Raising kids to have a positive relationship with money [inheritance]
July 28, 2018 11:42 PM   Subscribe

My children will be given a large amount of money when they reach adulthood. How can we best prepare them for this event?

I'm in my early-to-mid 30s, with 2 kids under 5. My husband and I don't plan on having any more children. My parents have set up a trust for all of their grandchildren which is currently designed to be available for education/career advancement purposes, and then will start paying out NSA checks when they reach age 25 (they'll get a portion at that point, then another at 30, and the remainder at 35). Using even conservative retirement calculator estimates, and taking into account that there may be more grandchildren born in the future (I have other siblings, there are other g'children already), my kids will be receiving a very large amount of money (high 6 figures each). I want to prepare them as best I can for this event, and/or I'm looking for ways to structure the trust such that the money will still have limitations placed on it before a certain age.

My parents struggled somewhat while I was growing up, but we were still pretty solidly middle class, certainly culturally. My grandparents helped to pay for my and my siblings' college education so none of us have student debt. When my g'parents passed away, they left enough assets to my parents and their grandchildren that we are all very comfortable financially. That said, I don't feel I have the healthiest relationship to money. This has changed somewhat since my marriage, bc my husband has promoted very open communication about our finances, but a combination of various emotional dynamics growing up and life events mean I'm still kind of scared of being in control of my own money. I don't want to pass this on to my children.

The idea of them having access to this money at such a relatively young age really scares me. I've read a couple of articles about preparing your kids for an inheritance, but I think what I need are resources for just preparing kids for money in general. Or even anecdata about how you got your shit together wrt money, especially if you weren't in a position of financial precarity.
posted by anonymous to Work & Money (34 answers total) 19 users marked this as a favorite
 
This may be more general/fuzzy than you are looking for, but: I was fortunate enough to be raised in a fairly well-off household, while basically culturally middle-class. Especially as I went through my teens, my mom in particular made a point of telling me often: 1) just because we can afford something, don't assume that other people can; and 2) if we can afford something and somebody else can't, it doesn't mean we're any better than they are, we just happened to be dealt a better hand in life. This was a good baseline awareness to have.
Also: if you are unnerved by the idea of dealing with large amounts of money (that would be me too), don't hesitate to use some of the money to hire something like a financial advisor, a disinterested professional who can help you figure out practical ways to handle it; either now, or at the point where your kids are ready to start dealing with the money themselves.
posted by huimangm at 12:36 AM on July 29, 2018 [4 favorites]


Talk to them about your household budget! Be very open about how much money you have, how you budget, how you spend and save responsibly... Model good behavior. And make sure they know that not everybody is as lucky as they are. We want our kids to grow up in a sort of bubble of happiness, but that's not necessarily good for them because it can make them ignorant of and without compassion for those who live otherwise. Please make sure they do not grow up in a bubble of unthinking wealth. The concerted efforts of teachers who wanted us to learn about systemic poverty and discrimination were vital for my not turning out to be a "let them eat cake!" sort.

Once they get to around ten or so you can do the money-for-extra-chores thing or some other form of allowance (if you want them to view their chores as obligations, maybe have a "bounty board" of other tasks they can do if they want a few dollars to buy candy or whatever). At that age they can start volunteering s well: homeless shelters and soup kitchens are the big ones, but there are other really valuable programs that will connect them to people who aren't about keeping up with the latest trends at school. As they get into high school too it'll be good for them to have solid volunteer histories as well.

During high school and college they can start working summer jobs as well. Don't directly pay for their rent: sit them down, make a budget for their college expenses including how much the school pays, how much you pay and how much they can be expected to pay and then give them a lump sum of money at the start of every semester and let them get to it. If they ask for more, DO NOT give it to them, though do offer to help them budget things or let them come home for laundry and some extra meals. They will learn to budget this way out of necessity if nothing else.

At twenty-five when the checks start coming make an appointment with a financial advisor. That's essentially all you can do.
posted by storytam at 12:40 AM on July 29, 2018 [2 favorites]


Pay for their education then pay it as an ongoing income trust, not dispersed as a lump sum upon any age. I know quite a few people who knew they'd be getting what amounted to smallish to medium stipend quarterly in adulthood and were very grateful but knew they wouldn't be living high on the hog on it so they still worked hard to establish themselves as adults. Most used it to give them a leg up on paying loans or buying a house or to survive while at a startup or to take time off to raise kids etc or to have kids younger than they would have otherwise. One spends it all on horses. One on charity these days. One or two have chosen to use that money to permanently fund an art career or travel but it's not enough to be rich without working or not have to save for retirement or anything. I think with the amounts you are talking that's what you can best offer your kids.
posted by fshgrl at 12:55 AM on July 29, 2018 [13 favorites]


I wouldn't tell them all the details until after they finish college/trade school. In the meantime, openly talk to them about money and finances and demonstrate the same through your actions with your husband.
posted by quince at 12:58 AM on July 29, 2018 [4 favorites]


I would encourage you teach them to consider the value of working to earn money and to place higher value on what has more importance over the course of a lifetime i.e family, friendship, love, health bring so many more benefits to shaping your life and personality than mere money.

Teaching them how to do chores and household tasks without pay is important for understanding what it means to simply be a functioning member of a family.

With that in mind it would be highly beneficial for your children to work in a casual job as soon as they are old enough and able. Even if only a few hours a week this will provide so many lessons in humility, compassion, understanding of how other people live or struggle, being reliable and turning up on time, listening to authority with respect, etc etc. Don't take these opportunities outside of the home away from them because, my personal experience with friends who haven't had to work, is that they have a severe lack of understanding of what it means to operate in the world outside their own.

When I started working casually my parents sat me down and said it was time to start paying food and board costs while I still lived at home but they also helped me budget for this out of the meagre pay I was getting. I highly valued this help and also how long it would take me to save up to buy that big item I had my eye on. It made me (still does) consider if I really actually wanted or needed the item.
posted by latch24 at 1:09 AM on July 29, 2018 [1 favorite]


This sort of happened in my family. My siblings who didn't count on money have done better. Getting a part-time job early is really good advice, and making sure they have good work discipline and manners (a service job like retail or food service, not a cushy job!) helped.

For the love of all, do not keep the amount of money super-mysterious and emphasise how the money is going to be a limited amount relative to all their possible goals. Make them prioritise. Let them think about what to pay directly for, what would be worth getting a loan for (student loans or a mortgage? One of my siblings took student loans because it was still cheaper at a very low government rate than putting cash down in full).

And most, most of all - get them involved in activities across social classes. Don't keep them insulated. Make sure they're comfortable living cheap in student accommodations, comfortable eating in a fancy restaurant, that they know how to go to museums and hang out with rich kids, and that they're just as comfortable in the 'rough' neighbourhoods. That means extending your own comfort zone. My two family members who wanted to go upper-upper class have had the worst relationship with money. The siblings who are happy being frugal and cheap had the easiest.

My kids had to save from an early age, and also had to give some their money away. They could choose who/what to give it to, and they put some thought into this. When they got jobs, I made them put on automatic deductions for savings to an account that they couldn't easily touch, so they built up a stack of money to use for a big purchase (to a teenager).

I also had them from early on (age 5-6?) buy their own clothes from a budget, about $200 every 6 months. They wanted more clothes, they had to save up for them. I paid for uniforms and underwear, but this way they got to choose their own clothes at different price points. One will buy a stack of t-shirts and some jeans and he's done, another spends it on a jacket and one shirt and then his savings on more clothes, another kid goes through discount racks to make her money work harder.

I also made them responsible for their phone bills from a base amount of pocket money once they had a phone bill, so they had to monitor their own spending and figure out plans etc. as young teenagers. Some very expensive lessons for them!

Now my youngest has three glass jars labelled Spend, Save, Share. She saved up enough for her own American Girl doll over several months, and is now saving up very slowly for holiday gifts. Glass jars work better than a piggy bank when they're little because you can see the money inside.

Talk to them about household bills and prices. Talk to them about business news casually. Talk to them about what they plan to do with their lives, including the money as matter-of-fact. There's a great Wired story about a Cherokee tribe where a chunk of money is distributed at 18 and 21 to members.
posted by dorothyisunderwood at 2:04 AM on July 29, 2018 [7 favorites]


You might find the discussion in this thread useful: The objective is to normalize the discussion so it’s not otherworldly, especially some of the MeFites talking about their own experiences.
posted by paduasoy at 3:23 AM on July 29, 2018


I asked a somewhat related question a while back- maybe some of the answers would be helpful?
posted by gemutlichkeit at 3:54 AM on July 29, 2018


All the advice above about talking about money is good but I feel weirdly conflicted about making people take jobs for pay when they don’t need to, mainly because those jobs are also needed by people who don’t have ‘back up’ funds and are already at a disadvantage in job-seeking through casual discrimination etc.

Wouldn’t it be better to teach the kids about how to use money as a resource rather a privilege by activitely talking about how much things cost and why (ie why is this designer thing more expensive than this off-brand thing) and getting them to think a bit more deeply about value, or maybe even philanthropy.

I grew up poor though so take that as you will, but having middle-class kids suck up all the decent student-and-entry levels jobs that they blatantly don’t need is difficult to reconcile with the notion of the ‘value’ of money. Anyone can cope with short-term hardship when they know a big pay-off is coming. It’s more important to parse the actual cost of living and determine what options there are to contributing rather than consuming ‘value’ if your basic needs are being met by means other than your own labour.
posted by freya_lamb at 3:55 AM on July 29, 2018 [14 favorites]


I think this is a great "put your own oxygen mask on first" situation and an opportunity to get a handle on your own relationship with money. Your kids won't get this money for another 20 years, but you effectively have it to spend for their benefit now. How will you use it? Will you send them to private school? Pay for sports or music lessons? How does it or should it affect how you save for their college tuition? Who is the trustee and how can you make sure the money is managed wisely and safely?

This may be an unpopular opinion, but based on observing my own family and close friends, I believe that how people handle money is very strongly tied to their overall conscientiousness, and that it is basically a personality trait that parents are limited in their ability to influence. I think your best bet is to not be weird about it, model good financial behavior in general (saving, investing, paying bills on time, etc.) and explain it to your kids, and generally encourage hard work in any arena.
posted by phoenixy at 4:18 AM on July 29, 2018


Oh, and I also strongly believe, contra to some of the posters above, that you shouldn't allow the existence of this money to dictate how your kids spend their spare time. You do learn a lesson from working a shitty minimum wage job with a million dollars in a trust fund, and that lesson is, "working sucks and is for chumps, I can't wait until I get my money so I can stop working". Not that they shouldn't get a job if they want one, but the great thing about the existence of this money is that it gives your kids the freedom to spend their time and energy on what they are passionate about. Let them do that.
posted by phoenixy at 4:26 AM on July 29, 2018 [17 favorites]


> Pay for their education then pay it as an ongoing income trust, not dispersed as a lump sum upon any age.

This cannot be done as the trust is written, it appears. BUT, any time after the beneficiary is 18 years old, he or she can choose to direct the trustee to do that.
posted by megatherium at 4:32 AM on July 29, 2018


Respectfully, you might be making this out to be more money than it really is. I did four years of private college and am now finishing up in medical school, and the total sticker price (cost of attendance before need based financial aid) for my education is solidly in the high six figures. If I were you, I would probably emphasize to my kids that their grandparents reserved money for their education and they should know they won't need to worry about financing college (with the situation you describe I wouldn't even make them feel secure about grad school, because they may not be). If there will be money leftover, or if as they get older you feel they're unlikely to go to a four year college, then you can start re-crafting your narrative.
posted by telegraph at 5:22 AM on July 29, 2018 [39 favorites]


My parents have set up a trust for all of their grandchildren which is currently designed to be available for education/career advancement purposes, and then will start paying out NSA checks when they reach age 25 (they'll get a portion at that point, then another at 30, and the remainder at 35).

This type of trust destroyed my ex and his siblings.

I would ask your parents to clarify how they want the money used--their intentions are good, this type of trust as designed is not.

Here's why I say that: my ex came from a family with a similar trust fund. He and his siblings spent years finding themselves and trying different colleges and extended their undergraduate careers for a long time. They tried art schools, music schools, science, cooking, piano tuning, all sorts of very expensive colleges in their 20's and burned through a LOT of their respective trusts. Why? Because it wasn't their money. They wasted it on tuition for endless schools and very expensive apartments in San Francisco and Boston and New York City and London for God's sake, because the trust also covered living expenses.

They went through hundreds of thousands of dollars--all gone, as they collectively screwed around for decades.

After that, they also got their big checks at 25, 30, etc. They bought expensive cars, clothes, jewelry, they took trips and stayed in fancy hotels in Europe.

They didn't ever get careers or work. They played golf and tennis and sat on their asses.

By the time they had all turned 37, their trust funds were completely gone. Done, nothing left, and they all fell apart in fairly scary ways. They have no grit, no determination, no drive. They're al Veruca Salts.

I would insist your parents talk to a financial planner. Ensure there's a limit to post-high school educational spending. Consider a far smaller allowance and consider a property trust instead of a lot of money. Let the kids get homes but have them owned by the trust. Give them a travel allowance.

I understand what your parents want to do, but my ex and his siblings were ruined by a similar trust.
posted by yes I said yes I will Yes at 5:33 AM on July 29, 2018 [34 favorites]


I think the amount of money they are going to be getting is really wonderful. A character in the novel The Descendants says you should give your kids enough money to do something, not enough to do nothing. Which I believe in turn comes from a quotation attributed to Warren Buffett about how you want them to feel they can do anything, but not do nothing. It's enough money to pay for school, maybe get them a leg up on the housing market, and then some protection in case of illness or something, and possibly an early start at a retirement fund too. If you're in a country with good public healthcare and education, then it's different. If you're in the US, it's a shame, but it takes quite a lot of money to ensure the basics.

But yes, they will be (presumably) getting this money at an early age and one where being told "You are a millionaire" is going to make them feel really rich. And then all the money is going to be frontloaded. That is concerning. I'd say get them to a financial planner once they have inherited, and have them write out a plan. And I think you are so right; don't be secretive. My mom came from a rich family and had a lot of shame and secrecy about that. That is pretty toxic and on top of it, that family did not do any charitable giving for you to notice. Paradoxically my father, who came from a poor family, loved giving money away. If you believe in giving, start doing that as a family now. Maybe identify a local charity and have a standing gift. Tell the kids you are privileged enough to have some money and be able to do this.
posted by BibiRose at 5:38 AM on July 29, 2018 [2 favorites]


I want to prepare them as best I can for this event, and/or I'm looking for ways to structure the trust such that the money will still have limitations placed on it before a certain age.

Having read yes I said yes I will Yes's response, I see that I totally missed this part of your question. Get with your siblings and see how you all feel about this and if you can agree to request that your parents structure things with more protection. The timing of this as it is set forth is indeed a perfect one for them to spend all the money by the time they're in their 40s.
posted by BibiRose at 5:59 AM on July 29, 2018 [1 favorite]


I don't have any direct experience with wealth. I did have a college friend who came into a lot of money at 21 or so, after having been raised by parents who had basically ignored/saved the money they had and lived solidly middle class lives. My friend was not adequately prepared for wealth by his upbringing and I believe the money was gone in short order, for a mix of reasons, at least one of which was shame, I think. I'm sure my friend's parents had the best of intentions (don't raise a spoiled kid who takes luxury for granted) but I'm not sure it worked out quite as they imagined. That said, I think this person is doing fine - we lost touch after college but last I heard he had a fascinating and successsful career trajectory through some sectors rich people usually don't travel in, plus a law degree. All this to say I think it's good you're thinking about this.
posted by eirias at 6:07 AM on July 29, 2018 [1 favorite]


As usual, Mr. Money Mustache has something to say about this exact thing. Great advice.
posted by SinAesthetic at 6:16 AM on July 29, 2018 [2 favorites]


I see very little mention of philanthropy, either in your original question or the responses here. Perhaps, because there has been multi-generational wealth in your family, there is already a culture and tradition of philanthropy, but if there isn't, you should start one. This will not be a ridiculous amount of money they're coming into, but it will be enough to enable the kids to be generous and purposeful in their giving. Teach them the value and necessity of philanthropy, help them to choose causes and institutions that are of interest to them, enable them to direct smallish gifts even during their teen years, and prepare them to use their inheritance not only to benefit themselves, but others in their communities as well. What goes around comes around.
posted by beagle at 6:53 AM on July 29, 2018 [7 favorites]


yes I said yes I will Yes is right on. There's a similar trust in my family and it has had mixed effects to say the least. I "blew" all of mine on an expensive undergrad college and was basically forced to become a regular adult (albeit with a fancy degree) a few years late (no big deal). My sisters had much different experiences in which this money essentially kept them from figuring out their own thing and from having a reasonable relationship with money. I am most concerned with their kids: there is zero money for them but they have had an idle and expensive lifestyle modeled for them.
posted by Ignatius J. Reilly at 8:49 AM on July 29, 2018 [2 favorites]


I feel weirdly conflicted about making people take jobs for pay when they don’t need to,

there is nobody who doesn't need any spending money until they turn 25. before that, they need jobs. To a sufficiently thoughtless young person with no fear of the future, knowing your college will be paid for is all the same thing, whether it's going to be paid for by parents, grandparents, trust funds, scholarships, grants, or loans that won't come due until an unimaginably distant date. None of that security or expectation puts money in your pocket right now, for coffee and bicycles and concerts and video games and books and whatever kids care to have these days that isn't room and board.

once they're out of free college, they will need to live somewhere, and they will owe rent to somebody. they will need a job for to pay for that, too.

it's true there are people who will basically hibernate unemployed and full of drugs in filthy group houses just waiting out the years until their trust funds kick in, but I think those people are mostly screwed up by other things than just money (their parents, mainly). avoiding this should not be terribly difficult. so of course they should get jobs when they're old enough to. you don't work minimum wage service jobs to improve your soul or to steal them from the deserving; you do it because you need to buy things and this is where money comes from. which also means, you do it for the same reason you learn to read, even if you are going to be rich enough in a few years to hire a butler to read all your letters to you for the rest of your life. because this is a very fundamental thing about living -- what work is, and what it is like -- that all people must know to in order be functioning adults worthy of respect.

this is not something you can teach yourself or learn from your parents, because part of what work is like is being told what to do by strangers who don't care what you're learning. this is real, it's not a fake educational fantasyland or voluntourism or special rich-kid theme park and can't be replaced by those things, even though you may want to supplement their vocational education by sending them out on extra enrichment volunteer work trips too, why not. your kids are not going to deplete their community's supply of shelf-stocker/barista/cleaning crew/dishwasher jobs by each taking on a part-time commitment for a few years when they're the right age for it, they will not be robbing the poor of an experience that properly belongs only to the poor. that is a bad lesson.

working a real non-executive non-hobby job for however short a time is a necessary human experience and it is not a selfish play-acting indulgence for a rich kid, because a rich person will grow up to have power over other people unless they get rid of their money. rich people with discipline and direct experience of real work for low wages will exercise that power with more decency than rich people without those things. one hopes. the important thing is that whatever work they do be real, not fake: so behave just like regular middle class parents who don't hand out free money to over-18 adult children, even if they have it to give. 18 to 25 is a long stretch of time, plenty of time for them to learn grown-up budgeting and work ethics while free from student-loan stress.
posted by queenofbithynia at 8:51 AM on July 29, 2018 [12 favorites]


I don't know what your politics are, but you might check out Resource Generation and see if its values align with yours. They offer all kinds of resources, conferences, etc including many directed at young people (teens and twenty somethings). You might find one of their books, Classified: How to Stop Hiding Your Privilege and Use it For Social Change useful in reflecting and thinking about how to understand and talk about your situation.
posted by cushie at 10:23 AM on July 29, 2018 [2 favorites]


I want to prepare them as best I can and/or I am looking for ways to structure the trust such that the money will still have limitations placed on it before a certain age.

We just did a trust for our kid. Our lawyer said that there is no way to guarantee what the money gets spent on. You can improve the odds somewhat by naming a trustee whose money values are in sync with yours but that's really hard when you are projecting far into the future (the older I get the more people I know who are super successful and really "with it" in business/financially but in their 70's become easily susceptible to all kinds of stupid decisions or bad influences, especially influences coming from loved ones).

So my money (LOL) is on "preparing them as best I can". Just a couple examples of what I do with my 9-year old:

1) We talk openly about how much things cost - I set spending limits and I am purposely not shy about showing emotion related to money and overspending. For example birthday presents are not to exceed $25-$50, depending on what we can find and how close a friend this is, and if it's $50 I tell my son how I really feel which is that it's a lot for a kid that age and that I am not happy about spending that much.

2) If something is a lot of money, it needs to be earned proportionately. For example he really wanted a Nintendo Switch and he had to earn it by doing a chore for months (which is years to a 9-year old) because it's $300.

Having said that, the old adage that your kids learn from "what you do, not what you say" is true. So it's important to look into why you are "still kind of scared of being in control of my own money" and any other hangups you may not even be aware of yet. Kids are very much "monkey see, monkey do" so most definitely figure you own shit out if you want your kids to have good financial hygiene.

Most importantly though, "failure to launch" is a universal problem. Inheritance, or expectation of inheritance, adds certain difficulties but it also removes certain other difficulties, and at the end of the day you have to jump through all the usual parental hoops regardless. Anyway in my opinion the vast majority of US children grow up rich as it is (says this rose-colored glasses wearing optimist, reader of history books, and once poor immigrant). Kids these days don't need a 6-figure inheritance to be able to spend their youth being high and utterly aimless. So in that sense, I think we just have to do what everyone does - teach our kids good values and hope for the best.
posted by rada at 10:34 AM on July 29, 2018 [3 favorites]


I wouldn’t tell them the money is coming. Is that crazy?

The idea being, they will live like people who have to save, have to budget, have to sacrifice, have to work hard in school, have to take jobs they don’t necessarily love, have to think of the future, are grateful for extras, aren’t entitled.
posted by kapers at 10:41 AM on July 29, 2018 [3 favorites]


I tend to agree with kapers- do they need to know beforehand?

The truth is that you always need to budget and support yourself, no amount of money is enough to never think about it. I fear that receiving high six figures at 25 would be enough money to ruin ambition and not enough to actually live on for the rest of one’s life. Making it a small stipend instead would be far better for someone that age.

I agree with others that you should spend some time repairing your own relationship with money. I’m not sure exactly what your issue is, but I think everyone struggles with feelings around money (whether overly materialistic, stingy, anxious or whatever) and therapy isn’t a bad idea if it’s extreme in your case.

I think my parents did a good job with me - they are frugal and I am not naturally of that inclination. They just told me what things cost and instilled a sense of what was expensive and frivolous and what was worth money. I had to earn money to buy luxuries, but school was paid for. It took years for me to really get over being an over spender, but now I can earn more than I spend and am a good saver. (Marry the right person, too). All that to say, I am extremely grateful I didn’t have six figures to blow when I was 25 and that my education was paid for. A stipend or the lump sum later would be much wiser.
posted by rainydayfilms at 11:23 AM on July 29, 2018


The very fact that you're already thinking about this is super encouraging, as the daughter of parents who were relativley well-off but never taught me about money management. One thing I would really, really encourage (as cynical as it sounds) is an awareness that yes, there may be people that try to take financial advantage of you. These people are likely not good and true friends.
posted by DulcineaX at 11:45 AM on July 29, 2018


I disagree with not telling them the money is coming. My parents are very well off and very weirdly tight-lipped about money. I am pregnant with my first child and feel pretty certain that my parents will set up trusts for my children (or at least plan to pay for their education), but I also think they won't tell me about it for years. I don't know how aggressively I should be saving for that purpose. Obviously I need to be saving for my kids anyway, but my financial structure would look different if I knew that my parents already had the money set aside. I wish they would just be more open about what they have and what they plan to do with it.

I have also stressed a lot about money in times when I would not have if I had known what my parents planned to do with theirs. For example, I delayed buying a long-term home because I felt like I couldn't afford it, when it turns out my parents had been planning on gifting me part of a down payment, but didn't tell me this until I asked for a loan that I intended to pay back quickly.
posted by raspberrE at 12:28 PM on July 29, 2018 [7 favorites]


I agree with raspberrE that it would be better to tell them. I grew up in a family living way below their means. My parents never told me that they were doing this. I was made to believe that I was a middle middle class kid on scholarship at a private school.

I was over 35 years old when my dad discreetly told me that my mom was much, much wealthier than she let on. This was jarring, because I had chalked up the challenging aspects of my life to the particular combination of privilege and constraint that came with being some version of middle class (as I believed). When I found out otherwise, these challenges felt artificially calibrated by my parents.

Like when I had to work 30 hours a week for years while doing a full load of Ph.D. coursework. Even doing that, and not spending excessively, I was still left with significant debt. This was difficult, and led to chronic health problems, but I did it because I knew I wanted to reach my professional goals. After learning that my parents could have made this so much easier if they had wanted to, all the trouble and debt just seemed so oddly unnecessary.

Also, if you don't tell your kids about your money, you are, in a sense, hiding your values from them. For example, my parents didn't tell me that they were living way below their means. This meant that they had to forego an opportunity to teach me early the value of living this way.

Keeping this a secret also precluded my parents from fostering in my siblings and me a philanthropic ethos and financial planning skills. They had financial advisors that I never knew existed, that could have helped mentor me in my 20s and 30s.

You may want to take a look at the publications of the inheritance project. They are thoughtfully done, even though, not surprisingly, they still have some blindspots about the contradictions of wealth.
posted by unk gladenboot at 7:58 PM on July 29, 2018 [5 favorites]


A few other things I forgot to mention. Your parents have to find people KNOWN for excellent family trusts, like whoever manages the Morgan or Rothschild families. Don't just go to the family lawyer or e*trade or Uncle Ted.

1. Your parents HAVE TO ENSURE the trust is written in such a way to guarantee perpetuity. Unbelievably, my ex's family trust was written with his and his sibling's names and because it literally named them only, they were allowed to clear it all out. Even though the intent of the trust was education for generations, there were no legal provisions for that since it only specifically named 5 people. We later discovered there are obviously ways to create family trusts designed for perpetuity, not one specific generation.

2. By the same token, carefully consider what counts as education and what counts as an educational expense. My ex and his siblings absolutely scammed their trusts by signing up for NYC cooking classes and living in a $20,000 monthly apartment in Soho, then doing it again for circus school in Tokyo, film school in Berlin, art classes in Paris---the list never ended. It was all considered educational. They all knew they had enough money to burn until they turned 25, then they'd get ANOTHER massive check but still no degree so they could keep it all going.

3. The reason #2 matters is because no matter how much you teach them about the value of a dollar, if you give an 18 year $100,000 and up and tell them to go learn things, that sense of financial responsibility changes. They will likely become slackers in the time of their life when they need to be learning about living independently within their means. In other words, 18 is a really bad age to give kids money. It may be better to let them know 4 years of college are covered with a small stipend for books but they will still need to work part time or volunteer or whatever.
posted by yes I said yes I will Yes at 3:47 AM on July 30, 2018 [3 favorites]


I grew up in a family living way below their means. My parents never told me that they were doing this. I was made to believe that I was a middle middle class kid on scholarship at a private school.

This was basically me. I knew my grandparents were doing okay but somehow my parents seemed to not be and we lived in a falling down house in a rural Massachusetts town. My parents were doing this on purpose, had choices, but I didn't have a choice and grew up feeling I was a different class than my parents knew we were. That said, my mom was shrewd, albeit frugal, with money. So we thought about it, talked about it, had ideas about how to manage it. Part of dealing with money is dealing with anxiety or shame about money. Some people never open their bills, some people will never spend money, even on things they need. I grew up with money having an outsized role in my life, because I never thought I had any. Fast forward to the deaths of both my parents and now I am pretty well off and it's confusing to me because I didn't grow up in a culture where this was even a possibility. So I know how to not spend money, but like others have said above, I don't know how to be philanthropic, how to move within circles of people who have more money, how to do anything but basically hoard it.

I also have a foster brother who my mother didn't trust to manage the money she left him. He received a trust which is administered by my sister. That trust is set up with certain basic stipulations about what the money can be used for and then my sister has discretion. This works well. My brother can get money for things he needs (business stuff, house repair stuff) but not for things that aren't designated (vacations, credit card debt) and for that he has a job. It puts my sister in an awkward position sometimes (he is a pain about it and threatens to sue her because he doesn't like these stipulations and doesn't like that she and I don't have them) but it does work to do what my mom wanted. There is a "minimum distribution" per year and the trust will empty itself in ten years.

There are all sorts of ways to manage this sort of thing. I would err on the side of not lying about the trusts specifically, but maybe vaguing the details such as dollar amounts. If your grandparents have a "money person" who advises them, maybe seeing if that person can come along with the trusts. Honestly things could be worse than being afraid to spend money. I'm not in love with my approach but it beats a lot of thher ones.
posted by jessamyn at 5:55 AM on July 30, 2018 [3 favorites]


I agree that you should probably put your own oxygen mask on first with this one, especially since you've got several years before your kids will need to make expensive college decisions. I recently realized that I struggle with money because of some deeply ingrained sense that it is uncomfortable and I must get rid of it ASAP. That discomfort--not a lack of paying work, not a lack of family support--explains all my money problems.

To try to fix this, I've been reading You Are a Badass at Making Money, which, despite the obnoxious title and questionably Randian views of the author, has been very helpful in understanding money as something that can indeed buy happiness, because happiness = freedom from worry / generosity / options / the ability to get out of a bad situation if you need to. Overall, it has been super helpful in correcting some of my self-destructive thought patterns re: money.

For long-term financial strategy, I've found The Millionaire Teacher to be useful for explaining investing and inflation (etc.) to a layperson, and for helping me visualize what might be possible if I use money wisely.
posted by witchen at 8:13 AM on July 30, 2018


I would worry way less about this if I were you - there is very little actual proof that poor people are unable to handle being gifted large sums of money as well as wealthy people are - it's basically yet another lie told to justify not giving them any money.

Working also does not build character - if it did, then we wouldn't be having threads like 'billionaire is a derogatory term' because most billionaires do work hard for various definitions of 'work hard'.
posted by The_Vegetables at 11:44 AM on July 30, 2018 [1 favorite]


I'm sure I'm biased here, but - while I advise consulting with a financial planner - I think as long as you model a good relationship with money your kids will be fine.

My personal experience: like jessamyn, my parents lived below their means when I was growing up. I think it was them mimicking their own parents' spending habits. My parents are not rich, but - compared to my friends whose parents earned the same amount, a comfortable middle-class salary - we were fairly unnecessarily frugal. I wore cousins' hand-me-downs and owned one pair of shoes, which were only replaced when they wore out. If I wanted candy or a toy I waited until Christmas or my birthday (not that I was guaranteed to get it), or bought it with my $2/week allowance (which, with inflation, I guess is $3 now!). Of course, they were clear that my allowance was in exchange for me washing dishes and doing other chores. My parents were also open about using coupons to buy groceries and talked about not buying certain cuts of meat or name-brand items because they were expensive. Our house needed a lot of repairs (like, um, proper insulation in my bedroom for winter) that never got done because of the cost.

Was this the right approach? I don't know. I think the point of my story is that I find myself modelling my parents' approach to spending. I walk around with a broken phone for months because it would cost money to replace. I've lived in cockroach-infested apartments because the rent was cheap. I feel guilty about every dollar I spend, even when it's on food. I'm considering starting budgeting, not so I can stay under-budget but so I can reassure myself that yes, I can afford ice cream this week.

I did pay off my law school loans quickly, though, so there's that (my parents offered to pay for law school because they're against loans, but - due to the way they raised me - I felt too guilty to take their money).

My perspective is that there's a lot of middle ground between (1) being terrified to spend money and (2) living beyond your means until you run out of money. Find a middle ground that's comfortable for you (even if it's uncomfortable at first, because of your relationship to money), model it for your kids, and relax.
posted by ersatzhuman at 5:14 PM on July 30, 2018


My thinking is that the best thing to do is be honest about the money ahead of time and to try to work together with your children (and perhaps a financial advisor) to develop a plan.

I'd try to emphasize that while they're going to be adults when they get the money and that they could do whatever they want with it, you really do think it'd be a mistake to just blow it all. Use the cautionary tales in this thread to try to show how you really don't want to run out of money. At 65+, you want to be able to volunteer or whatever if you're looking to fill the hours. You don't want to be needing a job, unable to retire, because you blew through all that money in your 20s and 30s.

So I'd try to get them to work out a plan where each disbursement they put aside X% towards their retirement, maybe invest some of it so that they can have additional disbursements at 40, 45, etc and figure out the best way to stretch the money. Set aside some for a safety net, or towards their future wedding of their dreams, or towards their kids' college funds. And then after all that, let them spend the rest on whatever they want, and/or get them to think about how they have a certain amount each month until the next payout. There's no sense just hoarding everything.

It might also be a good idea to get them to think about how even though it might seem like a ton of money, it would go quickly if they weren't careful. For instance, suppose it's 600k. If they got a 20k a month apartment they'd be out on the street in 2.5 years. Or how that 600k only buys 1/5th of a Bugatti Chiron. Or they could buy 200 people a 3k couch and then the money is gone. And once it's gone, it's GONE.
posted by cali59 at 5:32 PM on July 30, 2018


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