I have to admit… I don’t have a definite answer for this one.
My wife and I have different views on this.
Generally, my wife thinks we owe the kids everything we can possibly provide for them. She came from a family that didn’t have much and had to struggle. She wants to make sure our kids don’t go through what she endured.
I grew up in a similar financial situation. In fact, for a short time at the end of high school, I was homeless.
As a result, I think we owe our kids a lot more.
I think we owe them the opportunity to struggle and “enjoy” the results of their own decisions.
If you think about people who are really happy, they are often the people who have overcome real challenges in life.
Most people become really alive once they do something for themselves. They paid off their debts or they built a small business by their own hard work. Mommy and daddy didn’t do it for them.
But those who receive without working for it struggle to find mean in their lives many times.
A few days ago, my daughter got her first paycheck from a job she got completely on her own. Her check was for $210.93.
Rest assured, I’ve given her much more than that on any number of occasions.
But she was more excited about ripping open that envelope and getting her paws on that check than by anything I could have given her. She kept talking about the joy of money earned – not the joy of money received – for days.
You can’t buy that kind of happiness, my friend.
I’m not suggesting that you stick a parachute on the back of your kids and drop them into Kandahar Province or Mogadishu.
But I do suggest that you really think about how you support your kids.
And while you’re at it, you might consider your real motive for what you give your kids.
I think we give our kids all this ‘stuff’ because we are selfish.
Rather than allow our kids the opportunity to struggle – and possibly fail… We spare them that experience because we don’t want to feel guilty.
We want to feel good about ourselves. Our giving is about us, not about them.
But at what cost?
Are we willing to send our kids out into the world without the toughness they need to make smart decisions?
Sure you should provide counsel if they are willing to listen. I may be going to extreme, but I share my entire financial plan with my kids. And they’ve started asking good questions about IRAs, life insurance, health insurance, and retirement planning.
Ever wonder why so many people get into credit card debt?
Ever wonder why so many people have spending problems?
Puzzled as to why folks can’t balance their budget?
Why do so many people need to improve their credit score?
Perplexed as to why throngs of people have no idea how to manage their money?
It’s because their parents never let them make financial mistakes.
When I was 14, I sold flowers every Friday and Saturday night. I earned minimum wage at the time – $1.65. I’d earn about $6 a night.
After work, I usually spent about $4 “living large” at McDonald’s. So after 4 hours of work, I had $2 in my pocket. Amazingly stupid of me, right?
It gets worse.
I did this for 2 years before I wised up.
I still sold flowers at age 16 because I couldn’t find anything better, but I started packing my own dinner. As a result, my earnings went up by 300%.
Do you think I forgot that lesson?
Well, I’m 53 now and my wife will tell you that the odds of seeing me in a restaurant are lower than seeing Big Foot in a restaurant.
I learned the lesson of being mindful of how I spent money, and that lesson stuck.
Tell your 14-year old ‘NO’ – you can’t have that skateboard unless you work for it.
Do that a few times. If you do, you won’t have to tell him to go find a job when he’s 30 and still watching Dr. Phil from your living room.
I’ll do you one better.
Let you kid go hungry if he’s mismanaged his money. Let her lose her car if she gets towed.
Don’t bail them out.
These are hard lessons. In fact, I find it hard to apply this approach myself.
But when I do, it always pays off for my kids.
And I owe them that.
14 Responses to “How Much Do You Owe Your Children?”
It’s not that easy when there are grandchildren involved. I do everything I can to help my children keep their heads just barely above water. My son was recently promoted at work which caused him to be transferred to a new location. Now he is away from home more due to his commute, plus the extra cost of gasoline. Because of his commute, he can’t get home in time for his wife to go to work, so now they have lost her income. Now he can’t make his car payment. If he loses his car, he can’t go to work. If he can’t go to work, he can’t pay his rent. If he loses his home, his family will have to move in with us. I don’t want that – so if my paying his car payment prevents him from moving in with me – then you are right I am selfish. My husband doesnt see that. He thinks my son and his wife are not trying hard enough because they know I will bail them out. This is an argument that we have weekly. I dont know what the answer is.
If you allow your children to make mistakes early on, then have trials as a result of those mistakes, you’ll save them bigger mistakes down the road. The stakes get bigger with every major life change. High schoolers don’t typically have their financial futures heavily dependent on their present-day actions. At 30, I know that my actions today have a strong bearing on my finances for decades to come.
My brother-in-law’s family is a great example of too much helping and not enough parenting. They have 4 kids, 3 still live at home and are in their 20s or early 30s. The oldest of the 3 has 2 kids, she has visitation rights only, she lost all custody and then moved back in with her parents. The parents are at retirement age, broke and in debt. They have 3 jobs between the 2 of them and they still can’t get ahead of their kids’ “needs”. One of the younger kids wants to move out, but has very little concept of setting financial goals and doing what needs done to reach them.
They need autonomy so they can learn and succeed…but you get bigger success with bigger risks, so they need a safety net that allows those risks to be taken.
It’s a really hard balance to find.
I think the ability to see the value to your children in their struggle is important, along with allowing them to struggleand solve things themselves.
One missing component that is often missing is givingguidance to your children. Both of my parentsdid notparent me in this way in terms of the nuts and bolts,week to week aspect of managing one’s money.
What I mean by this is, taking , the flower sales example, if your parents had said to you “yes,you can work, and every week we will write up a business report together that outlineshow much you worked, how much you earned, and what you did with the money so you can learn how to manage your money.” and showed you how to a) track your income and expenses b) form goals and budget–then that would have been a gift of equal if not greater value.
Allowing your kids to flounder unnecessarily and have to invent the wheel for themselves is the end result of not giving them proper financial guidance and oversight. They should know how to budget and track their income/expenses–and should have practiced it with your help until it is verified skill and habit that they have, not just head knowledge. This is exactly where my own parents failed to parent me in terms of money. They gave me the means to earn a significant income for a kid (I worked for pay in family businesses from
the time I was 13) and lots of financial autonomy without effective skills to maximize and control my finances. While Iwas not a total financial disaster, it took me till the age of about 35 to learn to effectively budget, and till the age of 40 to break even with zero on my net worth due to credit card expenses from lack of effective financial controls and nonexistent financial goals in my 20sand early 30s, and till the age of 40 to master
budgeting to the point that I don’t even have
to think about doing it (in other words, it is
so natural that I wouldn’t imagine trying to
do without it).
That lack of knowledge–failure to pass
knowledge and methods along–cost me a lot of
money and life opportunities.
I will agree, don’t bail your kids out of money mistakes. Give them the time proven tools and methods to deal with their finances, though. That’s like passing on Grandpa’s set of wrenches or Grandma’s cast iron frying pan. My great aunts had a record of all money that came into and out of their household for their entire adult lives. It was just a way of life for them to record every expenditure in a notebook.
Somehow that knowledge, which is a much more useful heirloom than a single 120 year old cast iron pan (I’ve got one of those from my family and don’t get me wrong, it’s great) that served them so well didn’t get passed on to me as a young adult.
so, yes, let your kids struggle, but don’t put them in a position where they have to struggle unnecessarily. Teach them how to budget, how to track their money, and make it a ritual. Then they will have much more ability to make better decisions on their own–and you can let go and watch them learn through their efforts..
I think the ability to see the value to your children in their struggle is important, along with allowing them to struggle and solve things themselves. ]
One missing component that is often missing is giving guidance to your children.
In the flower example, if your parents had said to you “yes, you can work, but every week you need to write up a business report that outlines how much you worked, how much you earned, and what you did with the money” and showed you how to a) track your income and expenses b) form goals and budget
then that would have been a gift of equal if not greater value.
allowing your kids to have to invent the wheel for themselves is the end result of not giving them proper financial guidance and oversight. They should know how to budget and track their income/expenses–and should have practiced it with your help until it is verified skill that they have, not just head knowledge.
This is exactly where my own parents failed to parent m in terms of money They gave me financial autonomy without effective skills to maximize and control my finances. It took me till the age of about 35 to learn to effectively budget, and till the age of 40 to master it so I don’t even have to think about doing it (in other words, it is so natural that I wouldn’t imagine trying to do without it).
That lack of knowledge–failure to pass knowledge and methods along–cost me a lot of money and life opportunities.
I think that you want to find the right balance. You don’t want to spoil or pamper the kids but you also don’t want to act like a drill sargent and deny them everything.
I am of a similar mindset, not because I had it hard but instead because I had it too easy.
I had to learn all those hard lessons as an adult – much harder, and frankly bigger consequences.
We’re doing very well now, but I am clear with my children, your needs are COVERED. Your wants? Some of them, sure, the ones that we think are worth spending OUR money on, the rest? You’re on your own baby.
They get a small allowance to allow them, not to succeed in getting what they want, but to FAIL and learn from it.
The same will happen with jobs as they get older . . .
I’d much rather they learn these lessons while they still live under my roof [and frankly when they’re still SUPPOSED to be living under my roof!].
We owe it to our children to teach them how to succeed on their own and make good decisions. We can provide for them enough to live, and whatever extra we can afford. But the most valuable thing we can give our children is the ability to make their own way in life. Sounds pretty deep, doesn’t it? Didn’t mean it that way.
It’s for dramatic
My kids are 22,19 and 11.
I send my financial reports to my wife and two older kids. They see EVERYTHING.
Maybe that’s a mistake but it has worked out well. They see how much it costs us to live and how much money it takes just to survive.
They see our investments too so they know we don’t live in a bubble. When the market crashed, our investments and income dropped.
That was exactly the same time as my middle child got into NYU and Berkeley School of Music. By seeing what was happening to our business and savings, it was easier for HER to act like part of a team when we talked about her college choices.
Why is every paragraph one or two sentences?
Got to admit that I struggle with this one also, and my wife and I have somewhat different views – she wants to provide the feathered nest (that maternal thing) while I am more inclined towards letting them figure it out on their own. Knowing that, ultimately, I will never this argument I look for those opportunities for the kids to learn life lessons, and supplement that with lots of teaching on philosophies re: debt, retirement planning, budgeting, and overall financial planning. Both my kids are in their early/mid 20’s and it appears that some of the lessons are actually beginning to take hold. Hallelujah!!
Neal: You’re right about how difficult it is to let your kids struggle and find their own way, and I’d imagine it will only get harder as they get older.
I’m curious, when you talk finances with your kids, how specific do you get? Do you just talk about tools, strategies, etc., or do you talk about amounts, account balances, and so on?