The Millionaire Next Door

[*anj*]

Dh is reading a really interesting book called The Millionaire Next Door. It's all about the ways that the truly wealthy spend money as opposed to the way that others spend it. It has a lot of really interesting points, but the one I would like to talk about today is the following. This is an excerpt from dh's email to me:

 

his book has a very insightful chapter on the effects of "economic outpatient care" that parents provide to their adult children. Research demonstrates that the more dollars adult children receive (from their parents), the fewer dollars they accumulate, while those who are given fewer dollars accumulate more.

 

I couldn't help but think of (his younger sister.) The authors refer to this as weakening the weak. I know my Mom has "helped" (younger sister) over the years (she also has been generous to us), but the net effect has been that she has subsidized (Sis) to such an extent that she is nearly 40 years old and as financially dependent as ever. I think letting her and (her husband) live in (mil's house that she doesn't live in) for lo these many years has been much more a curse than a blessing because it has enabled (Sis' dh) to live off the sweat of someone else's brow.

 

If (Sis) is not able to turn her finances around, the predictable pattern is that whatever inheritance she receives from my Mother will be squandered within 3 years.

 

What do you think about this? Can parents be too helpful to their adult children in the financial realm? Do you think that his argument has merit?

[C_l_e_0..Q_c]

My parents helped me out numerous times, and I am financially independent, with enough money stashed away for our retirement already.

So there's at least one counter example.

 

My dad provided the cash down for my first condo. It was a loan, which I repaid as quickly as I could.

He also provided part of the cash down for my first house with my husband. Turns out the condo sold too fast (we had planned on two years at the time, and it took two months!) and we didn't have the time to accumulate the money. So once again Dad stepped in.

 

He helped my sister just as much. All loans were repaid. He never helped my brother cause he was never in need - he makes a huge salary, in the 6 digits and the first one is not 1, is not married and has no kids. The brother is the one who squandering his money left and right. The only reason he's not bankrupt is the huge salary he brings in.

[GothicGyrl]

I most certainly think it does have merit, but I also believe it is a case by case situation.

 

Obviously, for your DH's sis, it would apply.. but for me, it did not. If it wasn't for my mom/grandma helping me as much as they did (almost as much as this quotes), I would not be where I am today--which is a point in my life where I am no longer "robbing peter to pay paul", debts are getting paid off on time and correctly, etc..

 

I still have problem holding down a job/finding one, but that's because I can't stand morons. ;) I have a tendency to call people on their BS, especially when my meter is snapping off the chart. Which in turn, gets me in to trouble. I just can't not care about it, kwim? But it isn't my mom's fault that I don't find work easily.

 

But for your DH's sis, I would say this does apply and I've even met some like what the quote is speaking about.

[Mrs. Readsalot]

I have read the book and also found it a great read. When I read the section you are asking about I thought Wow how true it that. I have seen it many times. Adults who have parent that are there to lend/give etc money don't have as much motivation to earn it themselves, why should they.

My dh and I have had to work hard to get ahead, we have never had our parents help us. Actually my mom stole a significant amount of money from me(long story and not the time or the place) Earning our own way has given us a heathy respect for working hard and the value of money. We are teaching our ds this same respect and he is a great saver. He works summer jobs and thinks carefully before he buys something. I feel that parents that give to their children in excess are doing them a great disservice. In some ways they may be crippling them financially.

[abbeyej]

I think generally speaking, yes, it's true. That doesn't mean one can never help out an adult child -- but a one-time gift or loan is different than ongoing support. Both of my parents have (or had) siblings who play out this scenario very clearly. It's both heartbreaking and disgusting from the outside (and the pain caused by those relationships to *both* sets of grandparents has been horrific).

 

But occasional help can really, occasionally, be a help! ;) When we were first starting out, my parents sold some items they had that were no longer in use, so they could help us out. It was a one-time thing, it came at a time of transition in our lives, and it was never something we expected or thought we "deserved". I know my parents received some money from my grandparents at a similar time in their lives, though in the end, they had regretted taking it. (Too many "strings", too much obligation, not to mention seeing what that did to my uncle.)

 

Overall though. I've seen ongoing support cripple several family members -- or, at least, allow them to remain in a sort of perpetual adolescence. And adolescence isn't always that pleasant when it's a teenager -- it's a lot uglier when the adolescent is in his or her 30s, 40s or 50s.

[Guest Virginia Dawn]

I'm going to say yes. I think my opinion has a lot to do with my upbringing. My parents never expected to get a penny from their parents, and they lived accordingly. In fact, though they were by no means well off, they helped my grandparents financially throughout their retirement years.

 

When I got married and left home, I never considered my parents as a source of financial help at all, and neither did my brothers. In fact dh and I loaned my parents and his older sister money a few times, and they paid it back promptly. Now that my parents are much more well off than we are, they have given occasionally given us money to "help out." But we never asked for it, and I would be very embarrassed to do so.

 

I think any kind of expected welfare, even from relatives, leads people to be less ambitious, frugal, or hardworking then they would be if they had no choice. If parents help their children too much, they never become truly independent, and their expectations become unrealistic.

 

IMO our culture has completely lost touch with reality. Our prosperity over the last few years has made us fat, lazy, and greedy. Children have not seen their parents pinching pennies, or saving for a rainy day, so they are not inclined to do so either.

[Elisabeth in IL]

I think that this could be the case but it really comes down to the character of the people you are giving the money / help to. I have received help from my parents but it has not been monitory help. We also received help from our church which was monitory but it was not on-going and it was for a specific hard unemployed time that we were experiencing.

 

One of the same friends who helped us out, has helped out his sis for a number of years and he feels that he has enabled her and has done her a great disservice in the long run. It is hard when you love the person and are wanting to help.

[elegantlion]

I read that book several years ago and appreciated the insight. My parents have helped us out many times. Most time they have given because of their desire to give without repayment asked.

 

I do believe you can cripple an individual by giving too much. Too much is not necessarily a dollar amount, but would include frequency and lack of accountability. I think parents sometimes feel "guilty" about their children's lack of skills that they feel they must pay. I know my parents didn't teach money skills, they expected the school system to do that. :confused:

 

We have had some rough times in the past and our ds10 has seen us persevere through them. We have been very purposefully teaching our son money management skills since was very little. At 10, he has a maturity with his money, that I didn't even have as a young adult.

 

IMO, money management should be a part of every homeschoolers curriculum.

[Myrtle]

"...she has subsidized (Sis) to such an extent..."

 

The devil is in the details, isn't it?

 

Many readers will interpret too much of a subsidy as any money at all, and others will interpret it to the other extreme.

 

Back in the 80's a friend of mine had a millionaire father who so ardently believed in the value of lifting oneself by one's bootstraps that he turned down the request of his uninsured 19 yo son, who was an honor roll college student working full time, for financial assistance paying for dental care. He also didn't pay child support to his ex-wife for this child either. So this kid really got a good dose of learning financial responsibility as he grew up in a series of tiny apartments.

 

My friend didn't become a millionaire like his father and ended up with a tooth extraction as well. He did get his degree though and ended up with a mundane job like everyone else.

 

There are cases in which kids end up in jail and the parents believing that a court appointed attorney for their indigent child will result in justice for their child and thus don't contribute to the legal defense of their child. They regretted that decision when the kid was sentenced to 40 years in prison.

 

I know of another case in which the adult child going through a divorce needed money for an attorney, didn't get it, and lost custody of the kids, resulting in the grandparents not being able to see their grandkids.

 

Seems to me that cases of financial assistance to relatives and offspring should be considered on a case by case basis: Is this adult child generally responsible with his finances? Are they making progress towards independence? Is the request for something they genuinely need or are they making a request to have a particular lifestyle subsidized? Does the kid need help making it through a crisis that more or less struck like a meteor?

 

Any study that doesn't take into account the context under which the financial assistance was given and instead just looks at the total amount of money is flawed.

 

Finally, there is always the selection bias involved in who needs to the money to begin with: The incompetent, the immature, the mentally ill, etc. Of course, if you compare the kids who never ask for money (those who really have it together enough not to need it to begin with) vs. those who end up in bad situations, you will see that people with "issues" need money more often than people that don't. This doesn't prove that giving the needy kids money causes their neediness, it may just as well show that their neediness is what caused their parents to give them money.

[mcconnellboys]

Yes, I agree. My own in-laws made a lot of money off the sale of a business they partially owned and immediately began providing a yearly stipend to their two sons. My husband was younger and still in school and at home. They directed him into saving his money and so he always did that (he's extremely frugal, anyway, LOL). The older son was already married and out on his own.

 

Now, he does have quite a nest egg built up (those frugal genes, again), but he also has expensive hobbies such as an old Mustang housed in a rental garage; an airplane that he has to house and pay large sums to maintain, fill with gas, etc.; they like island living and scuba diving; they like to ski. He also stopped working in his engineering job almost immediately after the money flow began, and moved to Florida, where he supposedly was going to go into business renovating older, Victorian era homes..... That was about 16 years ago. He's rehabbed several properties, but has never yet gotten into doing what he originally stated he was going to do. He just floats around from one construction job to another, with long periods of unemployment in between.

 

And they continued to expect that Dad would provide the yearly stipend indefinitely. When he cut it out almost 10 years ago, they stewed for a while, managed to get their hands on all the family jewelry of any value, then stewed a couple more years and came right out and asked for money. He finally shamed them into silence at that boldness, but the long and short of it is that they have not been what they could be had they not been dependent on someone else for their money.

 

Loss of this money came as a shock to my husband and I, as well. We had based our decision to move here, where we knew I would not be able to work, on the fact that we thought we'd have that yearly money to help us. And I had just started homeschooling, as well. We quickly reassessed, regrouped and began making cuts and concessions to try to live within what would be our new, tighter budget. I told my husband to be thankful that he had been given the amounts he'd received in past, invest his money wisely and hold on to it (not at all hard for him, LOL), but not to count on ever receiving any more. And that's the premise we've worked from since then......

 

I think that's the pitfall for some. They are comfortable and feel that they will be taken care of forever. They've never had to think about where their support is going to come from and they're not prepared to deal with a future that might include them having to analyze, budget, etc.

 

Regena

[Sunny]

I have this book, after borrowing it from the library, I mooched it from Bookmooch because I loved it that much.

I think the surveys they did have much merit. Remember, they were following MILLIONAIRES and how money worked within that circle. For the most part, these people were "average" type people, but not "average" in their thought process.

This particular example really gets one to think about the consequence of GIVING money as ONGOING help. It is not discussing loans to temporarily help out situations of need. It isn't about the typical daughter or son getting a few dollars from their parents. It is a question about how rich kids grow up and like to live accustomed to their parents wealth, but can't and so they get subsidized. Those kids will not learn to accumulate wealth when being handed the money, at least that is what their survey indicated as the norm.

Is that 100%? Well, the survey concluded with ...

"it cannot be denied that adult children who receive cash gifts differ from those who do not. " Actual numbers are shown in the table of the income producers with parent help vs. without.

That is an average. Thus, there may be a small number who come out better, but overall, in this particular LIMITED example, I think what he says hold true.

 

And, yes, if your SIL is living in a rent free home from MIL, and learning not to live on what she makes, she qualifies for this award of Economic Outpatient Care. It is exactly what this example is pointing to. She isn't getting a little help. She is getting subsidized living.

[Sunny]

Yes, this is exactly the premise the book is using. Weathly parents. Kids who don't "need" the money but become accustomed to the money. = less drive to make it themselves.

[RoughCollie]

I think your key words are "all the loans were repaid". That doesn't happen in every case with loans from parents, that's for sure.

 

 

So there's at least one counter example.

 

All loans were repaid.

[OH_Homeschooler]

I think it may be true, but I think there is something inherent in the kind of person who willingly takes that sort of money in their adulthood (not including having a difficult situation arise, like being laid off).

 

I thought of DH's brother immediately when I read that email. I shake my head at how he takes advantage of DMIL, how he managed to borrow her entire life savings years ago and still hasn't paid her back. Meanwhile, he bought a timeshare because he thought his family needed/deserved/whatever the experience of vacationing in Florida every year because it reminds him of his childhood. Then, surprise surprise, without considering selling his timeshare, he still relies on DMIL to buy clothes for his kids, that sort of thing. He has a good job too, he lives with his family in his own house. But there's still a certain financial dependence on his mother.

 

BUT, he was like that as a kid too. He always "borrowed" money to buy things in souvenir shops while on vacation, never intending to pay the person back (as an example). He was like that in high school, then college. OTOH, DH always hated borrowing money, and still refuses financial "gifts" when they come up. So I don't know. I think a lot of it has to do with the person, as much as the parents.

[Mrs. H.]

When dh was in law school, and we had 3 children under 5 and were living off of one part-time job, and a vehicle broke down, my mil and fil loaned us the money to get it fixed. They also bought most of the kids clothes and shoes during this time, and always brought a box of diapers when they came to visit.

 

They co-signed and loaned us half the down-payment on our first home. We paid the money back the day the house sold, leaving us very little profit from the sale.

 

When we moved into that first home, they gifted us with a refrigerator, washer and dryer (brand new!) because they knew it would be several months before we could afford all three.

 

When dh got a new job here, and we were waiting for the sale of our house to go through so we could get a rental, they allowed us (with four children) to live with them for a month.

 

When dh's fil got ready to sell this house, he offered it to us first, at the same price he paid for it, taking no profit off the sale. The house appraised for MUCH more than we paid for it.

 

Dh's parents refused to co-sign on loans for dh's two sisters, because they aren't as financially responsible as they knew dh and I would be. We always repaid the loans, and never expected anything from them. They helped because they saw a need and they wanted to. If they hadn't helped, we always had a back up plan and would have been just fine.

[Antonia]

and have seen it borne out by members of my own family. These people are emotional and financial infants who are riding the wave of dependence all the way to inheritance. My children are lucky in that they have a good amount of money to look forward to in the future via inheritance from grandparents, bachelor uncles and mom and dad, but they will certainly be expected to support themselves between times, and that experience should temper the squandering of "found" money later (at least I hope so!)

[nuthouse]

There are the same patterns in our family. I think open and honest discussion of financial decisions are essential to forming appropriate attitudes about money for children. I don't think that's it's innappropriate for my son to know that there is no income for us now and all of our expenditures are carefully monitored.

 

I also know that because of our special situation of going overseas and converting to a Euro economy that we are going to have more dining room table discussions about how our monthly budget will get apportioned. Now my husband and I have been following the same spending patterns for about 20years. We know that overtime we spend a certain percentage for each budget catagory. Those percentages are all going to change next year. It will be a great learning experience for our soon to be teen. That is not to say you couldn't talk about the same things here.

 

Looking back on my own family life, where the financial status of the family was a "state secret", I think it would have been extremely empowering to know things like....."We're going to need a new car soon, we'll need to tighten our family budget $100/month." or "The hospital bill came due this month, can you wait on new school clothes until it gets paid." Instead, I got "No, I don't have the money." as the standard answer all the time and I got no finanicial education about savings and investing. It's been a hard twenty years.

[Scarlett]

There is merit to the argument. Myrtle had a great point in that often the kids who take the money are the ones who need it for whatever reason. Sometimes drugs or alcohol have stunted their maturity and their ambition. Continuing to give money to these grown children is harmful. Unfortunately parents don't always know all there is to know about their grown children and why they have such difficult lives.

 

In my dh's situation I can see this clearly. His older brother, (by 10 years) came home as an adult and returned to college on his parents dime. He became a professional student. :) He went and went and went to school. He was single, no children and around 30 at the time. Eventually he even moved to a different city, got his own apartment and continued college. His mother kept paying. He got a special education degree...then decided he needed a masters. He taught school for 4 years and then quit (thankfully, but that is another discussion). Now he is a 53 yo man, with a masters in education bumming around from state to state doing various construction jobs as the spirit moves him. :rolleyes: Oh, and did I mention he mostly just likes to drink? So yes, in his case, the alcohol has probably played a huge role in his laziness.

 

All the time BIL was in college (as a 30 year old), dh and I married young (dh was 19)against his parents wishes and he was cut off. We both got busy with working lives...I worked in an office, dh got a job in manufacturering and well, that was our life. We were both stable and never expected anything from the in-laws. Over the years they gave us very very little in the way of money or gifts. The biggest gift was $1000 toward the closing costs of our first house---we did the rest ourselves. 12 years after we got married, they came to us and made us an offer that was totally unexpected. They said, 'we will pay for dh's books, tuition and a set amount each month to help with living expenses, so that he can quit his job and go back to school full time.' We were blown away. Dh almost wouldn't do it! He said he just wasn't comfortable letting someone else help support us!. I practically shook him saying, 'they are very very wealthy!!! Let them help you!!!!' So he quit his job and 2 years 8 months later had his degree. So UNLIKE his older brother, dh immediately got a job and advanced very quickly and has had the same job for 10 years.

 

So, what is the difference between these two brothers, both of which received similar help as adults? Dh had a wife (no children though). Dh wasn't (and isn't) alcoholic. Other than that, I just don't know why one of them took the help and made a successful life and the other took the help and is still limping along likely waiting for an inheritance.

 

That was a long story just to say, I guess it is mostly case by case.

[Carol in Cal.]

It depends what the money is for.

 

If it's for something essential with a high downside risk, like medical insurance for someone struggling in their 20s, or for something that amounts to an investment in the future, like getting into a modest first home or getting a college degree, I think that it's great, normal, and truly helpful.

 

If it's an allowance to grown kids who are finished with school, not so much.

 

There is a lot of grey area in between, and it is very hard to turn someone down who is your child and has gotten into some sort of financial difficulty.

 

But when I was growing up I had classmates whose parents told them that as soon as they turned 18 they were on their own--and they had NO prayer of a future because of that. These were kids who were attending an academic high school and didn't even apply to college because they couldn't figure out how to support themselves at the same time. It was such a waste.

[j.griff]

What do you think about this? Can parents be too helpful to their adult children in the financial realm? Do you think that his argument has merit?

 

I think it depends on the individuals involved- in some circumstances you can be helping them get through a tough time that otherwise would have put them in debt. In other circumstances you could just be enabling a person and not be doing them any favors by bailing them out continually. It basically depends on the mental state of the giver and the taker.

[Holly IN]

Dh and I read the book. WE both agree with your dh and the book. Great book btw...I highly recommend you read it when your dh gets done with it.

 

Holly

[lynn]

Yes, parents can help to much. Grocery's once in a while and perhaps a bill here or there is okay but speaking from to much experience in my own family. Parents can and do help and cripple children financially. I will not get on my soap box on this but I will say this having seen what my parents did for my sisters and where my sisters are today I will not make this same mistake. My sisters live very poor lives, of course most of it is from their own choices and a good percentage is mom and dad always helping them for basic needs. It is wrong and should not happen. My sisters have NO concept of money and their children think money comes is just there. These poor kids grew up with absolutely nothing except what was giving them by my parents and my younger sister any myself. Why should the older sisters do anything it was all handed to them. ARGH. I need to stop rambling. Yes it's a very sore subject with me and I can go on but I won't

[Tracey in TX]

YES! There are so many fortunate recipients of their parents' wealth who squander it away. Why plant your own tree when you can pick off the fruits of another?

We have several friends who appear to be rather affluent. I'm astonished when they casually mention that 60+y/o parents are footing bills for cars, homes, vacations, etc.

We borrowed money once from FIL--with interest. We made monthly installments to ensure it was paid fully.

[TCoppock]

I left a very unhealthy relationship with ex after my son was born and moved back in with my parents. I left the relationship with nothing but my son and who knows where I would without the help of my parents. The court system is awful and to this day I have not recieved child support of any kind from my ex. My mother was kind enough to give my son and I food and shelter while I attempted to get my life back together. My parents made a deal with me that they would financially support me as long as I attended college. I took out a loan for school and stayed home with DS (who was a year old at the time) during the day and went to school at night while my mother watched him. I contributed all that I could during that time from odd jobs I took between semesters mainly. After completeing school I continued to live with my parents until DH and I got together. Do I think I am financially handicapped because of this situation? NO! I am very frugal now and save every penny I can so I will not be in that situation again. When DH got sick and was hospitalized I was able to support our family for the year and a half he was out of work. I know that financially helping out adult family members is not always a great idea however every situation is different. Sorry for the long ramble but I wanted to show that even helping long term isn't alway bad.

[Sunny]

But see, this is different than what the book is talking about. There were CONDITIONS upon getting the help. You school, they support. It was temporary, not ongoing. I doubt they expected you to become a full time permanent student for full time support everlasting.

The book is not saying there is anything bad about this type of help from parents. There are other stories throughout this thread much like this. Please realize this is not about getting money from parents in general. It is specific about ongoing payments to adults who don't "need" the money, they just need the money to live like they want to.

[TCoppock]

Sorry I misunderstood the context of the question then. I agree that parents should not be giving adult children money on a regular basis for extra luxuries. I think just as our parents earned the house, car, etc. so should the children. I thought before the author had meant that parents should never financially support adult children which is what I was disagreeing about.

[*anj*]

Wow, I posted that and left for the day. This thread took off!

 

So many excellent points have been made. I agree that you can't overgeneralize in this. And yes, there are absolutely times in life when even responsible adults can benefit greatly from financial help from their parents. I don't think that this book is talking about any of the types of situations people have mentioned in this thread. I would want to help my own children in circumstances like those listed above.

 

My sil's husband is a man-child. He lived with/off his own parents for far too long, and now he is more interested in watching his sport of choice than working hard enough to pay for his own home. And yeah, there are lots more issues, like the fact that my mil permits it, but that's quite another story....

 

I can't wait to read this book!

I've been getting the Dh Digest Condensed Version, but I'll have to check it out of the library when he's done with it.

[Jean in Newcastle]

I agree that it depends on the reasons why someone needs a hand. If someone is in a financial hole of their own making (through bad decisions) I would think a lot harder about giving them money. Does that mean we can't make mistakes and then benefit from grace? Of course we can, but sometimes it is helpful to go through the process of digging ourselves out of the mess that we got ourselves into. And sometimes the character issues/ bad choices that made the mess to begin with are still there and to help that person out is to just throw money to the wind.

[Renee in NC]

In our case it was a bad, bad thing. It wasn't until dh's father was no longer willing to provide and my parents were not able anymore for us to get it. We're only 31 and 32, though, so we are not close to being 40 and financially dependent.

 

It's kind of like gov't help - right now we could qualify income wise for all kinds of programs, but due to be self-employed and what the agency wants as proof of income, we can't. It makes us more creative in trying to figure out how to pay for our own medical care and stuff.

[gardenschooler]

This has really been an eye-opening thread. How interesting to see how other people live. I'm the farthest thing there is from a millionaire, but I really had no idea how commonplace it was for middle-class families to continue to provide any kind of financial support to their grown children.

 

I've heard many people say that their parents helped with a down payment for their first house, and that seems like a very generous gift to me. It would also feel comforting to know that in case of a dire emergency, there would be someone you could ask for help. Even this much is not my reality, so I have a hard time grasping the idea of what's being talked about here.

 

While I plan on doing all that I can to help my kids through college, they will have to put most of the effort in to make it happen. I will try to raise them with some financial preparedness, help them in their college decisions, provide free room and board, help with books and tuition as much as we're able, but we just don't have money to provide any extras. They will probably have to work a part-time job while at school in order to have any spending money. Heck, *I'd* be happy to work in order to help them, but I do expect them to take on the bulk of the financial responsibility - it's just a necessity.

 

My plan for my dds as adults, and how I can help them, is to do something that I wished I'd had. It's not financial support, but *grandma* support. When my dds are married with kids of their own, I want to help them by relieving the extra stress, whether it's babysitting the grandkids or helping out some other way. If they need to work part-time, they won't have to face the decision of daycare vs. no food in the house. It's pretty stressful to not have anyone who could step in and help if you got sick, or in a bind in some way.

 

But financially - maybe because I've never experienced it (and not even from age 18 - way before that!), it just seems like a helping hand that is not helping at all. I think I have issues about this, lol, because it really shocks me (or I'm bitter about not having it at all). But I'm very much against the idea of helping grown children, unless it's a loan or an emergency. I've come to see, though, from friends with grown children, that I am in the minority on this. Maybe I'll change my tune. Maybe I would feel differently if we had more money. But what I've seen are luxuries provided (for college-aged kids) and that just doesn't sit right with me, somehow.

 

As it is now, some of my sisters are helping to support my mother. I feel bad that I can't contribute towards that, and I want to be able to soon. Somehow, I feel very differently about the idea of helping my mom vs. the idea of helping a young, able-bodied person.

[Jeanne in MN]

I think it's very easy for parents to enable their children this way-adult or young.

[*anj*]

What about this scenario?

 

A young couple is ready to purchase their first home.

They could either live in Town A, where they could purchase a decent house for about $200,000. The town is okay, but not as tony as some others in the area.

Then they see a house in Town B. It's a nicer town, a little more affluent, and the houses are nicer/bigger/more spread out. But the house that they fall in love with costs $300,000, which is out of their price range.

 

Their parents offer to give them the difference in a down payment so that they can now afford to live in the somewhat more chichi town.

 

This seems like a good compromise because now the couple is able to live in a town that is cuter, nicer, and has a better layout. But that town also has higher property taxes, the trash and recycling are privatized. There are also other hidden expenses like the "need" for a lawn service, installing a swimming pool or joining "the club that everyone belongs to", and when their kids start going to school the pressure to keep up with the joneses becomes problematic. Speaking of the children, the wife isn't able to stay home with them, because even with the additional funding for the down payment, their fixed cost base is higher than it would've been if they'd moved to Town A.

 

Have the parents really helped them?

Would it have been better for them to live in the house they could afford in the town they could afford?

The "help" that they received from their parents gave them an artificial boost, that was unsustainable without additional parental (or other) support. In the end you have a couple in their thirties who still aren't 100% financially independent.

 

These are the kinds of scenarios that we're talking about here. These things can happen even in families that have healthy relationships.

[cin]

This has been a very interesting thread. We are in a unique position. Our MIL makes one of our car payments and supplements school supplies every year. She does this for 2 reasons. First, her love language is gifts. There has always been a large monetary gift for Christmas & b-day. Secondly, she wants me to continue to stay home with her grandkids, and appreciates how we are raising them. As she put it, she wants them in a safe car. Even though she makes the payment, DH did NOT buy new. He chose a 3 yr old, 56K ml Toyota Prius. We are NOT irresponsible with our gifts. The girls' financial gifts go in their savings acct except for 2-3 gifts to open. My money usually goes towards something for the house, as does DHs. We have a fairly modest house, about 1800 sq ft. And our other car is also a prius, purchased with about 40k miles already on it. The girls' clothes is all rock bottom clearance or 2nd hand. And we have NO credit cards. I do beleive that if we abused it, she would not help us, and we could not live with ourselves.

[Merry]

Great point, Anj! This illustrates so well what happened to my mother. She would not have moved to various expensive places if it wasn't for her father helping her financially for that purpose. Now she has been in the Bay Area for the past 25 years living in a rent controlled apt. in the hills and refuses to budge even though her father died last summer. If she is extremely frugal and wise with her small inheritance for the rest of her life and prices don't go up too much more, she might possibly manage to stay where she is, but my siblings and I are quite doubtful. I believe that my grandfather did her a lot more harm than good. Harmed us too because now we will have to either help her out financially from time to time because of her stubborness, or deal with her having to move to a cheaper but less tony place eventually. I'm so thankful my own father helped me and my siblings only occasionally . We're better off in terms of being financially responsible.

[Scarlett]

What about this scenario?

 

Have the parents really helped them?

Would it have been better for them to live in the house they could afford in the town they could afford?

The "help" that they received from their parents gave them an artificial boost, that was unsustainable without additional parental (or other) support. In the end you have a couple in their thirties who still aren't 100% financially independent.

 

These are the kinds of scenarios that we're talking about here. These things can happen even in families that have healthy relationships.

 

I agree with Eliana that this is more about poorly thought out decision making process. If your parents offer to 'help' you into more debt than you can afford, you need to refuse said help. In the situation you described, it would have been much better for the $100K to go toward the $200K home. To me it seems like another case of people wanting to live above their means.

[Sunny]

I disagree. Our case fits this senario perfectly.

My dh and I were both working when we were married. FIL decided that we should buy their house, and they would buy a single story across the street.

We would have qualified for the loan while I was working, but because of a credit mark I had, they would not accept my name on title. (blah, yuck, I know).

So, FIL decided he would put his name on the mortgage so dh and I would qualify. They already marked the house down to a very fair price, lower than they would have sold to outsiders.

2 years later, I quit my job after we have our ds, and now FIL helps us make the payments (6 years going).

There are numerous things going on in this senario. We don't have debt,and live within our means on everything, except the house payment.

But, first, we wouldn't have purchased the house if it hadn't been that FIL signed. I'm not sure we could have bought anything, being that we were in Southern CA.

Even when they were happy to give us the money, because they wanted us to live next door, it was a burden that we were not living on our own, and were unable to make it independant of them.

As to the final conclusion of whether or not it would have been better for us to move to another town, I'm not sure!

As it was, we finally decided last year, to sell, and move to ID where we COULD afford to live on our own. The value of the house had risen 300%, and paid for our new house outright. So, I guess it was worth it, but we had 12 years of living in poverty to get there.

[Scarlett]

I disagree.

 

Just so I can understand your mind set....with whom do you disagree?

[Sunny]

I disagree that this is a relationship issue, or necessarily poorly thought out decision making. Dependance can just happen and it isn't necessarily good.

[Scarlett]

I disagree that this is a relationship issue, or necessarily poorly thought out decision making. Dependance can just happen and it isn't necessarily good.

 

With respect, your dependance on your inlaws didn't 'just happen.' You and your dh made decisions that allowed that. Personally, I don't think it was a terrible decision....being near family is waaaaay high up there on my list of priorities. And being home with my child is even higher up the list. So you accepted help in order to have those two important things.

 

The real question is how was your relationship with your inlaws during those years? Did they hold it over your head? Were there strings attached?

[Sunny]

You're right, it didn't just happen, we accepted this as a solution to those priorities, but it doesn't mean that it was a "good" thing for long term. It does meet the criteria of the original post though. It isn't to the degree that we were lazy living off of the folks. It wasn't such that we would be put out on the street if we didn't have the folks. It was an inbetween thing.

Our inlaws were terrific. They were happy to see us take those priorities, and did not attach strings. However, that doesn't mean that they always held their tongues when we were making our own financial decisions. Part of that has to do with just being "dad" and the other part as an ex airforce military man. But, it was still just a hard burden to feel like we were held accountable for everything we ever did. Talk about guilt if we wanted to take a camping trip! That is why *I* believe it is not a healthy relationship, no matter if there is a good relationship between parent/child.

[pixelroper]

I find the line between "help" & "gratuity" very clear. Often gratuities are given disguised as help. I agree with the books argument. I think it points to the habits and values (or lack of) that can form and the consequences it has on their ability to function as a healthy adult. Sometimes it is a cultural trait. Some situations arise out of necessity, with parents willing and able to help there is no motivation to find another solution. Is this bad? Sometimes it can create a monster.

[CookieMonster]

Yes!

 

I can insert different names right into the email. Different people from four different families I know.

 

The more the parents give, the less personally reponsible the children become. It's so sad. :crying:

 

In some instances the children are actually squeezing so much out of the parents that the parents are going into debt for them. One particular set of parents I can think of wring their 75-year-old hands over what retirement they have left. It's not much because their daughter has "needed" so much "help". :angry:

 

The parents just don't see it, though. They really think their children need this "help". They really don't see that they're enabling their children to be continually dependent on them.

 

What these parents need to do is cut off the IV drip. The need to tell the kids the bank is closed and to fend for themselves. Otherwise, the inheritance they are so carefully providing will be squandered in three years.

[Danestress]

My parents have always helped their children. They do it as part of a long term estate planning strategy (I know - lucky us!) They paid for all our college - every penny. They also helped three kids with graduate school. They have college savings for our children and have helped with music lessons and camp - in addition to yearly gifts.

 

None of us is irresponsible. All of us use good financial judgment. One of my sisters is the most frugal person I know. I'm not super frugal, but DH and I have always funded retirement accounts religiously. I don't think there is a penny of debt between us - apart from mortgages. I do think that knowing my parents have the college funds for the boys makes us spend money we would otherwise save for college, but not on materialistic junk. We just do more lessons, hoppies and sports for the boys than we might otherwise. So in a way, I see the point that getting parental gifts might reduce savings in some ways.

 

We all love my parents, and my parents have never used money to control us. Truly.

[Scarlett]

I am very bothered by this post. ..and by the assumptions I've heard from some other people as well on this thread.

 

 

One of the reasons I am responding, and responding so vehemently, is fear that anyone reading this thread might let some of the things people have written discourage them from listening to their instincts and helping a friend, a relative, or (most importantly) a child.

 

This very much sums up how I see things around me as well. I do see evidence of grown children taking advantage of help, but in the same evidence I see evidence of a grown child using the help offered in a way that shows maturity and appreciation. I have also seen a parent try to control her children with money and it is not pretty. So all in all, I would agree with you Eliana, that it isn't the help that is the problem, but something deeper and more complicated in the family.

 

Would you believe that when my inlaws offered to send my dh back to school they made me sign some sort of paper? I felt very very resentful of that, but swallowed my pride and did it for my dh's sake. There was absolutley zero reason for them to do that to me.

 

There are extremes in every situation. I am taking notes though, and I hope I can be a good mother, MIL and raise a son I can be proud of.

[PariSarah]

For my part, I can definitely see how parents' gifts to their adult children can be either a blessing, or a curse, or both at the same time. There's enough of that going on in my extended family that I can see all kinds of dire problems and unmitigated blessings and two-edged swords. Of course, my family doesn't fit in the "wealthy" category (unless you're thinking globally), but I can definitely see numerous dynamics playing out in different ways among my different family members.

 

Some thoughts:

* Some children will always be dependent on their parents. When this is a result of a physical or mental disability, this is usually considered a morally good situation. But I wonder if some adults without obvious disabilities still belong in this category for whatever reason, in which case their parents' ongoing financial help isn't what's crippling them. They simply can't make it on their own, and never will be able to. Their parents' assistance is genuinely compassionate and helpful--not co-dependent or morally blameworthy.

 

* Some parents will always be dependent on their children for feelings of success and accomplishment. Sometimes those financial gifts are about making the kids "good enough" for the parents' wishes. I find situations like that to be very sad.

 

* I come from a religious tradition that mandates acts of mercy, even toward the undeserving. It also enjoins the merciful one to be prudently merciful--to meet actual needs, not perceived ones. So, I can imagine scenarios in which ongoing financial support of my adult children looks irresponsible but is nonetheless the right thing to do. This does not necessarily make sense to those who do not share my religious convictions, but it's what I'm commanded to do nonetheless. Or other scenarios where I'd refuse a request of financial support but give other, more effective support, more genuinely supportive help in its stead. Sometimes, it's not clear which of these tendencies is dominating a situation, which route God is leading one to take. God is more patient than we give him credit for, and he doesn't always use the "Let them hit rock bottom" approach with the children that he's drawing to him.

 

* When parents give financial gifts to children who are otherwise responsible, it is a tremendous blessing. When they are able to communicate their expectation that their children be financially responsible ("Yes, we're excited about your engagement. If you want us to be excited about your marriage, you'll write out your first year's budget and discuss it with us."), it is a tremendous blessing. When they are able to give their children the tools to be financially responsible ("Let's sit down, son, and look at my checkbook together. Here's how I balance it."), it is a tremendous blessing. And sometimes, when they help their children have more than the children could have had on their own, well, that can be a blessing too.

 

* But I am deeply troubled by some parents' desire for their children to have "the best" of everything, right now. They are very well-meaning, very generous, and genuinely want the best for their children. But they don't value patience. They don't recognize the pedagogical worth of self-denial and mild "suffering." (And the "suffering" I'm talking about here is, like, having to share rooms and not having enough space to store twenty pairs of shoes.) I think parents who are anxious for their children to have the best of everything without working for it are truly doing their children a disservice.

 

* I'm also troubled by the class element that often enters into these co-dependent relationships. The son shows up for the fancy wedding in an old beater of a car, and Mom and Dad are embarrassed. The grandkids have to play with immigrant children in parks with rusty swings, and the grandparents want "better" for them ("Don't you think they need to play with their own kind?"). The power couple who dress for success don't like what their kids and grandkids wear on Easter Sunday, because their clothes are at least two socio-economic levels down the ladder. When the financial gifts are about making the kids "presentable" to their peers, or keeping the kids from "mixing" with "undesirables," I think the "gifts" are controlling and wrong-headed.

 

I've put these thoughts in "general" terms, but that's only because they involve actual people and actual relationships, and I don't have the right to tell these stories behind those people's backs. So please don't read my general comments as actually general comments. And if some of them are vague, it's because I can't be any more specific without telling stories that aren't mine to tell. But I'm not making general comments about "society today" or "rich people" or whatever. Clear as mud?

[CookieMonster]

Eliana I am not at all bothered by your answer. Thank you for adding clarification to the discussion.

 

IThese generalizations do not match any of the truths I have seen. All of the strong, healthy families I have known IRL have an open-handed approach to helping their relatives... and I have never seen this cause harm or irresponsibility.

 

I think the larger context of family and communal dynamics makes the difference between healthy, genuinely helpful assistance of friends or relatives and counter-productive, dependency producing assistance.

 

One of the reasons I am responding, and responding so vehemently, is fear that anyone reading this thread might let some of the things people have written discourage them from listening to their instincts and helping a friend, a relative, or (most importantly) a child.

 

 

I have seen this as well. I certainly would not want to discourage people from giving, especially to their children, in a prudent manner. I was not at all referring to the type of giving you mentioned that is such a blessing. I was also not referring to the type of giving that Pari-Sarah mentions as being part of our mutual faith.

 

But, I did identify with the statement in the email. It is a truism that should serve as a warning. It does not apply in a blanket way to all giving done by parents to children. The four families I mentioned above are ones I know quite well, on both sides. And none of the interaction is healthy. The money is a sign of that. Several of the things Pari-Sarah mentioned apply to these situations.

[Merry]

Parisarah, thank you for the great summation! I can see now that I'll have to rethink my mom's situation which I talked about above. I see now that there's more to her situation than I assumed and judged upon.