Monday, March 27, 2006

What Do You Want to Give Your Children?

The previous post about inheritance brings up an interesting question that I've been thinking about lately. I don't plan to have children of my own, but I have a niece and nephew. I gave each of them a savings bond when they were born, and of course I love giving them presents. At one point, I was thinking of starting a college fund for each of them, and I may still do that (without telling their parents, though!)
But it's made me think about what people give to their children. What is enough? What is too much? What will spoil them, and what will give them the opportunities they need?
I think many wealthy people don't want to give their children enormous inheritances because they are afraid they won't learn to work hard and have productive lives if everything comes too easily to them (and really, does the world need more Paris Hiltons?)
I don't want my niece and nephew to grow up being spoiled and thinking they are entitled to have anything they want, and I would feel the same way if I had kids of my own. And if money and gifts are your main way of showing love to your children, you've got a problem. But everyone wants their kids to have toys to play with, a good education, a decent place to live, etc., so how do you strike the right balance? I think most parents see themselves as having some responsibility to pay for at least part of a college education, but beyond that? What about cars, travel, downpayments on houses, paying for the education of grandchildren?
What do you want to give your children, and what do you think they should work for on their own? What was given to you?


Anonymous said...

I would like to give my children more than what was given to me. They should be able to work for most things after a certain age. I was given nothing when I was a child.

Anonymous said...

I am a staunch republican, however, one point in which I part ways with my party is that i think there should be income tax, sales tax or other tax. Instead, there should be a 100% death tax. No inheritances, ever. It is unamerican to allow wealth to be redistributed among wealthy families in perpetuity. There would be allowed inter vivos transfers to children, sick family members, etc., but that would be capped. Paris Hilton is the poster child for this tax plan. To have us taxed at both ends is inane. we should not be taxed on income, only on outcome. ( i hereby copyright that slogan).

Single Ma said...

Interesting post...

Coming from an underpriviledged background, I find myself giving my daughter everything I didn't have. I want her life to be easier than mine was. In the process, I don't know if I'm spoiling her but I would feel bad watching her struggle or do without while knowing she doesn't have to.

However, she understands the value of a dollar and she has to "earn" what she gets in excess. When she leaves for college, she WILL work. As an adult, she will buy her own car, buy her own house, and quite possibly pay for her own wedding. I won't lie, if I'm able, I will probably help her in some form or fashion because she's my only one. I'll try not to overdue it. Then again, to some one else, this could be my way of rationalizing it to myself.

So depends on who you ask, I spoil her. If you ask helping her, teaching her, and leading by example, I'm taking care of my child and raising a productive member of our society.

Anonymous said...

I think there's too much of a sense of entitlement in this country. As the numbers in the NY Times shows, this problem is for the top 10% of the wealthy. What happened to assuming that we should work hard to educate ourselves, make a living, and plan on taking care of our parents when they become older like other countries, particularly in the Asian countries? After all, our parents gave us everything; we should give back.

IRA said...

I don't have any children yet, but I do have a niece and nephew. My brother and I were somewhat 'deprived' as children. We always knew that our friends had more than we did. And my parents were constantly worried about money. They did the best that they could, but like most immigrants, they were fighting just to make ends meet.

On numerous occasions, my brother has said that he doesn't want his kids to suffer like he did. So, from my parents' perspective, the grandkids are pretty spoiled. They have a ton of toys, and they don't always finish the food on their plates. A big no-no for my parents.

But I do think that my brother and sis-in-law have done a great job of teaching their kids about gratitude. I remember one Christmas, my sis-in-law wrapped up an old plate and gave it to my nephew as a gag gift. She asked him if he was grateful or happy with his present. He seemed a bit disappointed at first, but then his face brightened, and he said that it was a very pretty plate. She waited a few minutes, and then finally gave him his real present, which was a video game that he had wanted Santa to bring him that year. Yes, he was excited about the video game, but it was heartwarming to see that he was also grateful for the plate.

As for what I'd want to give my nephew and niece someday, I've set aside some money to help pay for their college tuition. And no, I won't tell them about it until they're in high school.

As for my parents, they did quite well for themselves later in life. And they tried to overcompensate for stuff that we lacked as kids. They agreed to pay for both my and my brother's college educations, if we agreed to go to state schools. They also paid for my brother's wedding. And they helped pay for each of our respective down payments.

But it's also understood that I'll be taking care of my parents someday when they get older. They've saved up a bit of money for retirement, but it may not be enough. And that's when I'll need to step in.

Anonymous said...

I grew up in an upper middle-class household, but my parents never treated us like rich kids. They stimulated our minds rather than placating us with toys. We wore hand-me-downs for as long as feasible, and never had name-brand clothing or shoes. I think we got our first TV in 1984 for the Olympics, but we were not allowed to watch it until we were much older.

My father made it clear that the most valuable thing he could give us was a strong work ethic. He helped pay for college, but only after we had completely tapped out our ability to borrow money. He made it clear that, were we to move back home after college, he would charge 50% more than the going rate for a room rental. He lent me money to help with the downpayment for my house, but charged above the market rate. In other words, while he was completely emotionally supportive, he did everything to ensure that we understood the importance of independence.

None of us expected (nor wanted) an inheritance, but he did leave us one. Because we did not expect it, my siblings and I have developed the ethic to work hard and the discipline to save on our own. If I have children, I plan to emulate this strategy precisely.

calgirlfinance said...

My parents bought my sister a new mid priced car in high school, which I ended up getting to keep after college. My parents paid for my college education at a public school. I paid for my graduate education at a private school. My mom asked me if I would live with her after I finished college until I got married. I lived with her 3 months after grad school before finding a job and I will live with her for 1 year between moving back to California and getting married (I'm in that period right now).

Anonymous said...

I grew up in a lower middle class family. My parents taught me the value of money and how to invest/save it. They got to the middle class through hard work, saving, and smarts. I never new it was coming but my parents helped me with my first car and my first house. They paid for my college(with me working to help pay). My father is gone. Recently we have had fertility issues and my mother wanted to help with that. At various points in my life my parents have been there. The money has helped alot at key points. I never expected it nor had to have it. What they taught me was every bit as important as them helping me financially. I am now in the lower upper class. I work hard every day, save, and invest for my future. I am saving to do the same thing for my kids when I have them. Things have changed. To bring a kid into the world and not give them an education. Or to allow them to graduate with huge ammount of debt is simply not wise. Instead raise them to not expect it. To work for it. And when they get it... They will learn to pass it on.

Anonymous said...

I didn't get much from my mother except the value of money and to save it. As for giving me anything, forget it. I had a top private university that was giving me grants and loans to cover over 90% of the costs (I was top of my HS class). Her answer when I asked about money for college was she helped my father through school, why should she help me. Her mother (my grandmother) ended up paying 50% of the bill, and shamed her into paying the rest. And her child support payments (yep, they were divorced) was almost the same amount as she "gave" me for college. And then she had the nerve to tell people that I should have joined the army instead. (Gee do I sound bitter? ;)) Of course I knew not to ask for anything after I moved out.

As for what I would expect to give a child, I think the amount for college should fall in the range of what a local community college would cost. If they want more than that, they need to work for the rest, find grants, or take out loans. As for other things in life, give them loans when you can, and small amounts of money of course is ok. If they expect you to pay for their life, well that ain't happening. What is more useful is to teach them how to make, earn, save, invest, etc...