, great, if not, oh well.

Catherine

:yeahthat:

[bisous]

It's a goal of mine, but partly because I don't know how and if DS will be able to provide for himself. We hope to buy a couple of houses to provide some sort of income for him as rental homes, in case he is unable to work.

Larig, is this because your son has some special needs? Or are you just concerned overall with the health of the economy? I do have some concerns that our economy will never be as strong as it was for our parents and even for us. And that will necessitate an entirely different strategy to give our kids the best advantage.

As it is, I will not be buying my children a home. I'll be really happy if I have my own home at that time!

But really, I don't aspire to helping my children be wealthy. I think kids with too much given to them are often (but not always) ungrateful and don't really benefit from such generous gifts.

[Pennylane]

My #1 priority is to save for my retirement and if there is anything left when I pass, my dc will inherit it.

I have 2 DDs and I'm already saving for their college education. They will be able to go to a nice college but I can not provide for Ivy League so they will have to chip in. I assume I will be helping with their first car, college expenses beyond tuition, weddings etc. when they are ready to make a purchasing decision on a home, they are on their own. I will buy them a house warming gift!

Me too. I don't feel any obligation to buy or even help buy my dc a home! I would love for them to enter the real world debt free and after that, they are pretty much on their own.

Ann

[candaceb]

DH's father has gifted him $10K a year in stocks for about 10 years. These are all stocks that he inherited from his mother. We used that money for the down payment on our house, and it provides us with our emergency cushion (some stocks have been sold and are now liquid). It would be my hope that we will be able to do the same for DS when he is an adult and well established. We will probably end up using some of that money for DS's college but I hope we don't burn through all of it and we can keep the tradition.

[niccig]

I hope to fund most of college, but I expect DS to pitch in too. We have a couple friends who were either given or loaned money for part of down payment on a house. They both got into the market much earlier than other people of similar age, and it has paid off for them. If we can, I'd like to give some help for that, but it'll be a bonus. And only if our retirement is fully funded.

As for inheritance, well I hope we have enough so that DS doesn't need to support us when we're old. Anything left over, he can do what he wants with.

[Cuckoomamma]

I guess I'm the only one so far that thinks differently. We don't have the financial means to buy our dd's homes, but if we did, I definitely would. But, of course, I'd also be teaching them how to manage their money.

Dh and I have spent our lives without financial assistance from our parents and have not benefited from that lifestyle. Our peers are in far better circumstances because their parents were able to offer them options that we didn't have. I was babysitting at 10 to pay for shampoo, lunch and clothing. Dh's brother was given a great deal more financially than dh. Dh's husband is wealthy, we are not. BIL also received several degrees from great schools. Dh didn't have that opportunity.

You can raise a financially irresponsible child who isn't given much financially and you can raise a financially responsible adult who is given huge financial benefits. It's all in how you raise the child. I only wish that we had the means to give our girls a financial freedom that we haven't had.

[pinkmomagain]

While it is not a goal of mine, I think my dh is the type who gets great, genuine pleasure out of making grand, generous gestures. While we never discussed it in detail, I'm sure he'll do some big things for our girls as they get older. If we are concerned about any of the girls' well-being (safe transportation, roof over their heads, etc.) we would definitely help.

[karstmama]

my parents (mainly my mother) do give my brother & i money, almost every year, at christmas. it has meant a lot to me, and i didn't have any debt until i didn't have a job for a year last year.

my bf's mother could do the same for him. she has the money available, in a cd. it's her choice - *but!* he had an expensive divorce/cross country move/took a loss on a house, though, and he's in some debt (about 20k, so not crippling, but not easy to pay off in a couple of months, either). the kicker is that she keeps telling him she plans on using her money until it's gone, then depending on him. uh, bad plan. if he's still paying on debt then that she could have helped with, then he can't help her. if she helps him now, he could help her then. (just as a data point, she's 70+.)

so it's not that i expect to make my son 'wealthy', but there is precedent in the family for helping along the path & i hope to be able to do that, but retirement & my own financial house come first. after that, i hope to help.

[Ceepa]

We are saving for DC's education, but we are putting the priority on our retirement and our financial future. We would help out if our adult kids were in a bind, but personally as an adult I wouldn't feel comfortable receiving regular monetary gifts from my parents.

[Liziz]

I haven't had time to read all responses, but in short -- no way. DH and I strongly desire to do two things: 1) raise our DD in a way that teaches her the value of $$, how to manage it, and how to be self-sufficient and work for herself, and 2)have funds available to help pay for a significant portion (I actually want her to have to pay for some herself, so she feels ownership and responsibility) of her college education, so she's well-placed to start her own journey towards wealth and success after that. Now, I absolutely want to be generous to DD in life after college, but have absolutely no goal of it, and would rather have $$ in retirement funds.

[Kindra178]

If you do, what incentive does she have to work?



I completely agree with this. I can understand parents helping with a small portion of a down payment for a home, assisting with wedding costs, paying/assisting with college and grad school costs, but a house? Cut the cord! We, as parents, need to teach our kids how to care for themselves, including saving money, spending wisely, etc.

[schrocat]

In my culture, parents buy houses/apartments/homes for their children if they can afford it. I know of alot of people whose parents bought apartments and houses for them while they were young, rented it out and gave it to them as adults. Of couse this was all done in another country with different tax and inheritance laws. That doesn't mean that the kids are not independent. It frees up more of their own money to invest.

[MontrealMum]

I didn't realize this thread would be about actual money! I had assumed that it would be a link to an article or something that discussed raising emotionally healthy children, or how a stable marriage w/ happy, non-yelling parents produces more resilient children who are more successful...or something similar. I don't know why my brain went there but I just thought it was about giving your children the skills and resilience to create wealth - in its many forms, not only monetary. Am I alone in that?


I love my kids, but I have no intention of supporting them beyond undergrad (and even then, I will expect them to work for their spending money and non-essentials). My job as a parent isn't to give them money, it's to raise them with the skills to let them make their own money. If I have money left when I die, then of course it will go to them. But I wouldn't deny them the pride of earning the money for their own homes/families/lives.

So, about the actual topic... :yeahthat:

[janine]

I disagree with your FP for several reasons. I agree with the concept of aiming to fully fund your child's education so they won't have to worry about loans as they enter adulthood. I can see helping with the first few months of rent when they first start out, but that's it. If they would like to live in an apt we own and pay rent, ok. But buy them their first place? That is overstepping the parental role in my opinion and can stunt a child's move towards independence. The drive to support oneself is the basic incentive to leave the nest, right? The best gifts and tools to give your child IMO are a strong education (fully funded), a solid upbringing, and social/cultural exposure along the way.

I also have seen many wealthy friends be enabled by their parents too long and it never ends well.

[AnnieW625]

Not a goal of mine. I would like to be able to fund their undergraduate education. And completely cover our own retirement/long-term care needs. Beyond that they are on their own. If they inherit something, great, if not, oh well.

Catherine

:yeahthat: I agree with this completely. I also think a lot of this could be a cultural thing as well.

[arivecchi]

I believe in helping with their education, but that is it. I don't believe in helping with house down payments, weddings, cars, etc. DH and I have done everything ourselves and we will expect the same of our children.


but personally as an adult I wouldn't feel comfortable receiving regular monetary gifts from my parents Same here. Any kind of gift other than a minor one actually.

[sntm]

I'd help if I can but it isn't a specific goal. Personally, I'd love for my children to have the financial freedom to follow their passion with work - being a teacher, a social worker, an artist, or working at a nonprofit - if that is what gives them joy. If I can relieve some financial burdens to allow them to do that, great. Different than buying jet skis or fancy cars and probably more sensible than giving them thousands for a wedding!

[blisstwins]

I believe firmly in intergenerational wealth and often think about making sure my children will have a foundation and safety net. I own a significant investment property (with my brother) that has been in my family for several generations now. My family was very poor for a long time, but my father did very well. He lost a lot of what he made (retired too early, etc.) but he was passionate that this particular property never been sold. "As long as we have that we will never be poor." We could sell it and live very well, but we choose to use it conservatively and pass it on to our children. They could not live off of it, but it is a resource and more and more I think the gap between those who have resources and those who don't will define life options. We will pay for undergrad and help with wedding expenses, and hopefully something toward a downpayment on an apartment. We won't tell them all because I don't think they should expect anything and none of that is an entitlement. I will not pay cell phone, expensive clothing, vacations once they are young adults, etc. But I want my children to have options and I want to be able to help my children in this regard.

BTW: I never received regular gifts from my parents, but they paid for undergrad, helped with living expenses during grad, and stepped in when needed (car when our children were born and we were still in school) and also paid for cord blood banking, etc. I have always felt responsible for my future, but I did also always feel that I had support and resources if need be.

[larig]

Larig, is this because your son has some special needs? Or are you just concerned overall with the health of the economy? I do have some concerns that our economy will never be as strong as it was for our parents and even for us. And that will necessitate an entirely different strategy to give our kids the best advantage.

As it is, I will not be buying my children a home. I'll be really happy if I have my own home at that time!

But really, I don't aspire to helping my children be wealthy. I think kids with too much given to them are often (but not always) ungrateful and don't really benefit from such generous gifts.

It is because he has a fairly serious language delay. he is quite smart, but who knows if he will be able to communicate well enough to survive realistically in a work environment. At this age it's hard to tell. If it turns out that he can work, then it may provide him with the freedom to work a job that he loves that doesn't pay him well, which DH wishes he had the freedom to do himself.

I am not ashamed to admit I've had help from my parents (college, help with a downpayment for my first condo, and they are generous with gifts to me and DS), and they had help from theirs--but they came from parents of a different generation. They were farmers, and most of the farming parents helped their kids get started in life (usually farming) by helping them to buy land, or gifting some to them. My mom's parents were very poor, but through hard work my granddaddy was able to buy land. My dad's father was a sharecropper all his life, but inherited some money from a childless sister when he was in his 70s and saved every penny of that for his two boys. He was determined to pass on something to them that he never had. He was a simple man who was just so committed to the idea that he could make his kids' life easier--it was really his life's work. I have never known a more generous and kind soul.

I feel very lucky to have such a generous family. And even if DS doesn't need help, I'd like to honor their legacy and help my child as I have been helped.

[blisstwins]

My dad's father was a sharecropper all his life, but inherited some money from a childless sister when he was in his 70s and saved every penny of that for his two boys. He was determined to pass on something to them that he never had. He was a simple man who was just so committed to the idea that he could make his kids' life easier--it was really his life's work. I have never known a more generous and kind soul.

How beautiful. There is real joy is knowing you can help your children in this way and I get it.

[elephantmeg]

no, I hope to raise children who are loving, capable, giving and able to work. I hope for them to be good employees, friends, spouses and parents. At this point we are not even saving for their education, but will encourage community college for the first part (and live at home) and then state school/scholarships. I guess some of this is based on that we had no help from either parent (well a little from my parents but it was a loan and we paid it and my school loans off before we had kids). DH's parents let him live at home while he went to community college but he paid for everything else-worked part time through school and paid as he went.

[larig]

How beautiful. There is real joy is knowing you can help your children in this way and I get it.

Thanks, he was a beautiful man who lived a hard life. I miss him every day. And am proud to be his granddaughter.

[California]

On a related note... I would like to establish a nest egg for each kid that is in their name only. It would be a safety net in case they ever needed it. This came to my mind after reading statistics on abuse in relationships (one in four women). Enough to pay for a lawyer, a place to stay, and if they need to relocate or aren't working, a few months living expenses to to give them breathing room to look for a job. Obviously money I hope we'll never need to spend!

[BayGirl2]

This is not really on our list of goals, but I can understand how it is of cultural importance to some people. I also think in those cultures there may be more a tradition of children caring for their parents, so the gift of a home is somewhat reciprocal. I feel like at that point we'll be saving for our own retirement and that will be a priority.

That said if we were in the position to do so I can see contributing to a down payment vs. a wedding or education, if that's what was more important to that child when they become an adult. (Not all careers require a college education, as much as I'd like all my kids to be CEOs :-), not all young adults want a large wedding.). I think a house is generally a better investment than a wedding, but its pretty common to put a lot of $$ toward a wedding. I don't see us being in the position to do all of the above, and I think the child's personality and level of responsibility somewhat comes into play too.

My parents paid for my private undergrad degree. I was on my own for grad school and I'm now $5k away from paying it off, 11 years after graduation. DH's parents did not fund his college at all. I do think that coming out of college without debt that I was responsible for made a big difference in the opportunities I was able to seize, it did not make me less responsible. However I do think there were other things my parents did that did make me less responsible, where I'd do things differently with my kids. We are saving for college now but I already know our views about what we should cover will be different, its a point we'll need to work out as we get closer.

[squimp]

I would love to be able to help out my DD when she's buying her first house. My parents grew up extremely poor but they worked hard to make enough money to put all of their kids through college and contribute to house down-payments. We were lucky and I hope my DD is lucky too.

[hwin708]

My parents have been EXTREMELY generous with us, and I hope to do the same.

I am certain there are plenty of examples of kids who have been given money by their parents and failed to learn money management properly because of it. I am equally certain that there are examples of kids who were given nothing and still can't manage money properly. The two do not have to go hand in hand. My parents always placed a huge premium on education and academic success, and that led to kids who don't need their help. But it certainly does help, nonetheless. My career path required no-pay internships to start out. Had I needed money, I would not have been able to pursue my career at all. Now, I am quite successful, doing something I love. Thanks to my parents. I would NEVER begrudge my child that, especially not over money. I have no desire to hoard it until I die. I want my children to learn how to manage their money, but I care less about teaching them the "value of money" than I do the value of family and a career you love and pursue passionately.

There are also some things that are undeniably selfish in terms of my support. I will pay for lavish weddings, because I think I will enjoy it just as much as my mother enjoyed ours. I like going on nice vacations with the whole family, and I certainly won't want one of my kids sitting out because they can't afford it. So if one my kids becomes a wealthy stockbroker, and the other a broke social worker, is there really a lesson in work ethic while the wealthy sibling hits the beach and the social worker stays home??? Not for me. As long as my child loves being a social worker, and is happy and pursuing success at what s/he loves, then I have no problem footing the bill for a vacation they couldn't enjoy otherwise. Especially when I get to share in that vacation with them.

ETA: On the point of this being an unusual topic for your accountant to raise, I would imagine it depends somewhat on how much money you are dealing with. My money manager has discussed things like future large financial gifts, trust funds, and inheritances since the beginning. If there is enough money there for these things, I think it is common sense to discuss the possibility, so that things, such as taxes, can be planned accordingly.

[crayonblue]

Living in SoCal puts a lot of things into perspective. We have never had any trouble whatsoever finding a house we love and can afford. Move to SoCal and goodness gracious. Boy would I love to have rich parents right about now! We don't have any aspirations to make our children "wealthy" but oh my goodness, if we have the means to buy them a house here, by all means, we will!!!!

I was invited to a dinner party at a house on the beach last year. Big huge house, beachfront property, gated community, amazing, amazing, amazing. In talking to the owner she told us that her mom gave her the house. When I got home, I told DH about the house and that it was a gift and he said, "I would LOVE to be able to do that for my kids."

[KrisM]

We are saving for DC's education, but we are putting the priority on our retirement and our financial future. We would help out if our adult kids were in a bind, but personally as an adult I wouldn't feel comfortable receiving regular monetary gifts from my parents.

Us, too.

I can't imagine my parents giving me money for a house or paying for a vacation or buying a car or whatever. It would take something away from me and I'd always feel like a child dependent on mommy and daddy to help me out.

My parents would happily help us out if we were in a bind. I'd let them do that if there were no other options. And, they do gift generously and spend about $200 on both me and DH at Christmas, which is great. Otherwise they don't gift lavish amounts or things to us.

[Dream]

We will try to, and we're not wealthy by any means. That's what happens in our culture. But it doesn't mean the house it going to be all paid for. If there's a mortgage in the house they'll have to continue paying for it, if they don't like the house they can sell it. The house we live in now are my parents, when they bought it 10 years ago my name was added to the mortgage. Since we got married we're taken over the mortgage and everything else with the house. My parents live with me, they're retired and don't have to worry about taking care of the house and mortgage etc. and on the other hand we don't have to worry about leaving our kids and don't have to pay for child care.

My parents had bought another house for my brother but he's living in another country so no use of the house, we're in the process of taking over that house and paying him off. So if everything goes accordingly my daughters will have a house each.

[hellokitty]

I see this as probably a cultural issue and the OP hasn't come back to say what the background is of her financial planner. I know that many asian parents will not only fund their children's college education, but they will also pay for the wedding and even help with a downpayment, some even buy their children a home, in fact, it's not unusual at all, I know of many and it's not that their adult children are slackers, the parents insisted on it. However, as it has been pointed out, many of these cultures are ones where the parents expect their adult children to take care of them, so they see their childrens' wealth as THEIR wealth. I know that sounds like a foreign concept to many of you, but it is literally the way that many older asians think. I have an asian friend right now whose family is fighting over the grandfather's inheritance. They feel that her dad (who gets most of the inheritance, being the oldest son), should give up ALL of his inheritance to his siblings, since he has 3 children, and all of them are doctors... therefore, they believe that he is rich and doesn't need the $. Yeah, couldn't be farther from the truth, none of the three doctors is really pulling in that much right now, one is in education, one works very part time and one only works sporadically and their adult children having been brought up American don't necessarily share the same belief that their money is their parents' $ too. All of the, "help" that older generation asians provide for their adult children is usually seen as an investment in their own retirement, they feel that they will be taken care of by their kids if they help them out and that their children, "owe" them. So, there is a string attached, it's not just a free house/education/car/downpayment, etc.

As for us, dh and I are both asian american. We would like to help our children with their college education, but I think that will be the extent of our financial ability to help. Their weddings, grad school, house will be something that they will have to earn and save up for on their own. We started our careers late, due to extended education, so we are kind of playing catch up in terms of saving for our own retirement. I also feel that we will have to help support both sets of parents, so that is another factor as well and to me, it's more of an unknown cost. My parents should be financially ok, my in laws, I don't think so, basically their plan is that we and bil/sil are going to be their ATM once they use up all of their $, they didn't really save enough to retire on, they will probably be ok for the next 5-10 yrs, but anything beyond that, I highly doubt it. Once again... older generation asian thinking, retirement is banked on the success of their children, so that is another layer as to why they wish their children to be wealthy.

[pb&j]

I don't plan to create wealth for my children, but I do hope I can be supportive and generous financially with them. My parents have been that way with me. They haven't supported me since just after college, but they have given some generous gifts from time to time, and I have really appreciated it. I am responsible with money, and I don't think my parents would be so generous if I weren't self-supporting, and a hard worker. I've had a job since I was 14. I don't think that giving your children money means they'll be irresponsible with it. If you also give them financial education and a work ethic, they'll be grateful for what they receive and use it wisely.

[aa2mama]

I haven't had time to read all responses, but in short -- no way. DH and I strongly desire to do two things: 1) raise our DD in a way that teaches her the value of $$, how to manage it, and how to be self-sufficient and work for herself, and 2)have funds available to help pay for a significant portion (I actually want her to have to pay for some herself, so she feels ownership and responsibility) of her college education, so she's well-placed to start her own journey towards wealth and success after that. Now, I absolutely want to be generous to DD in life after college, but have absolutely no goal of it, and would rather have $$ in retirement funds.

:yeahthat:

[123LuckyMom]

I, too, believe that responsibility and competence with money has little to do with how much help a person gets financially from their parents. My aunt is the least fiscally responsible person I know, and she had no help from her parents. DH isn't fabulous with money, either, and he grew up poor. I grew up wealthy and did receive help from my parents. They paid for my undergraduate education and bought me a house. I officially own it outright as of last year. It's a good thing that they helped, too, because I was able to pay down nearly half of DH's outrageous student loans out of my savings (earned by myself). If I hadn't, that debt would have crippled our early life together. It was very rough going even with that help!

I believe in helping those who help themselves. If you have the money, and your children are responsible, hard working people, bless them with your generosity!!! It will ease their way but will not spoil them. I know exactly how much I will inherit. It is a tiny, tiny portion of my parents' wealth, most of which is going to philanthropic efforts. If I invest it wisely, it will help support me in my old age and enable me to help my children in ways I would not otherwise be able. It will not be enough to make me wealthy, by any means, but it will be enough to enable me to be safe from poverty in my old age and to be more generous with my own adult children.

I don't intend to try to make my children wealthy, or myself, for that matter! I hope to be able to provide my children with an undergraduate education at the very least and, I hope, a little safety net for their own savings. When I pass, I hope to leave them what was left to me, and I would expect they would do the same for their children.

[BabbyO]

My goal is to teach my children to manage their money responsibly, value a hard day's work, and do my best to have DH and I set for retirement so my kids don't have to worry about us. We're trying to save some for their college - but frankly, we won't be able to put them through. My parents couldn't pay for my siblings and I either.

I think kids get way to many handouts these days. I don't even believe in allowance unless they've EARNED it. And I don't mean the household chores they complete because they are a part of our house and responsible for it as much as DH and I are. I mean extra chores they complete to earn $$. Paying for grades - I won't do it. I guess I'm a hard@$$.

[larig]

I see this as probably a cultural issue and the OP hasn't come back to say what the background is of her financial planner. I know that many asian parents will not only fund their children's college education, but they will also pay for the wedding and even help with a downpayment, some even buy their children a home, in fact, it's not unusual at all, I know of many and it's not that their adult children are slackers, the parents insisted on it. However, as it has been pointed out, many of these cultures are ones where the parents expect their adult children to take care of them, so they see their childrens' wealth as THEIR wealth. I know that sounds like a foreign concept to many of you, but it is literally the way that many older asians think. I have an asian friend right now whose family is fighting over the grandfather's inheritance. They feel that her dad (who gets most of the inheritance, being the oldest son), should give up ALL of his inheritance to his siblings, since he has 3 children, and all of them are doctors... therefore, they believe that he is rich and doesn't need the $. Yeah, couldn't be farther from the truth, none of the three doctors is really pulling in that much right now, one is in education, one works very part time and one only works sporadically and their adult children having been brought up American don't necessarily share the same belief that their money is their parents' $ too. All of the, "help" that older generation asians provide for their adult children is usually seen as an investment in their own retirement, they feel that they will be taken care of by their kids if they help them out and that their children, "owe" them. So, there is a string attached, it's not just a free house/education/car/downpayment, etc.

As for us, dh and I are both asian american. We would like to help our children with their college education, but I think that will be the extent of our financial ability to help. Their weddings, grad school, house will be something that they will have to earn and save up for on their own. We started our careers late, due to extended education, so we are kind of playing catch up in terms of saving for our own retirement. I also feel that we will have to help support both sets of parents, so that is another factor as well and to me, it's more of an unknown cost. My parents should be financially ok, my in laws, I don't think so, basically their plan is that we and bil/sil are going to be their ATM once they use up all of their $, they didn't really save enough to retire on, they will probably be ok for the next 5-10 yrs, but anything beyond that, I highly doubt it. Once again... older generation asian thinking, retirement is banked on the success of their children, so that is another layer as to why they wish their children to be wealthy.

I think you are right about it being cultural. We are not Asian, but are a family with ties to the US so far back that I've only been able to trace ONE family back to Europe. Genealogy has put things in perspective for me. Generation after generation in my family of farmers parents lived with children, and people stayed together, even when they moved west they did so together. They had to take care of one another, because they had little means to do otherwise. What little a family had was carefully tended and passed down. People saw the larger family unit as succeeding or failing together, whereas I think some in this thread are expressing that success or failure is measured by an individual family, not the extended multi-generational family. It's a matter of perspective really.

And, to those of you who have been able to "succeed" on your own, that's fantastic. But, I feel no less pride in what my family over-time has accomplished, and hopefully I will add a little to that legacy through hard work of my own.

[arivecchi]

I think the issue with giving money to adult children is that it can become a crutch. DH and I both have relatives who depend on help from their parents for childcare, purchasing a house, even their vacations! It's too much IMO. I guess I just don't get that viewpoint since I've been completely independent since I was 18 and just cannot fathom ever asking my parents for anything. They have their own selves to worry about. As with all things money, opinions can vary greatly and are so so personal.

[♥ms.pacman♥]

I think the issue with giving money to adult children is that it can become a crutch. DH and I both have relatives who depend on help from their parents for childcare, purchasing a house, even their vacations! It's too much IMO. I guess I just don't get that viewpoint since I've been completely independent since I was 18 and just cannot fathom ever asking my parents for anything. They have their own selves to worry about. As with all things money, opinions can vary greatly and are so so personal.

:yeahthat:

i totally agree. Our plan is to pay for kids undergraduate educations and then possibly chip in for their wedding or some baby items once they have their own kids. I agree that parents paying for things like vacations, cars, or buying them a house is a foreign concept to me. maybe that's because in our case, each generation was way better off than the previous one (my dad grew up in a house in the Andes mountains, with dirt floors and a "bathroom" outside), so yeah, they had their own selves to worry about and it's not like they had extra money to be able to buy their kids luxuries.

And like Montreal Mum (i think?) said, i thought that this thread was going to be about giving your kids the tools to become wealthy on their own when they grew older..that is entirely different, IMO than buying your kids a house. like codex said, i'd be wary of this financial planner using this tactic.

And i do get that it's a cultural thing..i guess I just disagree with that aspect of the culture. :) Both DH and I are from cultures (South American, Mexican-American) where parents paying for things for their adult children is very, very, common (most people live with their parents until they are married, and often live in the same house, and are somewhat dependent on their parents).however I personally disagree with that philosphy, as my own parents did (maybe that's why they left and came to the US, lol). Both DH and I have experience with relatives (aunts & uncles, and their adult children) where one or more adult kids essentially leeches off the parents....never buys their own home, has kids, kids live in the house and have their own kids and they are completely dependent on their parents, even at 40+ years old. There is no motivation to become independent, and I guess for my kids that worries me more than than anything else.

[larig]

:yeahthat:

i totally agree. Our plan is to pay for kids undergraduate educations and then possibly chip in for their wedding or some baby items once they have their own kids. I agree that parents paying for things like vacations or buying them a house is a foreign concept to me, i guess because in our case, each generation was way better off than the previous one (my dad grew up in a house with dirt floors and a bathroom outside;), so yeah, they had their own selves to worry about.


My parents too. My mother did not have electricity until after WW2, when she was 10 or so. Her father was born in 1894, and his father died when he was 10. He had to start working to help the family after that and never finished school. Mom put herself through college. Dad put himself through college by joining ROTC and serving for 2 years in the army.

[edurnemk]

I met with my financial planner who I've worked with for well over a decade. During the course of our meeting while talking about retirement/long-term planning, he mentioned that I may want to buy DD a house and wouldn't I want her to be wealthy (well, he said it more like DD not having to struggle to buy a house, get a family started, etc.).

I was a bit taken aback. It never crossed my mind that I should consider buying DD a house or that I should try to make her wealthy. One of my main financial goals is to make sure DD has a wide variety of options when it comes to her education, from public to private to Ivy League. If I'm able to help her buy her first place, then I will. However, as I sit here today, I don't think I'm working and saving to make DD wealthy or to provide her with significant financial support after she's an adult.

Do you plan on leaving an "inheritance" to your children, or helping them financially after they graduate from college?

This is actually pretty common in my circle, lots of people I know were gifted apartments by their parents when they got married or graduated college or whatever. I also know of a few people who not only got a luxury condo or house but they keep receiving money from their parents after marrying! I don't agree with it, and neither do my parents (my uncle was one of the ones who got a very nice apartment for each of his 3 sons). It really strengthens the entitlement attitude that is so prevalent, and goes against my parenting goal of making my kids self-sufficient people. My parents and IL's did chip in towards our down payment as a wedding present, but they didn't give us the whole house!

As far as our plans, we will help them out after college a bit, as in let them live with us a couple of years or whatever if they can't get by on their salary. We do plan on paying 100% of their college tuition, so they don't start out with debt, our parents did the same for us. I know my parents have set up a trust fund for my brothers and I, for when they pass, but I don't feel they are obligated to inherit me anything and I keep telling them they should just take the money and travel around the world. I hope I can inherit something to my kids, but I won't be buying them houses!

[Mommy_Mea]

We can barely afford a house for ourselves! Our extra money is going towards retirement and some college savings. Our plan is to pay for a portion of the kids education, but expect them to take on some loans themselves. Both of our parents did this, and it provided us some "buy-in" to the educational expenses and decision making. Made us a little more responsible for our choices in college.

We will provide small gifts for weddings and house purchases, but that will likely be a surprise, and nothing that the kids should bank on.

In general, our goal is to raise self-sufficient, money-savvy adults (best laid plans??). Any money/support they get from us will be a surprise or special gift.

When both of our parents have spoken with us regarding estate planning/inheritance, we have told them that we would be happiest if they spend every penny enjoying themselves in retirement. It is their money!

[StantonHyde]

My parents paid for very expensive colleges for my brother and I plus helped out some with graduate school--put money toward housing and paid car insurance. They gave each a used car in grad school. They paid for a new car when we got out of grad school. They paid for my wedding and gave my brother money for his. They gave me a very big down payment for my house.

None of this was given "free of charge". We had to have good grades in school and keep our noses clean. We were also told--very clearly--that it was our responsbility to educate our children or to educate 2 people if we chose not to have children. Education is an extremely high priority in our family. With the house--we showed that we were mature, could hold down good jobs, manage our money etc. So these were huge helps but not a crutch. I was very happy to take the money.

We lived so frugally when I was a kid that it was insane. That is why my parents had money to give us. My parents didn't make tons of money but they saved like crazy.

My intention is to pay for college educations at good schools and certainly to pay for weddings. We will probably figure out a way to give each kid a used car. As for house down payment--that's pushing it.

The bottom line is that people need money when they are starting out--so why not give it to them then? Leaving an inheritance for someone to get when they are older and established doesn't make much sense to me. If you can afford to give it to your kids, you should. With responsibility strings attached of course.

[minnie-zb]

Do we have plans to leave our children a lot of money? No -- not unless there's a drastic change in our earning power.

But if I had the money, I wouldn't save it for when I died, I would do things to make the quality of my life and theirs better.

[egoldber]

The bottom line is that people need money when they are starting out--so why not give it to them then? Leaving an inheritance for someone to get when they are older and established doesn't make much sense to me. If you can afford to give it to your kids, you should. With responsibility strings attached of course.

I'm beginning to think this more and more. My ILs have done some of this with their kids. DH and I did not really need a lot of help with housing. We were fortunate. But my ILs gifted both SILs money for to help with downpayments on houses. My ILs are tracking this money and it's borrowed against their "inheritance".

This did not get them luxury houses, but it did help them get a bit nicer than a starter home in neighborhoods with good school districts vs. having to live very far out or in areas with not great schools. My ILs and SILs are very frugal, so it has certainly not affected their attitudes about money. Honestly, I think part of that is nature and part is what our kids observe in our behaviors.

Also, it is such a different world now than I was in college. College at a decent state university was very affordable 20 years ago. That is much less the case now. The college scenarios our financial planner has us saving for are scary expensive. $55K per year for private college and $25K per year for state schools. Scholarships would be nice, but again are FAR more competitive than they were when I was in school. I would really prefer my kids not to graduate from college in deep debt.

Helping kids out with housing, preventing student loan debt, etc. these are how kids can get a leg up on their own retirement savings and saving for THEIR kids college tuitions. Of course our own retirement savings come first, but after that, helping our kids out is a big priority.

[niccig]

Also, it is such a different world now than I was in college. College at a decent state university was very affordable 20 years ago. That is much less the case now. The college scenarios our financial planner has us saving for are scary expensive. $55K per year for private college and $25K per year for state schools. Scholarships would be nice, but again are FAR more competitive than they were when I was in school. I would really prefer my kids not to graduate from college in deep debt.

Helping kids out with housing, preventing student loan debt, etc. these are how kids can get a leg up on their own retirement savings and saving for THEIR kids college tuitions. Of course our own retirement savings come first, but after that, helping our kids out is a big priority.

This is how I feel. DH's parents paid for college and it was easier on him starting out not to have student loans to repay. I know people who have graduated with $1000 a month student loan repayment. That's very difficult to manage on a starting salary. My goal is similar - save for our retirement first, then help as much as we can with college costs and starting out. DS will still have to work and nothing will be a free ride.

I'm due to inherit some money from my grandmother's estate, it's not much but it'll be going to DS's college fund.

[lovin2shop]

I work for and with many very wealthy families. Being exposed to it on a daily basis, I would say that high wealth is one of the very last things on my list that I want for my children.

[janine]

I don't look at this as a question of wanting to help our kids out as much as we can -- we all want that. Maybe it's more different perspectives on whether "helping" or giving financially well into adulthood is truly helpful in the long term. I don't think some help with downpayment would negatively affect anyone long term (but I wouldn't do this), but to continually financially support the adult child does create dependence IMO.

Now I can't say for sure, but I have many wealthy friends from prep school and when I returned for reunions I was shocked at how many were floundering when give such opportunities. One of my best friends was still being supported by her parents and still soul searching. She is 41. She had bouts with drugs and aimlessness. She isn't the only one though (although not all with drugs, but the aimlessness and wandering well past 30's is the repeating theme). It may just be a coincidence but the common thread I saw was parents who were both extremely lax (maybe clueless) and wealthy enough to fund their adult children's rent/homes and travel indefinitely.

The culutural aspect is in a different category to me though - I can't relate, but I can respect it.

[BabyBearsMom]

I want to be able to give my children a high quality life while they grow up (quality time with parents, all needs and many wants satisfied, good memories of vacations and family time etc.) and I hope to be able to pay for all of their undergraduate so they don't have to take out loans. I also hope to make sure that I am not a financial burden on them as I grow older. The rest is up to them. If I had the money available, I would also consider helping them with grad school or to buy a house. But I would prefer to retire and live close to them so I can help them when they have children of their own. I know that I spend $$$$ on daycare and helping to cut that cost for them would be a greater contribution IMO

[sntm]

I don't look at this as a question of wanting to help our kids out as much as we can -- we all want that. Maybe it's more different perspectives on whether "helping" or giving financially well into adulthood is truly helpful in the long term. I don't think some help with downpayment would negatively affect anyone long term (but I wouldn't do this), but to continually financially support the adult child does create dependence IMO.

Now I can't say for sure, but I have many wealthy friends from prep school and when I returned for reunions I was shocked at how many were floundering when give such opportunities. One of my best friends was still being supported by her parents and still soul searching. She is 41. She had bouts with drugs and aimlessness. She isn't the only one though (although not all with drugs, but the aimlessness and wandering well past 30's is the repeating theme). It may just be a coincidence but the common thread I saw was parents who were both extremely lax (maybe clueless) and wealthy enough to fund their adult children's rent/homes and travel indefinitely. it.

I went to school in eastern Kentucky and have many relatives who have been on welfare. My high school reunion has gobs of people who are aimless and on drugs, and they were from families who didn't have the money to support them! So I agree that how you teach your kids about money is as if not more important than how much money you spend on them

[Nooknookmom]

I work for and with many very wealthy families. Being exposed to it on a daily basis, I would say that high wealth is one of the very last things on my list that I want for my children.

Haven't read anything else but I cannot agree with this statement more!!! I work with a LOT of uber wealthy and have family (not me!) in a wealth situation. It does not solve life's problems and may create them.

I want my children educated, happily employed and financially savvy. I'm trying to teach them to have a LOW debt to income ratio. I just want them to not STRESS about money and have the things they need. I don't want to create superficial materialistic adults. Quality clothes and the occasional reward is fine but I do not want to teach them overindulgence!

Something DH has never understood and it has been a wedge for years with me. He never looks down the road and always wants to buy now pay later-kills me.

[westwoodmom04]

I wouldn't say it is a goal of ours; but I would help our children if we had the capacity to help and they needed it. My parents paid for my undergrad and wedding; and my in-laws gave us most of the down payment for our first place (although we gave them the money back when we sold the place at a big profit). If you do manage to be very financially successful, there are tax advantages to gifting the money to your family members while you are still living, and frankly, that's when your kids are more likely to need it. That said, we are raising our kids to support themselves and would never give them an expectation that things would be otherwise.

[Philly Mom]

I wouldn't say it is a goal of ours; but I would help our children if we had the capacity to help and they needed it. My parents paid for my undergrad and wedding; and my in-laws gave us most of the down payment for our first place (although we gave them the money back when we sold the place at a big profit). If you do manage to be very financially successful, there are tax advantages to gifting the money to your family members while you are still living, and frankly, that's when your kids are more likely to need it. That said, we are raising our kids to support themselves and would never give them an expectation that things would be otherwise.

I believe similar. My parents paid for undergrad and helped with law school. DH's parents don't have extra resources but he lived at home during university and his first few years working. He went to school in the UK so no loans. My parents also give us generous gifts now of things they know we are saving to buy. We don't need their help and don't ask for it, but it is very appreciated. Both my brothers have needed their help more and have asked for it. My brothers are two of the hardest workers I know. They just have each held jobs that don't pay as much to cover certain expenses my parents find important, mainly related to education for them or my nieces. All three of us have held jobs since we were teenagers even though we didn't need to work nor were asked to or expected to. I also was helped with my down payment on our first house from gifts made by my grandparents when I was younger that I saved. My brothers did the same. We are very thankful but if I had to guess we will all work into our 60s or even 70s regardless if we need to. My dad (over 70) works full time and will never retire. His father never retired either.

[wendmatt]

I want to be able to give my children a high quality life while they grow up (quality time with parents, all needs and many wants satisfied, good memories of vacations and family time etc.) and I hope to be able to pay for all of their undergraduate so they don't have to take out loans. I also hope to make sure that I am not a financial burden on them as I grow older. The rest is up to them. If I had the money available, I would also consider helping them with grad school or to buy a house. But I would prefer to retire and live close to them so I can help them when they have children of their own. I know that I spend $$$$ on daycare and helping to cut that cost for them would be a greater contribution IMO

This is exactly how I feel. We have a college fund with some in it and 2 yrs of GI bill, so have told DD that we'll pay for college, after that it's up to her. We'll help out where we can if we can, but it is not a goal of ours to be able to gift money.

[Binkandabee]

I work for and with many very wealthy families. Being exposed to it on a daily basis, I would say that high wealth is one of the very last things on my list that I want for my children.

This is precisely how I feel. I also work with wealthy families and I've seen time and time again how wealth can negatively impact a child's self worth and purpose in life. It doesn't always happen, but it certainly happens more often than not in my experience.

We will help them through college. I don't intend to pay for their college entirely because I think they need to have a financial stake in their education. We have saved a small amount every single month in a 529 since the day they were born, so there will be a decent amount for them.

Both DH and I both stand to inherit a decent amount of money one day. But we've discussed that we're not going to live our lives dependent on doing so. We save for retirement every month and have done so since the day we got married. We don't impulse buy anything. I'm seeing these skills rub off on DD#1 who is 9....and that makes me VERY proud.

My goal is to give them the tools for them to create their own wealth....whatever that may be.

[div_0305]

I'm worried about fully paying for college, since the only classmates I had in college who didn't care if they flunked or not were those whose parents were paying for their college. They sneaked and hid from their parents until it was too late for the parents to pull the plug on paying for college (or carried too few credits per semester to graduate on time). I thought it was so selfish of them. Now, my colleagues are telling me the same stories of their kids and how hurt they feel that their kids carelessly squandered the parents' hard-earned money. These colleagues lived frugally to save money for college tuition---making 6 figures, but driving old cars, foregoing vacations, nice hair cuts and clothes, etc.

Since I had to pay for college the whole way, I was accountable and responsible. A friend's father paid for her sisters' house, but that sister lives way beyond her means because she has no mortgage to bring her down to earth.

[maestramommy]

I can't even imagine doing something like that. We have 3 kids. Are we supposed to buy 3 more houses?

I'd find another financial planner.

[sunnyside]

I work for and with many very wealthy families. Being exposed to it on a daily basis, I would say that high wealth is one of the very last things on my list that I want for my children.

Agreed. While I want my children to be able to support themselves, I can see how the focus on money and success can sometimes have a negative effect on quality of life.

My aim is to raise my children to be independent and financially responsible and with an understanding of how to lead well balanced lives.