A Massive Generational Wealth Transfer Is Why Everything Will Be OK

Bank Of Mom And Dad

The headlines about a massive generational wealth transfer are real. I've been witnessing it for years. I'll share just a few examples that I've observed in my own neighborhood. Trillions of dollars will be inherited by the next generation.

When I bought my previous home 10 years ago my 68 year old neighbor stopped by to say “hello.” He was the godfather of the block, having bought his building back in the early 70s. He gave me the inside scoop on all the neighbors. One neighbor stood out in particular.

He said the house across the street was purchased a year before mine by a family who wanted a place for their son to live while attending UC Hastings School Of Law. The purchase price? $1.45 million for a 2,100 square foot three bedroom, three bathroom house.

Living It Up Thanks To Rich Parents

The son would host at least one fraternity-like party every year, but other than that, the house was pretty tame. The son continued to live in the house after law school and now it looks like they might sell.

For 10 years, the son not only lived for free, but he probably made rental income as well thanks to his two roommates. His $120,000+ law school tuition was also probably full paid for by Bank of Mom and Dad. He also drove a $60,000 Audi S4. If the house ever sells, I wouldn't be surprised if he gets to keep the $1 million+ in profits.

It's clear to me that my neighbor is going to be fine, even if he doesn't work for the rest of his life. If you're willing to accept so much assistance that's beyond what you can afford, then why bother working at all? Just mooch off your parents forever!

More Examples Of Generational Wealth Transfer

My Other Neighbor

About two years ago my 32 year old next door neighbor came home in a brand new, $48,000 Toyota 4Runner Limited. I thought it was a quizzical purchase because the car couldn't easily fit in his garage. I saw him struggle for five minutes just to get the beast in.

Even so, I was intrigued and wrote a post about it called, “Dealing With Money Envy” because I was jealous. He's lived in his parent's flat for the past 11 years since college. While his parents lived in their other home in the South Bay.

With the average SF rent for a two bedroom at $3,800 a month, of course he could afford a new 4Runner. He's saved $400,000 in after-tax money by not paying rent for 11 years.

Parents Taking Care Of Everything

My neighbor is a nice fella who now works in real estate with his father. For 2.5 years he got to travel around the world in his 20s without holding down a job. His mother would stop by and share with me how her son was having so much fun.

Meanwhile, I worked my ass off all throughout my 20s just so I could be able to afford the house at age 27. His carefree lifestyle is what made me the most envious. The car was just an extra kick in the nuts.

When I was moving out he asked whether I'd like to sell my house to him (to the family really). If he could really afford my house at $1.7M, then his finances must be in great shape. Valuations have gone a little nuts as you can see in this chart.

Then in mid-2017, when I texted him to know I was considering selling my house to simplify life, he gave out an offer of $2.1M. It was a low ball offer because I believed the market value was at least $2.4M – $2.5M. However, it just goes to show how much money his parents have to help him buy!

It Is Not As Expensive To Live As We Think

One of the biggest problems in society today is the widening wealth gap. Part of the angst has to do with the rising cost of living (rents and property prices) while wages for the middle class have stayed stagnant. There isn't a week that goes by where some type of newsworthy fight between landlords and renters, developers and renters, and tech companies and renters doesn't occur.

But if you ask my two previous neighbors about costly living in San Francisco, they'll have no idea what you're talking about. They haven't had to pay a dime in rent for years thanks to their parents. They are benefiting from a generational wealth transfer from their parents.

Rent Is Affordable If You Share

The other week I surveyed four UC Berkeley part-time MBA students about their rent during a meet up one evening. Their average age was 31 and their rent ranged from just $800 to $1,600. That's not bad for folks who are presumably making at least $80,000 a year.

Every single one of them was sharing an apartment or house with a roommate or three. One finally said he was moving in with his girlfriend and splitting their $2,800 a month rent. $1,400 a month each is not too bad at all.

Rooming with other people and living just a little bit further away from city center was the basic feedback of my post asking how people can afford to live in expensive cities on less than six figures a year. To me, it feels weird to still live with roommates after age 30. But I guess that's how things are nowadays. At least it's a step up from still living at home with your parents in adulthood.

Let's meet my new neighbors.

Meet The New Neighbors, Same As The Old Neighbors

One of the reasons why I moved out of my old neighborhood was to experience a new lifestyle. I also wanted to eat and drink at new restaurants and bars, hike at different parks, and view different sceneries. The people are pretty homogenous on the north end of San Francisco, where property prices easily top $1,200/sqft. I longed for a little more diversity.

I thought I'd experience a more realistic representation of San Francisco given my new house is roughly 50% cheaper than my old house. Further, it was not much more expensive than the median SF home price, but not so! It seems like there's even more parental help for adult children the cheaper you go.

Here is a quick summary of my six neighbors in Golden Gate Heights. They are all wonderful people. One couple even snipped me a bunch of roses from their garden as a welcoming gift.

Profiles Of My Neighbors And Their Adult Children Living At Home

* Neighbor 1: 50-year-old female. Grew up in the house since birth and inherited the house after her parents passed away.

* Neighbor 2: 40-year-old male with wife and kids. Father bought his house for him nine years ago according to his father. His father introduced himself to me while painting his son's house while he was away.

* Neighbor 3: 24-year-old male attending community college. Lives in the entire house for most of the week while his parents live in another house up north.

* Neighbor 4: 40-something year old couple. Lives in his father's house with his partner. His father lives somewhere else.

* Neighbor 5: 60-year-old woman living with 31 year old daughter. Daughter has lived in the house since she was in middle school.

* Neighbor 6: 30-something year old woman with family. Father bought the house for her in cash early 2014. It's the same father who bought his son a home! Father was a first generation immigrant who started an auto repair shop and saved all his money.

* Neighbor 7: When I bought a forever home in Golden Gate Heights in 2020, I met with more neighbors. It turns out the neighbor across the street from me had all three of their adult children move back at home. One daughter dropped out of college and the 25 year old son has been there for the past three years.

Generational Wealth Transfer To The Rescue

It's pretty interesting how much you can learn by just keeping quiet and listening. There's a lot more detail, which I've kept private. For those who asked what I do, I told them I was a writer working on an online media business.

Notice the commonality in all six neighbors? NOBODY has to pay rent or a mortgage because they either inherited the property or their parents paid for the property.

None of them had to go to some fancy private university and get some cutthroat job in banking, consulting, private equity, tech or any other high-paying industry either.

According to Cerulli Associations, an estimated $84 trillion is expected to transfer from baby boomers to Generation X and millennials by 2045. Of this, $72 trillion is predicted to pass to heirs, while $12 trillion is earmarked for philanthropy. 

Massive generational wealth transfer equal to over $70 trillion coming in the next few years

Feeling Bad For Grinding So Hard

I'm not making this stuff up. I am the ONLY turkey who had to aggressively save money and delay gratification for years to buy my latest house! I'm sure my neighbors worked hard, saved their money, and took risks as well.

But it's hard to come up with something as expensive and hard to save up for like property, unless you're talking about saving and investing for a new business. Oh yeah, doing that now. I let honor and pride get in the way of getting ahead.

My initial reaction to the realization that every single one of my neighbors for the past 10 years didn't have to pay a cent for their house was, Why bother trying so hard? I was admittedly envious of their good fortune and I felt deflated for having to take a more treacherous path.

I quickly got over my pity-party and focused on the one big positive. Everything will be OK due to a massive generational wealth transfer!

A Better Life For Our Children By Generational Wealth Transfer

Someone has to slave away so the next generation can have a brighter future. It's the American way. We pray our children will have better lives than us because from where I'm standing, life seems so damn competitive.

Elementary school kids are already being pushed by their parents to be superhuman with after school activities and weekend schooling. Elite universities have acceptance rates under 10% now thanks to population growth and the common app.

Jobs are being outsourced due to cheaper labor and the internet, which makes the transfer of skills much easier. Costs for real estate, tuition, food, and gas are rising much faster than wage growth. What is a young person supposed to do to get ahead except tell themselves hard truths?

But after witnessing with my own eyes how every single one of my neighbors over the past 15 years was able to get ahead thanks to the help of their parents, I am no longer as concerned. The reality is, there are fewer self-made millionaires than we think due to so much wealth and parental support.

The godfather of my old block has a multi-unit building that generates over $300,000 a year in rent. He said his daughter will inherit the building when he passes. Lucky her.

The Main Concern For My Children

If I ever have children, they will get living help from me as well if they decide to live in San Francisco. I'll make them pay at least 75% market rent so they don't grow up being entitled brats. But still, I will help them out as much as possible because getting ahead is brutally tough.

Of course if they decide to complain why they can't get ahead when they are only working 40 hours a week or less, I'll let them fend for themselves.

I first rote this post in 2014, three years before I had my first child. And what I realize now is that living at home is a great way to save money and also for parents to reconnect with their adult children. However, if you're near or over the age of 30 and still living at home, I think there's more downside than upside.

Downside To Relying So Much On Parents For Money

The one common thread between most of the adult children still living at home is that they have mediocre-to-poor personalities. Therefore, as a parent, I will do my best to help develop better personalities in my children so they can get into a good university and get a solid job.

Millennial generation wealth chart - Millennial generation is wealthier than previous generation according to Survey Of Consumer Finances

Over time, I realize the angst experienced by high-income earners with children is because they are not rich yet. They are HENRYs who lack generational wealth to ensure their kids will be OK.

Hence, if you want to feel less stress, anxiety, and angst as a parent, try to accumulate generational wealth so you no longer have to worry about your kids getting into a good college and landing a well-paying job. With generational wealth, all the rejections don't really matter because they are set for life!

Support From My Parents

My parents provided an incredible foundation for me to learn and grow. I remember my father introducing me to many of his business connections in order to try and help me get a job. In the end, I went my own way. But I did so only because my parents gave me the educational opportunities in order to do my own thing.

One thing that kept me going during the most brutal times in finance was knowing I could always go back to Hawaii and live for free in a home my grandfather purchased 60+ years ago. Hawaii was my backup plan that I almost executed after 9/11 happened.

Even though I don't expect an inheritance or a generational wealth transfer from them, just knowing that I wouldn't fall into the abyss provided me motivation to take some risks.

If you are thinking of providing some generational wealth, I think one of the best ways of doing so is by providing the gift of education. Superfund multiple 529 plans for your children, grandchildren, and other relatives. This way, you know your money is going to a good cause. It's harder to spoil your children by educating them!

A Massive Generational Wealth Transfer Is Happening

The next time the media says Americans are in financial disarray, don't believe them. There is roughly $38 TRILLION dollars getting passed down over the next 15-30 years, according to government estimates and independent research houses like Impact Assets.

Talk about a massive generational wealth transfer. The average American inheritance is $180,000 and will just continue to grow over time.

And if for some reason your parents didn't purchase a home 30+ years ago to leave to you and they didn't save and invest their money wisely over their careers, not to worry! Not only are you not spoiled, you're now able to create your own fortune one dollar at a time to leave to the next generation.

Generational wealth transfer based on total home equity by generation Baby boomer, Gen X, and Millennial

Generational Wealth Transfer Updates Over The Years

2018: I decided to sell my SF rental house not to my neighbor for $2.1M, but to a tech VC for $2.74M in 2017 and simplify life after the birth of my son. I still own my primary residence in Golden Gate Heights.

I used $500,000 of the proceeds to reinvest in real estate crowdfunding. My goal is to earn passive income by buying cheaper valuation properties in the heartland with higher net rental yields. If I can earn an annual 15% return on $500,000, that is a greater net return than what I was making with $2,740,000 in exposure with my SF rental house.

2019: I met a new neighbor, 29 years old and still living with his parents. But they bought him a new $50,000 truck. I asked him if he works in construction and he said no. He just likes big trucks and goes up to Tahoe during the winter with his dog.

Neighbor #3 is now 28 years old. He is still living at home as he still tries to figure out what to do with his life. In the meantime, he got a new $8,000 motorbike. His dad said he wants to get a graduate degree in something. 

Maybe Everything Will Be OK

2023: I met another neighbor whose 22 year old daughter is trying to find her purpose in life. She worked on turning a van into a camper and drove to a commune where she was planning on living. That didn't work out as she planned and now she's back at home with her parents.

The neighbor I met in 2014 living at home with his parents is still living at home. Now his brother is living at home with them.

The more I've thought about this generational wealth transfer issue, the more I realize the fear of spoiling our adult children is overblown. By the time adult children receive a large amount of money, they will have already been set in their ways.

Do your parents still help you out financially after college? (Choose up to two)

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Planning for retirement when paying for private grade school
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Build Generational Wealth Through Real Estate

If there's one thing you can do for your children, it's to build generational wealth through real estate. Not only does real estate provide shelter for you and your family, real estate tends to appreciate over time. The combination of capital appreciation and rental appreciation is a very powerful wealth force.

Take a look at my two favorite real estate crowdfunding platforms. I've personally invested $810,000 in private real estate so far. Both platforms are free to sign up and explore.

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go. 

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields due to positive demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio. 

A Massive Generational Wealth Transfer Is Why Everything Will Be OK is a FS original post. The amount of wealth the oldest generation will transfer is incredible.

156 thoughts on “A Massive Generational Wealth Transfer Is Why Everything Will Be OK”

  1. I love this post (along with many of yours!)

    This makes me deepen into a sense of gratitude and contentment.

    I grew up in a wealthy DC suburb and felt incredibly insecure with my family’s rented house and hand-me-down cars. Needless to say my divorced parents aren’t rolling in dough.

    After enlisting in the marines out of high school, I found my sense of self, went to community college, transferred to an ivy, embraced sobriety, joined corporate America, and found a path to financial security.

    I’ve been married for two years to a superb partner and we’ll be able to buy a home — not anything over the top, but something we’ll be proud of — and start our family. Our annual income floor for now is $300K and will more than likely continue to rise at a decent rate. I do work I enjoy (leadership development), and don’t see burnout in my future. Similarly, my wife has so far found good work life balance.

    Im both highly privileged AND have worked hard to find the position in life I’ve found today. My wife has as well.

    I grew up insecure comparing my socioeconomic status to my friends. Today I’m happy. I see some of my friends and ways in which they were actually hindered by the financial abundance of their parents. I wouldn’t even consider changing my position with theirs.

    Don’t get me wrong — we have friends and the husband was born into an entrepreneurial household in the insurance industry, and he’s built a successful business of his own. I get the impression they could retire today and be set for life. I catch myself with a bit of envy for their abundance.

    However, his parents didn’t just give him a pile of money — or if they did, he learned how to use it wisely and work hard to grow it. Likely they mentored him and gave him a skill set and worldview more valuable than cash — and he in turn developed put them to work.

    I do believe in karma and I believe if I inherited money at an earlier age than today, it may have limited my growth/fulfillment in life.

    Sam — do you think you’d have the level of fulfillment you have now if you had an unlimited bofm&d account back in your early adulthood? My guess is no.

    1. “ Today I’m happy.” This is your most important sentence!

      I appreciate coming from my four dollars an hour McDonald’s job to go into college and then beyond. Having the perspective of hard work and not much is wonderful!

      Makes me appreciate much more everything I have today. I also don’t take my luck for granted.

      I hope you pick up a copy of my new book, Buy This, Not That. It’s perfect for your demographic.

  2. Wealth transfer! Hahahaha!! Hilarious. The global financial system is literally collapsing right now. Not only will there be no wealth transfer, we’re very realistically entering a global Dark Ages thanks to the criminal mafia we call the government and banking cartel. Kiss your dreams goodbye!

  3. If people honestly think that the US government is going to allow wealth of the boomers to transfer to their heirs, then they are truly gullible. Assisted living, medical bills, in home health care will take the majority then taxes will get the rest.

  4. You were jealous? I’m glad I don’t have that problem. When I was in my late-teens almost all my peers had their own car. I didn’t have one and while walking home from school one day I thought “I’m just a dumb guy that’s why I don’t have a car”. I was literally at the top of my class then – always on honor roll. Then decades later I discovered that generational wealth is why everyone had a car and I didn’t.

    This revelation occurred because now many people I grew up with are millionaires and it’s not that they earned they money – they inherited it. I wasn’t dumb. My father got into our wealthy community because he was very smart but was also alcoholic. Apparently he lost his executive level position, lost it and spent the days at a bar! All the while I was in school doing really well. But yea. I get it now. It is possible to be self-made but most people who have wealth are not. It’s generational wealth.

  5. First, I don’t believe we want a country where your future is decided by whether your parents have an inheritance waiting for you or not. We want a meritocracy where hard work and creativity is rewarded. If you work hard but still can’t afford a decent lifestyle because less hard-working people are holding down the fort thanks to their parents’ money, that is not good. You may say that it should only motivate the hard-worker more, but we have to accept that everyone has limitations even in that regard. If you need another 10k, it’s achievable. 100k, it’s a stretch, but OK. But if you’re short a million, that is a tough pill to swallow even for a motivated person.

    For example, let’s say one of your neighbors that inherited their home is just living at home and not working. Meanwhile, a hard-working person who got a job at UCSF doing cancer research is looking for a home. Because less homes are available, this person may not find an affordable home. They may end up going to another region, or another country, which will end up benefitting from that person’s research. Not good.

    Second, you are just taking the average wealth and dividing it by US population to conclude that we all have a big sum of money coming our way (I assume). But we know that wealth is massively concentrated in the hands of a few. Few Americans, as a percentage, are going to get a decent chunk of that multi-trillion dollar pie. And keep in mind that, for historical reasons, certain races and nationalities have much less generational wealth in the United States, through no fault of their own, and will end up with nothing. Does that seem fair?

    So while your conclusion at the end of the article is celebratory, I think this is actually cause for concern. Our system of restrictive housing in the bay area is leading to increased income inequality and economic issues which will bite us in the ass later on.

  6. This article evokes a lot of emotions in me. It’s not that I feel envious so much as I really don’t think it is good for parents to take away “firsts” from their children. Receiving your first check, buying your first car, first house, first stock, etc is such a wonderful feeling of accomplishment. Why would a parent want to take that away from a child? Secondly, I don’t think it is good for our democracy/society in the US. There is something to be said for working hard and achieving your goals. It is good for your mental health. It’s not good for you to rely on your parents to support your mental well-being. Also, I think the parents who are letting their children live with them or buying them houses and things are actually trying to fill a void in their own life.
    And seriously, do we think we can keep a democracy in the US if we have those who inherited money and didn’t have to work for their wealth? If you don’t have motivation or you don’t know what it means to work hard for the things you achieve you won’t want to protect it.

  7. Friendly Russian

    It’s a great article, thank you so much for it.
    I am you neighbor and live in the South Bay, and I see a lot of adults living with their parents for free, not worrying about paying rent or saving money. And yes, sometimes it makes me envy. But I’ve learned how to deal with this feeling.

    You are absolute right, as a parent I will help my kids (I have 2 daughters) but my primary help is to raise them right. Raise them being able to make right decisions, being able to work hard and save. Raise them with an example of delaying gratification.

    That’s my primary help for them. And not living for free, doing nothing and waiting for my death to inherent whatever I will have by that time.

  8. I think receiving financial help from parents is a great way to have a head start in one’s life. My parents helped me opening a bank account, they taught me the basics of saving and investing money when I was 10. My parents paid for all my college education including living expenses, but I still worked hard by volunteering and scored high in summer internships. My parents also bought me be a condo when I was 20, but I’ve never lived in it and my parents rent it out for income. Having this money enabled me to choose a career out of passion, choose a husband out of love, choose to live where I want to. So less limitations and more freedom in my life.

    I come from a family where we believe it is parents’ duties to fully fund their kids college education, and help them get their first property. The kids are expected to get at least a Bachelor degree (everyone in the last 4 generations starting with my grandparents went to college), work hard for a successful career, live below our means to accumulate more wealth to pass onto the next generation. When parents get older and need extensive care, the kids are expected to reduce work or retire early to take care of them (at least for emotional support). I am taught to volunteer and donate to the people in needs. I am also constantly reminded by parents and grandparents on how lucky I am being born into this family, and responsibilities come with the privilege.

    The most important inheritance is not the money, it’s all the values and life-skills needed to be successful in life and build wealth. My grandparents lost all their fortune during the Chinese cultural revolution in the 60s and 70s. My parents, all my aunts and uncles still got wealthy in the last 30 years on their own thanks to my grandparents’ teaching.

    1. Sally

      I agree with you totally. Unfortunately my parents went bankrupt in life and I ended up paying for their funerals – both single children and inherited. I learned what one doesn’t do a very hard way. I am the only one with graduate degrees and my 4 younger siblings have grade 10. In this era. What a broken family can result in. I must admit I am jealous of friends who are all coming into million or so inheritances. However we helped my daughter with school and a down payment. So I do agree but also know how hard it is to start and even more so now. Although I did have 16% interest rates when I bought.

      Great article

  9. I think receiving financial help from parents is a great way to have a head start in one’s life. My parents helped me opening a bank account, they taught me the basics of saving and investing money when I was 10. My parents paid for all my college education including living expenses, but I still worked hard by volunteering and scored high in summer internships. My parents also bought me be a condo when I was 20, but I’ve never lived in it and my parents rent it out for income. Having this money enabled me to choose a career out of passion, choose a husband out of love, choose to live where I want to. So less limitations and more freedom in my life.

    I come from a family where we believe it is parents’ duties to fully fund their kids college education, and help them get their first property. The kids are expected to get at least a Bachelor degree (everyone in the last 4 generations starting with my grandparents went to college), work hard for a successful career, live below our means to accumulate more wealth to pass onto the next generation. When parents get older and need extensive care, the kids are expected to reduce work or retire early to take care of them (at least for emotional support). I am taught to volunteer and donate to the people in needs. I am also constantly reminded by parents and grandparents on how lucky I am being born into this family, and responsibilities come with the privilege.

    The most important inheritance is not the money, it’s all the values and life-skills needed to be successful in life and build wealth. My grandparents lost all their fortune during the Chinese cultural revolution in the 60s and 70s. My parents, all my aunts and uncles still got wealthy in the last 30 years on their own thanks to my grandparents’ teaching.

  10. My dad used to tell me the story of how his his uncle told his daughters that they would be very wealthy someday. My dad’s uncle died back in the 1970s when he was in his mid 60’s, but his wife lived almost a full four decades longer. My dad’s cousins didn’t inherit until they were in their 70s and had medical issues of their own.

    Inheritances can be a funny thing. I don’t think it is wise to count on them, and it seems kind of morbid, since you know, the person has to actually die first.

    For all I know, my parents will inherit from me, they are the beneficiaries on my life insurance policy. :D

  11. Had an interesting sit down conversation with the parents recently and this post came to mind. My parents worked hard most of their lives and now have a low maintenance business generating decent 6-figure income every year. I asked them what their plan was moving forward because they just hit their 60s and they can’t run the business forever. They essentially told me they wanted me to run the business later and share the profits with my sister 50/50 (it’s just us two ‘kids’).

    Some background info:
    Me = in tech making 6-figures, wife making 6-figures, savings rate 70%+, early 30s, looking to FI by mid-40s, 2 rental properties (maybe more in the future), FinacialSamurai fanboy, in state Uni w/ full ride, etc…
    Sis = self employed in the ‘arts’, struggling to save a dime, designer everything, spend spend spend, always struggling with finances, private college paid my mom&dad ~200+K, always hitting up bankofM&D for help (cc debt, car, rent, etc.).

    I’m not totally okay with running the business. It would require me to move, and although I like the low maintenance of the business, I’d rather not be tied down to it. I proposed they sell the business and travel/spend as much of the money as they can. I can’t imagine the extra income/money affecting me much.

    My main concern is what the money will do to my sister. She’s never shown much interest in personal finance nor improving her own. I’m afraid what that kind of money would do to her life, habits, etc. My parents trust my opinions and advice on their finances due to my track record, but this situation isn’t as clear cut.

    I wanted to see what advice you (FS and FS followers) would give. Thanks in advance!

    1. You can’t control other people or change their habits. Everything is split 50/50. Your sister gets what she gets and if she spends it, in your opinion wastes it, and lives in poverty because of it, tough sh**.

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  21. I’m not sure where I fall in your survey… I am still eligible for my parents’ health insurance and they pay for my cell phone bill. I live with my boyfriend now, but for a while I was living for free with a friend and doing chores as rent. I freelanced and was able to keep my schedule flexible.

    Where do / did I fall?

  22. “The Millionaire Next Door” covered this topic extensively. In a nutshell, children that get financial help not only earn less money themselves (obvious effect), but actually take in less money overall even when considering parental financial help. This surprised me, but looking around I think I believe it. This probably only applies to middle class folk. The truly rich can give a lot more than I’ll ever make.

  23. There is a saying in Guatemala “Hard working parents, gentlemen kids, panhandler grandkids”, saying if you spoil your kids too much, like this first generation migrant, they won’t know the value of money but will still have enough to live without working, while the third generation will be entitled and broke. It is common here for rich families to buy a $400-750K house cash for the newlywed kids who make $1,000 or so a month, so basically they get used to living beyond their means and parents foot the bill. If I have kids I would want to avoid inheritance taxes as much as possible and buying them a house could achieve that goal but I would try to have them pay a rent or find roommates so they pay for taxes and maintenance and learn the value of money.

  24. I remember being jealous of the kids who’s parents would only buy their books (& my assumption tuition, room & board) not the t-shirts. My parents did not even buy my a pencil while I was in college.

    I’ll be beyond flabbergasted if I get any inheritance.

  25. Downunder Sugarglider

    Well – this is a very interesting observation. To compare to Australia, my next door neighbour is a young woman living in a 3 bedroom house probably worth about $800K, owned by her parents, who 9 years ago was undertaking a PhD in Law – has flatmates – must have finished by now but still appears to live there in the same circumstances. The house across the road sold 5 years ago for $1.2million to a family who had come into an inheritance. so yeah – inter-generational wealth is alive here too AND it also is not in many situations.
    I left home at 20 to move into my own mortgaged apartment, and now MANY years later my father constantly says he is going to die with only 10 cents left. My father-in-law passed 6 months ago leaving none of his estate to his children.
    There are many stories in the media of how Sydney real estate prices are locking out first home buyers by Baby Boomers buying places at high prices for their university attending children.
    Only 1/3 of properties in Australia have mortgages on them – so whilst there may be a small number of people who own a lot of the property, there would be a decent percentage of people living in wholly owned, and thus rent/mortgage free, property.
    Obviously I am not the only one really struck by your thinking and interesting topic

  26. I am 25 years old, and I have always been shocked by the amount of parental help my generation has received. When I was in graduate school a few years ago, everyone received a minimum stipend of 18K from the university plus you could work part-time on top of that. I applied for lots of scholarships to receive the maximum stipend and had a part-time job, and was therefore able to pay for all of graduate school and living expense without any debt. I actually netted around 15K over the two years! I didn’t own a car and lived with 7 other people in a giant house. The jobs I had came with lots of free trips and events. I had a great time!

    However, several of my peers preferred to live alone, have a car, and bring Starbucks to class everyday. Their parents still paid their rent and for their car! They struggled to even pay their own tuition and complained about our stipends all the time. I was shocked!

    Even now that I’m in the workforce, it makes me laugh when a co-worker talks about her plans to buy a house. Her parents are giving her the entire down payment!

    I’m not envious of these people at all. I am proud that I was able to pay my own way through graduate school, and that I can now easily afford a down payment on a home. If my parents just handed me the money, I would feel confused and dissatisfied because I like to feel the satisfaction of saving money to provide things.

    But I wouldn’t mind being the recipient of inter-generational wealth in my old age. I hear retirement homes are expensive!

  27. Done by Forty

    I’m not as optimistic about the wealth transfer, as I don’t believe it positively impacts a wide segment of the population. (Of course, I should dig for some actual data.) Still, we can deduce a little something about how wealth will flow due to the wealth gap. If it’s concentrated with a minority, the progeny of that minority will benefit. (And your neighbors might fit within that group.)

    1. Chief Curmudgeon

      I was thinking the same thing. You are correct, stats show wealth much more concentrated than income. So the bulk of that wealth will stay in a very small number of hands.

  28. This blog couldn’t have been more timely. I just launched my own site (see link!) and have my brief intro posted only. I’m an immigrant and have been given nothing to start with, my parents try to give me what they can but outside of college, it was nothing. I intend to fully pay them back plus more as my career progresses.

    I won’t be shy, it’s not jealousy when I see people given things from rich parents, its loathing. But more so it drives me to be better (and pretty successfully so far if I do say so myself). I think this touches one of the fundamental things “wrong” with the US today is jealously between the two groups. It shouldn’t be jealousy, it should be motivation!


  29. Hi Sam, I am not sure I agree with you about the general statement of parents providing wealth. The region of the country you are living in is such a high cost of living area and the wealth in that area is so prevalent that only well off people can afford it. I am not sure why you are surprised with the “freeloading” oops I meant endowment by parents because money creates money. In other areas of the country especially rural and suburban I think you will find a lot less of this type of entitlement and people have to support themselves or at best their parents help them find jobs and supply a car. There are always rich folks who help their kids but for every one of those folks I bet you will find 10 parents who don’t have the means.

    1. I’m just looking at statistics and reporting back my findings. The idea is to then get the community to challenge my reality.

      The median household income of $75,000 a year, which is higher than median, but not rich in SF.

      Id love to know if you got help from your parents and what you’ve noticed from your neighbors. That’s my biggest hope. Thx

  30. We can give to our kids what we have but the timing is important. I think the best time to give them is when they are older (after 30s) or better still when they have more responsibilities like children or mortagage payments. After that I think the money given to them is better spent/invested and appreciated.

    I am an example of how my father provided a car and house early in life that lead to leechers benefiting from me. I was with wrong company and they targeted this money all the time. It was just sheer luck that spared me from them – but not everyone is as lucky. It is one thing to earn and give your kids the best, but also teach them about protecting what is given to them so as they dont loose it due to lack of exposure to different types of poeple or immaturity in how the world works.

  31. My mom didn’t have the means to help my financially, nor did she have the financial education to teach me sound financial principals…in fact, as adults, I am teaching them to her.

    I want better for my son…I want to level the playing field as much as possible without spoiling him or making him feel entitled.

    I want him to develop a strong work ethic, but at the same time I don’t want him to have to work so hard that he doesn’t have time to enjoy life.

    I don’t think there is a massive generational wealth transfer coming. Some generations understand…and break the cycle. Others perpetuate it into a never ending cycle always in the rat race.

    I want to break the cycle!

    1. Way to go! That’s what I’m talking about!

      Somebody has to break the cycle. Someone has to make the hard choices and sacrifices. If we aren’t on the receiving end of a generational wealth transfer then we sure as heck can create our own and make things easier for our living parents and our children.

      Fight on and never surrender.

  32. We’re a dual-income couple with a baby making about 200k/year. My wife inherited some money from her grandparents and my parents gave us a low cost mortgage. That’s how we were able to afford an apartment in manhattan.

  33. There is help and there is help! When my children were in private school, there were students who would drive their parent’s Ferrari to school. Great for a teenager, but where do you go from there? Helping your children too much takes away motivation and ambition. I helped my children by paying for their education, the rest is up to them. They turned out okay because they are successful adults.

  34. Everybody is suffering. Life is hard and anybody who believes there are parents out there helping their kids is an idiot because I never got any help!

  35. I hate rich people! Even though some of them worked hard and took risk, I don’t think they deserve what they deserve. I didn’t do as well in school but I deserve more.

    Everything will not be OK, Sam until people like me and my friends get more as well.

  36. A “necessity” to have a handout to handle the costs in NYC? My $150K-dual-income-with-kid experience is admit that you’re priced out of buying, find an affordable rent, and build up your net worth through old fashioned saving and investing. Just because you’re priced out of owning doesn’t mean you can’t build wealth without a handout.

  37. Many of my friends who live in San Francisco, New York City, and LA had a lot of help from their parents buying their homes and cars. It might be a necessity given the costs.

    It’s probably less common or a big deal in central parts of America because housing and everything else is so much cheaper. Helping kids out for a $10,000 – $20,000 downpayment is much different from a $200,000 downpayment. There’s much less of a need to help your kids out in non coast cities in other words.

    I think you make a good point about highlighting how so many people in their 20s and 30s are able to afford nicer things and nice homes. Parental help is bigger than people realize. It’s just not discussed as much, b/c nobody probably says “my dad bought me my car” as a 25 year old.

    Very insightful as always. You must be a very good listener!

    1. Thanks. There’s actually A LOT more that was shared, which I haven’t written about.

      Who in their right mind would brag as an adult that their parents bought them a car, house, etc? Of course most folks would make it seem like they earned everything themselves. It’s just natural.

      But one of the neighbors is proud her 30-something year old daughter doesn’t have to pay rent. And that’s one of the points of this article. We are proud to help our children, no matter how old they get. Love is love.

  38. I’m not going to lie…I’m a bit of a hater. Yea, I’m envious and annoyed when I see others who mooch off the bank of mom and dad. Mainly the reason is because they are spoiled and entitled and often don’t understand why others struggle financially yet have never worked for anything they have. I lived at home after college and paid my parents what I think was close to market rent (long story short, they were forced to refinance and were forced into retirement). I definitely want to help my kids out…but like you, do not want them to become spoiled or entitled. There might be generational wealth transfer going on…I’m not sure…but if this generation doesn’t learn the skills to earn their own money, then the next generation is in a lot of trouble.

  39. Sam, I was about 22 years old and between jobs. I had just been hired but I was broke until I got that first paycheck. Broke as in nothing to eat broke. My dad owned his own business and lived in a $500K house. I called and asked him for $100 to eat on until I got my first paycheck. He said “No”. I was so pissed off at him, I dont think I even talked to him for 6 months. I vowed I would NEVER EVER ask that S.O.B. for anything ever again as long as I live. The anger passed. I was close to my dad until the day he died. But I never really relied on anyone but myself (finacially) from that point on. Now I am going on 48 years old and have a decent job, paid for house, some retirement money saved and 0 debt. I consider that call with my dad 25 years ago to be one of the freaking greatest things he EVER did for me. It made me self reliant and it feels great. To my buddies sponging off their parents as adults-Have at it. I am just glad I never had to after the old man set me straight.

    1. Good post, I bet it broke his heart to say no to you. Sometime, parents has to do something like that for the kids to grow up.

    2. Fantastic commentary. And great you found the gem in his word “no”!

      The question is: what if your kids ask for the same help? Will you have the strong will to say “no” too?

  40. HAH! I don’t know how my parents even survived at all, yeah right when it would come to supporting me.

    I’ll just say this… I saved my lunch money when I was a kid/teen to buy what I needed. $2 a day in elementary and $5 a day in HS. Yes, I starved all day at school my entire childhood. Seriously. Didn’t have breakfast or lunch and saved my lunch money. I used the money for books and braces. Trust me I needed them! Why didn’t I get a job instead, you ask? I didn’t have transportation to get a job, and where I grew up the public bus was not a smart way to get around. But as soon as I was able to get a car at 17, I have been working since. Needless to say… didn’t get any help getting into or finishing college or as an adult either. I’m not mad or bitter about it, they had their own stuff going on when I was growing up, and they were immigrants who didn’t really know how things worked in America. They figured it out eventually but too late for me to reap any financial benefits from it. I just know that it’s not going to be like that for my children. I learned from their mistakes and I’d like to think I am proactive about finding the information that I don’t have to figure the things out that I wasn’t taught.

    I do want to give my children the gift of intergenerational wealth. It’s not just the money itself that is a gift, but it’s also the habits and knowledge on how to build, maintain, and pass on wealth to the next generation that is the real gift. That’s how rich families stay rich and poor families stay poor. I had a Jewish bestfriend who’s family was from NY and had a trust fund the paid for her first car, her college, her first house, etc. She didn’t tell me about the trust fund until we were in college, and of course I was like “you have a trust fund? then let’s do this (party)!!!” but then she told me that’s not what it’s for, that she’s just supposed to use what she needs, add as much as she can, then pass it on to the next generation. I was blown away by this. Her first car? A used civic, older than the one I bought. School? A public school. House? Modest! Shoes? 3 for $20. She didn’t even NEED or want the trust fund with her lifestyle. The real gift was her upbringing and how she was taught to handle money. Oh… by the way…when I didn’t have lunch money to buy my own 39 cent taco, she would spot me the 39 cents, and not forget that I owed her the the 39 cents and collect it in a few days. :) Hows that for being good with money! Economically, everything will be ok if the transfer of wealth comes with an upbringing that teaches you how to grow and transfer it again, but not if their upbringing teaches them how to squander it. If all they learn is how to squander it… then we’re all going to be right back to square 1 for the generation after that.

    My neighbors are are twice my age or more, some retirees, and I think they assume my parents bought me the house since I seem so young and my husband is a stay at home father. I am sure they can’t imagine that female her 20’s bought this house all by herself without help. Well I don’t talk to them because I’m always working but the one neighbor did tell the hubs that “his brother just bought his son a house in the neighborhood too”. Key word is “too”. Hubs said, “oh wow that’s great!” and the neighbor added, “cash!” Well… wouldn’t that be nice!!!!

    Ok I better get back to work.

    1. Ahhh, the good old days of 39 cent tacos!

      Musta been a little hard concentrating in class when your stomach was starving no?

      You are right about the gift of passing down a solid upbringing. And having a car, house, and grad school paid for aint too bad either :)

      I’m glad you’re back commenting! Hope the rest of the work day goes well.

  41. Thinking about this…… Much of this makes sense. Median household income in San Francisco proper is somewhere around $75,000/year. So, if it wasn’t for inherited housing, these folks couldn’t realistically afford to live there.

    Also, because of Prop 13, there is considerable distortion in California housing prices. When you think about someone only paying $1200/year in property tax on a million dollar home, you just can’t not help think that something is out of whack!

    If it wasn’t for the basically frozen property tax bills that Prop 13 provides, many of these folks would be forced to sell, bringing more available housing on the market. And eventually, bring prices down to a more realistic level.

    1. Maybe! But maybe not. After 11 years of CA ownership, I am now happy for Prop 13. But of course, in the beginning, nobody isn’t, and not renters either.

      $75,000 in SF is like $30,000 in Houston. Maybe even less.

      1. Unless of course, you have basically no housing costs!

        Without a $3800/month rent or mortgage payment, $75,000 is great money.

  42. What the hell is wrong with mooching off for god’s sake? You people are so damn jealous that someone gets everything for nothing whereas others have to work endlessly for peanuts. Get over yourselves. That’s how life is. You don’t like it? Don’t breed others like you then!

  43. My husband and I were high school sweethearts and married 40 years ago. We bought a mobile home to live in the first two years of marriage, and we built the home we currently live in two years later…we were 20 and 22 at the time. My inlaws gave us an acre of land beside them to build our house, and my parents gave us $4K to buy appliances when we ran out of money before the house was finished. That is all the financial support we received from our parents. I even paid for our very small church wedding. We did, however, inherit approximately $200K after my inlaws died a few years ago. My parents are still living, and the tax value of the farm my dad inherited is $4M. I have no idea if I will inherit anything, as both of my brothers live on the farm and have been given houses to live in. My sister was given an acre of land to build a house, but she chose to buy a house elsewhere. I don’t know if the farm will go to the boys to keep it in the family name, or if the girls will get their share.

    I am currently retired and my husband is still working. I went to college as an adult and my company paid for my degree, and my husband did not attend college. We have over $1M in our 401Ks, and I get a $20K pension. We plan to sell our vacation home next year and should have at least $200K equity. We planned our retirement assuming we would not receive an inheritance from my family, but we do want to leave an inheritance for our 34 year old unmarried son with medical issues. We paid for his college education (state supported school) until he dropped out after 3 years. He went back to college after 10 years and finished his bachelors and masters degrees. We did not pay tuition the second time around; however, we did pay between $500 and $1000 a month for his expenses. We are always paying for emergency expenses when they come up….heat pump replacement, medical bills, etc….since he is unmarried without a second income coming in. We also paid off his car and other miscellaneous bills except his mortgage when we received the $200K inheritance, so we feel we have been transferring the wealth all along. He has remained debt free except for the mortgage on his condo, so we are thankful he hasn’t gotten into debt again and learned how good it feels to not have a car payment. He is also saving 20% in his 401K, so we are happy about that. He just can’t seem to save up an emergency fund!

    1. First of all, congrats on your 40+ year marriage! Always great to hear.

      That $4 million farm must be one big farm! Where is it?

      Congrats to your son for going back to school as well. The bottom line is that you love your son, would do anything to keep him safe and happy, and have the money to do so. I don’t know any parent who wouldn’t help their kids.

      Maybe the best is to slowly withdrawal some financial support and ask him to keep upping his 401K contribution by 1-2% a month until it hurts.

      He’ll have the financial support from you if he really needs it. But help him develop those stronger savings habits now so he can one day fully be self-sufficient.

      1. The farm is in NC, and I think it’s 150-200 acres. My grandfather was a big tobacco farmer and had approximately 1000 acres, which he left to his sons.

        Thanks for the good advice for my son! We want to offer support if needed to keep him out of debt in an emergency, but not so much support that it will jeopardize our retirement. We worked hard for what we have, most of it anyway, and want to instill a good work ethic and savings habits in him too. We believe an inheritance from us should be icing on the cake, not an expectation, as we never know if we will need the money for long term healthcare.

        I love your blog and have been reading since just before you left your job.

        1. That sounds like an amazing farm WC.

          Always good to have long-time readers. If you’d ever like to share your views on anything and try your hand at blogging, I’m always open to promoting readers stories and perspectives.

  44. Coach Barnes

    Very good article. I believe your parents instilled in you the value of hard work, which I think is more valuable than anything material. Given your determination to stick with finance after 9/11 and the readily available plan to kick back and enjoy the Aloha spirit indefinitely, it appears that you also had a strong interest in the work and thriving in that cut-throat culture. Is this maybe why you didn’t move to Hawaii when, maybe, 75% of the people in your position would have done so?

    This article resonates with me because I too had the opportunity to live (and stay) in Hawaii but instead chose the MBA (and consulting) route at a significant cost. Am I a turkey as well? If I am, then I’m one happy turkey.

    1. Yes, we are both turkeys! But, at least we are both happy :) The only times when I experience a prolong period of sadness is during deaths and letting down my teammates if I lose a match. But even the latter no longer affects me as I grow older, just the sadness of losing someone I care about, which I have to imagine everybody feels the same way.

      I felt I could always go back to Hawaii. But once I got to Hawaii, it would be hard to leave the lifestyle, and also find a similar job.

      When is your exist strategy from consulting? It’s a pretty intense job with lots of traveling no?

  45. Interesting post. I ended up somewhat in between the two scenarios in the original article. My undergraduate was free due to my father working at the university I attended and I payed for grad school out of my own pocket. I lived with my parents through college and grad school, despite working 40+hrs a week and make a pretty decent income for my age, or really any age for that matter. Neither myself or my parents ever really cared, as it wasn’t like I was immature and couldn’t hack it on my own. My parents retired shortly after I finished my MBA and let me buy out their current house for the price of the rural retirement property they wanted. This left me to pay $700K for a $1.8M house in a prime neighborhood. Had I not lived at home this whole time, I never could have come up with the money to pull this off at such a young age (30 this month).

    Personally after going through this process I will definitely do the same for my future children. As one of my close friends likes to say: treat your family like a firm and invest in all projects that increase its net present value. If you have the money to do it, why make your kids waste money on high interest loans, rent, student loans etc… I get that there are emotional reasons to make your kids “work for it,” but I still think it’s possible to inculcate the same desired attitudes without withholding support.

    1. To be given $1.1 million by your parents at age 30 is HUGE! Will you tell your friends you bought the house on your own? Or will you tell them your parents gave you the discount? Or will you tell them to mind their own business?

      1. I freely tell people what went down. I used to get lots of ribbing from my friends for living at home for all these years; I would respond openly this was my plan all along. To strangers, I basically have to come clean as given my point in my career this would quickly appear nonsensical and cause a host of sociopolitical problems in my career.

        This isn’t such an uncommon story where I am (Vancouver) since many middle class families bought their primary residences for between $75-200K in the 80’s and then watched them soar in value into the millions today. So it’s kind of a weird situation where the parent’s total investment in the house isn’t that much, and without the transfer of equity none of their children could afford to live in the old neighbourhood.

    2. I like your attitude. Most of the help I received from my parents prevented me from higher interest and wasting money. Why should I pay such as high interest rate in this economy when my parents are not making money on their cash?
      Also, most of the money I received my parents was my “cushion.” I did not necessarily need it, but was used to have an active social life. I am cheap by nature and felt I lost friends not going out to dinner/drinks as often as others. I needed that cushion to feel more comfortable hanging out since most of my friends made more than me.

  46. Sam, these past couple of articles about crazy levels of parental support have made my head spin.

    I’m simply dumbfounded – it seems like I’m not even reading about cultures and families that are in our time and place. More like tales from the bad old days of the early industrial revolution, where one or two families would live in extravagant luxury while everyone else would be in the breadlines.

    But, I guess your point is that this could be happening for MANY families and that a strong financial legacy is more the norm than ever before.

    1. Jason, I’m only writing what I’m experiencing and seeing. Even then, I’m not writing everything I’ve observed.

      The industrial revolution families are farther up on the hill.

      Working hard for your wealth is not the only solution anymore. It is apparent to me that plenty of adults are getting help from their parents. And this is only natural to want to help the people you love.

  47. I have a family member that living with me for the past 11 years and have no motivation to graduate from college or getting a job, still withdrawing from M+D bank. Play games all day and go out have fun with friends.

    Why need to work hard for money if you can get it from free?

      1. It’s not simple. It will affect family relationship. So I just keep my eyes closed and my mouth shut.

  48. “I grew up in the poor part of Golden Gate Heights. We didn’t even have an ocean view.” – Cary Tobaben

    FS, the reason you love to live in SF (and not, say, Oakland) is because it is a nice place to live, and wealthy people get to live in nice places. Your neighborhood may reflect your ‘reality’, and your ‘reality’ is that ‘everything is going to be OK’. For those in your neighborhood.

    The issue of ‘generational wealth transfer’ really only concerns those who have wealth to give or get. The ‘net worth’ S-curve for the U.S. has the top 1% with 35%, the top 10% with about 70%, and the bottom 50% with a 0-to-negative net worth. Are things going to be OK in Detroit or San Bernardino or Stockton? But they will be in SF, Vancouver and Newport Beach.

    One piece of anecdotal info I am compelled to share…of 12 young adults between 24-30 with 4-year degrees, children of my friends and family, only one has ‘launched’ by moving out of their parents’ home and starting a real job. And that person is a Yale grad beginning a career in…wait for it…investment banking.

    Serious questions now…you seem disappointed in the “lack of diversity” and I gather you are not talking about age, attractiveness, intelligence, education, income, political, etc. What would be your idea mix, exactly, to satisfy your desire for diversity? Does this mix exist anywhere? What is your current mix? What do you think needs to happen for the ideal mix of diversity to happen?

    1. I’m not disappointed with the lack of diversity in my old neighborhood, I just longed for something new. I tend to get bored after 10 years of living in one place or doing 10 years of one thing. I felt it at work, and I felt it in living. I think it might have been my upbringing moving around every 2-4 years for the first 14 years of my life.

      Watch out for Oakland! Rents have skyrocketed faster than SF and are now in the mid-$2,000 range.

      One day Golden Gate Heights will be on the map, but not today, hence why I think it’s the best value in SF. Nobody knows where it is, and therein lies the opportunity! What about the kid growing up in GGH with only a view of the ocean and not a panoramic ocean view from all levels? The tragedy!

  49. I believe in the idea of wealth transfer. (I mean, I like it.) However, my parents never gave me a red cent after schooling. Certainly no down-payment on a house! I believe I got an electric blanket and an electric kettle when I moved out. They’re not poorly off, but help me get a head start? Hell, no. I think back to our flea-bitten ancestors that came over on crowded boats and think, “Geeze, if every generation had done things properly our family should be insanely rich by now.”
    But that’s not how it works. And that’s not how the wealth transfer you’re seeing will evolve either. There’s always a screwup somewhere along the dynasty that trumps the family fortune–a drunk, a gambler, a criminal, spendthrift kids. It’s the “Shirtsleeves to Shirtsleeves in three generations” phenomenon. Or the Chinese proverb: “Wealth never survives three generations.”

    1. Ah yes, “Fu bu guo san dai.” Great Chinese proverb. Don’t forge womanizer or manizer for a generation that blows the previous generations wealth.

      I might have to write a post about how to prevent one generation from wasting another generation’s hard work!

  50. My parents did not help me with anything after college, they didn’t pay for my college, and I was out the door the month after I turned 18. I was out, mostly on my own decision (I am first-born from a family of 11 children… it felt natural to give my siblings more space). Further, by 16, I bought my own car, cell phone, insurance, clothes. I managed everything with exception rent (and food when I was at home). At 19, I bought my own house with my own money.

    With 11 children, My parents really just made enough money to sustain a household at any given day. There was no doubt growing up, that I would not receive college funds (or any funds). I’m also really happy about this. With no college funds, means no pressure or demands to attend college. It was completely optional.

    Instead, they sent me off into the world with a practical education, a back bone, integrity, courteous outlook and humble demeanor.

    Also, my dad was a software developer, and I was very interested in also becoming one at an early age. I started apprenticing at his employment at the age of 14. By the age of 16, I finished school (home schooled) and began working full time as an entry-level software developer. As of this month, at 28, I sold my side business (software related) for a chunk of money and a job making 100% more than I did at my last job (and in an industry I am very passionate about).

    Every step of the way has been completely satisfying. I attribute this satisfaction to the fact that I had to work my ass off, and for the most part, build myself since day one of becoming an adult.

    I doubt I’d have nearly the same experience I have had if mom and dad had the money growing up. Maybe I’d have been the same amount of successfull on a different scale, but chances are really good that my lazy side would have gotten the best of me.

    1. Wow, 11 children! Guess there was lots of love in your family!

      “it felt natural to give my siblings more space” I bet, and I think I know that feeling.

      Good work being your own man! And I’m sure things must be quite awesome during family reunions.

      The question is: Will you let your kids fend for themselves after 18 given your background? Or support them financially if they need to no matter how old?

      1. I love seeing my family. They are all awesome. :-)

        For our kids (non yet, but maybe soon). I’d like to raise them similarly to how my parents raised me. While I’m hoping to be able to back them financially in some regards, I want to do it in a way that they feel enabled, rather than entitled. How to do *that*, I’m unsure. :-)

  51. My college was over-populated with very rich kids from all over the world. They drove really expensive cars and lived in beach houses purchased by their parents. I couldn’t even afford to hang out with them. That was kind of lame. I imagine if you took a sample from that group, you’d get similar results.

    My parents were very generous with our education and paid for all three kids to attend as much expensive school as we wanted – and we did just that. But we were completely cut off upon graduation. I am opposed to giving kids a house or a trust fund and would repeat what my parents have done for us if I am ever in their position. I don’t regret the years I’ve spent learning the meaning of hard work and the value of money. My dad told us that the pursuit of success (however you choose to define it) is a privilege that we he wouldn’t take away for us, even if he could.

    1. I think I will pay for performance when it comes to schooling, I watched too many of my friends rack up 100K in expenses and not graduate…..

      1. I really never thought about folks who actually spent big bucks going to college and dropping out without a degree until a recent TV segment on student loan debt. That is a brutal lose-lose scenario. Perhaps a discussion for a future post.

  52. I think things would look a lot different in the suburbs of major cities. The middle class or upper middle class generally populate these areas and there are constantly new developments being built. I would say most of those people did not get their house passed down to them or do they have their rent paid by their parents.

    I have to agree with a comment above that SF is a small sample size that isn’t representative of the country as a whole as far as middle or upper middle class is concerned. Maybe this is just due to the homes in and around SF being older, there’s not any new development, so there’s more of a chance that the homes have been passed down.

    1. Ryan, please share where you live and any anecdotes you have about your neighbors. My goal is to get as large of a sample set as possible. I can only truly report what I know about my surroundings, and provide a anonymous survey at the end.

      1. My wife and I live in a Houston suburb in a master planned community that is fairly new which will continue to be built out for years. These communities are all over the place in this area. We’ve been in the current new build home for a little less than a year. This is our first home. We are in our late 20’s and make combined gross between $200-250k. We receive no assistance from our parents.

        I’ve only talked with about 5 neighbors to know enough about their situation (i.e. how they got to where they are). They all vary in age and some have young children, grown children (not living with them), or no children. None of them had their homes passed down to them. They all pay their own mortgage (not sure if any paid full in cash). Some have been local to the area since children, others have moved numerous times mainly for jobs, and some are at/near retirement.

        I would suspect my experience is much more aligned with most of the country versus what you’re seeing in SF.

        1. Ryan,

          In regards to the brand new “exurbs”, I believe your observations are very correct.

          But in regards to old established neighborhoods, not so much. Take a drive through “main line” suburbs right outside of Philadelphia and I think you’ll see (and feel) kind of a similar generational wealth transfer as Sam is describing. Although in this case, it looks more like many generations!

          Again….. I’m not sure this is necessarily a bad thing? Or a good thing? It’s just my observation.

        2. Another good example would be the North Shore suburbs of Chicago. Something like a Winnetka or a Highland Park.

          You’ll more commonly see expensive properties passed down through generations.

  53. I have occasionally envied those who were propelled financially in life by their relatives (people, for instance, like your last guest poster). My college cost my parents nothing (I went to a Service Academy). I have paid for everything throughout my life, including our home. I don’t expect to receive much financially at all in the way of inheritance (certainly far less than the mean).

    Then I realize that what my parents provided for me was their time and support, a vision for a bright future, examples of a good work ethic, and so many other things that are far more important than cash.

    A boost now and again would sure be nice, and I’ll certainly help out my own kids financially to some degree where I can in their futures, but I can’t help but think that many people who have had too much given to them over the course of their lives just can’t be too happy.

    1. What is more important than TIME and SUPPORT from our parents Mike? I don’t think anything is. I would much rather have their love, time, and support ANY DAY vs. money. And time just gets that much more precious as we get older.

  54. I have come across the exact same thing Sam in my neighborhood. It is almost comical I think, I was sitting at my neighbors house I just met in this beautiful $1M plus home watching the boats go by…all the time listening to her pat herself on the back on how she has done everything on her own and doesn’t need anything from anybody. LOL, then as I talk more to her and the group I learn that it is one of her parents homes…oh, and she really has not worked in 10 years. Honestly I think even though these are probably genuinely good people they are absolutely freaking clueless on how hard it is to earn and save $1M. Thankfully it doesn’t bother me, but the massive transfer of wealth is definitely out there, I’m just worried about the sense of entitlement down the road of the future generations.

    My parents helped each of their three children out by paying $2,000/year for 4 years of college. I was the only one who actually went…now I’ve been gone from home since I was 18, and both my brother and sister live in homes (literally right next door to each other) that my parents have purchased for them about 2 miles from my parents home. I love them all to death, and because I’ve been somewhat successful it really doesn’t bother me a bit,but I do worry about what will happen to their gravy train once my parents are no longer around. If it makes my parents happy though now to spoil them now while they are alive, then that makes me happy : )

  55. Sam,

    I’m not entirely sure about whether so much wealth transfer is economically good or bad; or even fair, but it is the reality which I have observed.

    San Francisco itself, is really not that diverse (in an economic sense). Chances are, if you live there, you have considerable wealth (or family wealth/help), or you will be struggling (even with a $100,000/year software job).

    I also think that at 32 years of age, one should be able to afford to live without roommates.

    The good thing is: There are plenty of opportunities across the country. You just need to be willing to look for them and more importantly, move!

    1. Just running some quick numbers and thoughts: If you live in a place mortgage free, which could be rented at $3800/month, that’s the same as receiving an after tax income of $45,600/year.

      In tax free bonds (paying 4%) that would be like having a lump sum of $1,140,000.

        1. Financiable.com

          What are property taxes like in SF? Are you looking T 25-30k in taxes who is paying those?

          Mortgage free doesn’t = expense free.

          1. 1.2% of assessed value based on your purchase price plus an index. Thanks to PROP 13, my previous homeowner was pay $1,200 a year in taxes for a home worth over $1 million purchased 68 years ago.

            Prop taxes are 100% deductible to income too FYI.

          2. We could probably develop a very complex cash flow model based on various expense factors. But….. I think the simple “implied rent model” works well in explaining the economics.

            Everybody pays property taxes (it’s included in the rent). Everyone pays utilities, upkeep, etc.

            The point is: There is huge economic value in being mortgage/rent free!

    2. You make a good point. Nobody is forcing anybody to live in an expensive region of the country. Thanks to the internet, public transportation, etc.. people are more mobile and less tethered than ever.

      If I was smart, I would relocate to a much cheaper area of the country. But then, I love SF and the jobs are plentiful. The availability of jobs really makes owning property out here much LESS risky than say owning in Hawaii where I was considering buying, b/c I can’t get more than a $50K job there. Whereas in SF, $100K jobs for someone with 10+ years experience is a dime a dozen.

      1. Sam,

        You are set… You are in a position to live anywhere you wish and I congratulate you for working hard to achieve that.

        For the younger folks, the twenty something’s, or thirty something’s……
        Those without trust funds or parental provided housing……..
        My thinking is be “open” minded. The USA is a big country. There are many wonderful places to live throughout the country and plenty of opportunity.

        The best time to make a geographical move and try out a new place is when you are young. And the reality is; now a days, airfares are dirt cheap. You can always fly back home.

        1. Greyhound works too. No longer does one have to spend three months riding a horse to cross the country.

          I hope people have the courage to move to areas of the States that have more job opportunities. It would be only logical no?

          We hear stories of broke folks moving to Hollywood to follow their dreams. Why can’t people move to NYC, SF or another hotbed for jobs? They can!

      2. Here is an interesting related link:


        I prefer a cooler climate, but it does seem like Texas is growing rapidly economically. And wages are very high in Houston for example, versus the cost of living.

        Anyway, there are very many fine cities to consider. I was down in Austin for a visit, about two years ago. I thought it was a great little city.

        I’m going to pay Houston a visit maybe latter this year (after things cool down a bit), and take a good look around.

  56. Zee @ Work To Not Work

    I believe that somewhere I had read that inheritances are more likely going to shrink with the baby boomer generation. A lot of it has to do with the recession hitting when many of them were planning on retiring. This shrunk a lot of nest eggs when people were just starting to give up their jobs, which is the worst time to take a setback financially, the first years of retirement. This sent many people back to work that thought they were done, I also don’t think that many people plan to live as long as they do or plan how they are going to live financially in retirement very well.

    I do think that there is a group of people that will continue to pass down legacies though. The people near the top will probably stay at the top and pull their children along for the ride while they are at it. Unless somewhere along the line one of those children goes all M.C. Hammer and just spends all their money on things that are just wasteful, they will probably continue to pass along their fortunes. But like one of the commenters mentioned above, that figure you stated is the average inheritance, not the median so it’s probably out of skew, one CEO that passes along 500 million makes up for a lot of estates that pass along much less.

    I also think that trying to gauge inheritance by looking at your neighbors in one of the most expensive cities in America is going to give a skewed perception of inheritance. I’m not saying that I think you’re wrong, because I don’t have evidence that suggests otherwise. But perhaps I just have less faith in the average middle class family. Most average people I know are terrible with money and I doubt many of them will pass along anywhere north of 100k when they die (in todays dollars, ignoring inflation).

    I think that the size of the larger inheritances will continue to grow, but so will the population and therefore I think that the wealth gap will continue to grow as more people will fall on the small inheritance side than the large inheritance side.

    1. That may be true, but I don’t think so anymore. We are at record highs in the stock market and real estate is recovering, so I think the inheritance figures are probably at record highs as well.

      I have A LOT of faith in the “average middle class” thanks to rising education and the internet full of free information. I also believe most people are rational. There is nobody I know who wants to get ahead, but isn’t willing to put in the extra effort.

  57. John C @ Action Economics

    I think as some posters above have stated that due to the geographic area you are in such transfers of home wealth generationally will be more common than across the country as a whole. I only know of one person given a house by her parents.

    It certainly is a fine line to draw between helping kids get a start in life and hindering them by giving them a cushy safety net from the bank of M + D.

  58. I have not witnessed the same thing as you. I live in the midwest. Most people I know have not had help from their parents, except for the current generation that seems to live at home longer than what my generation did. All of my neighbors bought their houses through their own hard work and ALL of them are still working to pay for it — their ages range from the 20’s to 70’s.

    I don’t expect to have any or much of an inheritance from my parents. I think what you have written about with your neighbors is incredible!

    1. Sounds like the place where you are from consist of some great people! No wonder why so many folks refer to the midwest as the heart-and-soul of America.

      I know MANY more people who received tremendous windfalls from their parents. I just highlighted the average folks.

  59. My parents paid for my college education and I’ll be forever grateful. Now that they’re semi retired. I’m helping out when I can. Eventually, they’ll probably come live with us full time.
    I think your data point might be skewed. Your neighbors seem more well off than usual. I don’t think regular middle class people has much wealth transfer between generations. I guess I don’t know many well off people. None of my friends inherited much wealth, yet… I don’t expect to inherit much if anything.

  60. I’ve had to provide for myself since I was 17 (I was around 2 weeks away from turning 18). Lived on my own, paid for my own food and everything else since then. It’s been tough, but I think it’s much better this way. I still have friends who have things paid for by their parents, even though their parents are struggling to pay the bills. That’s not something I could do.

  61. Very interesting and relevant post. I’m 36 and a trend I’ve seen lately is for people my age to buy their parents’s home as their parents downsize. I’m guessing they usually get a pretty sweet deal on the purchase price.

    I have one friend who still asks his mom to pick up groceries and diapers at Costco for him (he has 2 kids). The most agregious offender I know – his parents paid for private college, then law school, then a new Audi, then (when he failed to land a job at a law firm) they paid $500K for his insurance franchise. He worked for 5 years building the business then sold out and took all the money from the sale……. hasn’t worked in 5 years. Both of these guys – immature, self entitled and don’t want to grow up.

    1. At least they are buying their parent’s homes. I think their parents are getting a pretty sweet deal, as I think most parents would gladly entrust their homes to their kids for free. I know I would.

  62. I even though people who get things paid for by their parents may have it easier, they probably don’t have as much satisfaction in life. I learned to stop worrying about people making more money than me and look at them as role models instead of be jealous. That is harder to do with inheritance though. To be honest I don’t know many people that had a house or car paid for by their parents. I am in an area with much less money than San Fran.

    I may get some inheritance, but right now I am paying for their retirement by buying them out last year.

  63. Self-reliance may well be a better path to larger and more sustainable wealth, AKA the message of the Millionaire Next Door, but when it comes to housing prices (which are often irrationally high) these families are looking out for each other wisely.

    Samurai, what would you observe about these characters if you set housing aside? How do they differ from each other excluding the housing factor?

    1. Hard to say, b/c all my neighbors except for the frat-house neighbor are normal, nice, working folks. So you can’t tell any difference in character from someone else who didn’t get housing help from their parents.

      But working with various folks over the years (construction, minimum wage jobs, white collar jobs, coaching, etc), I notice a TREMENDOUS amount of difference in work ethics and attitudes about entitlement for money. I’m doing some work on my house now, and man…. I don’t know what it is… but some aren’t willing to adjust their times to work later or longer… it’s 8:30am-5pm and that’s it.

      1. I think the hard work values that you possess are worth FAR more than that average $180,000 inheritance you write about or even the value derived from being able to live rent free because of family generosity. Jack Bogle in recent his video interview with the Motley Fool talks about how the value of future Social Security payments, if capitalized in a current portfolio might be valued at something near $300,000. These are both nice potential security blankets for the future. Both may come in lower than expected. The future is impossible to predict. But work ethic and good inner values are priceless because they mean that whatever life throws at you, you are better prepared to take it on.

      2. Definitely know what you mean about the 8:30 to 5pm deal. And to top it off, they will eat lunch on your time. Then they’ll miss days and delay your project and won’t offer to make it up or knock any off the price.

        1. It is weird, b/c if I were them and there was some conflict in terms of the construction guys working with the painters in a room or something, I would offer to come earlier as the painter e.g. 7am to work until 8:30am, and allow the construction guys to work at 8:30am onwards.

          A lot of inflexibility. I wonder if it is because there is this Union worker type mentality with them and friends?

  64. SavvyFinancialLatina

    My parents have not helped me since I graduated with my bachelor’s in college. Actually, it’s my turn to help them financially. I do envy those that get help from parents. I would lie if I didn’t say so. Here we are saving away pennies so we can have a stable financial future, and then I see some people still mooching off their parents. But I couldn’t mooch off our parents. Other than free homemade dinners. Those I can take. And some occasional help in renovating the house because they have more experience and are teaching us. But we would not accept any other financial help.

  65. As a person who grew up a spoiled rich kid, I cannot fathom anyone working as hard you have, Sam, to achieve what you have achieved and keep achieving. I never and I mean NEVER would have worked as hard as I WOULD HAVE HAD TO WORK to amass my current financial situation. I got lucky early with a trust fund, stock market gains, and buying SF real estate and then just played super conservative to hold on to everything.

    You’re a player by nature. It’s really mind boggling and I’m not necessarily even congratulating you because I don’t think amazing things need to be congratulated, they need to be revered.

  66. mysticaltyger

    I think the two posts above are spot on. The other thing I’d add is that the average inheritance may be 180K, but the MEDIAN inheritance would be a lot lower. A relative few will inherit most of the money, which generally concentrates wealth.

    1. Median is definitely lower.. it’s always lower.

      The optimist in me looks at my middle class neighbors as examples of why things will not be as bad as people think due to generation wealth transfer.

  67. Very interesting, but I would like to know if those people who have been living rent free have actually saved anything over the past 10 years. How do you know that they are really ahead of the game? Do you ever wonder if the house of cards will fall down one day? It sounds like your neighbors are a bunch of moochers.

    I too envy some of our friends who haven’t worked for much and their parents gave them everything, but I also feel that those same friends do not understand money and are not saving a thing. What will they do in retirement? I have a friend who was given half of a beach house….his dad pays for it, lives in it and pays for the expenses. Yet this guy says he bought it. Not only that but if something happens to his dad, he can not afford the mortgage and/or the expenses. Nothing to fall back on. Do you know what his plan is if something happens to his dad? He’s going to ask grandma for the money. Sigh. Yes, i am envious, I admit. I wish I had someone to give me things…however, I would not be the same person I am today and would not be teaching my kids the value of money.

    1. Just having a fully paid off house is pretty ahead of the game to me. The average person takes 20-25 years to pay off their house. If they can do it in 0 years, they are ahead of the game, even if they have no savings.

      1. What I am saying is that they will have to take on the mortgage of this home if something happens. And what I neglected to mention and should have, is that this is a second home. They can barely afford their first home! Sorry about the confusion.

  68. Interesting post, Sam, and I agree that there is a “snowball effect” with wealth in this country. Unfortunately, I feel like your sample size is entirely too small and geographically specific.

    What you’re saying IS true, but my gut tells me that it’s true for an incredibly small % of the population today. The vast majority are running at break even or in debt, which makes generational wealth transfer nearly impossible.

    Anecdotally, I look at my own parents and upbringing. We were a normal, middle class family in a nice suburb of Chicago, yet when all is said and done, there will be little wealth transfer. Up to this point, I paid my way through college and have never received financial assistance in my adult life – not because I didn’t ask for it, but because my parents probably couldn’t afford to give much anyway.

    I still felt very fortunate growing up, and have always felt “well off.” Logically, if I feel this way, yet still don’t see wealth transfer, I can only imagine that the ~70-80% below me (socioeconomically) won’t see much either.

    With all of that said, I imagine if my parents pass around age 80-90, I will see some type of inheritance at age 55-65, when I probably won’t need money (assuming my retirement savings goes as planned), which means that MY kids will see a meaningful transfer of wealth.

    So perhaps “regular” middle class people like me just need 1-2 generations of decent job, dual income living situations to build that generational wealth transfer.

    I’m not sure if I’m making your point or arguing it, but that’s where I’m at. :D

    – Eric

    1. Eric’s right, Sam. Your sample is not the least bit representative, in no way does it prove that “everyone will be all right.” You’re actually dealing with a pretty select group!

      I’m not at all surprised by the situations of your neighbors. If anything, what you describe actively illustrates the effects of the increasing wealth gap. With the economy having evolved as it has, it’s a helluva lot harder for younger generations to actually buy homes— especially in pricey SF. So the older generations own a large portion of homes in nice neighborhoods, and it’s not surprising that they share ’em with the kids. Keep it in the family!

      What we don’t know is where those younger generation neighbors would be if not for the housing largesse of their parents. Despite the wealth of their parents, would they have been able to go forth and earn on their own the kind of money required to buy homes like those in your neighborhood? Maybe, maybe not. If they *weren’t* able to do that, would it have been because of personal weakness from having “grown up rich” (a la Marco), or would it have been because the economy now makes it incredibly difficult to earn that kind of money? Who can say?

      Either way, it’s likely that they wouldn’t be living in San Francisco! Or at least, not in neighborhoods as nice as yours. Your sample is extremely exclusive. Not surprising, just exclusive. Given SF home prices, I’m not at all surprised that a large number of homes were bought with parental help. That’s been going on in the Bay Area for a long time, actually. Sadly, I think it’s become even more prevalent as it grows harder and harder for younger generations to really earn their own way. Wealth will continue to concentrate in a relatively small number of families, and gradually the middle class will wither away.

      For those of us who grew up here and remember when there really WAS a middle class in the Bay Area, it’s pretty hard to watch.

      1. Tricia,

        But my new neighborhood in Golden Gate Heights is pretty middle class. Lots of DINKS, families, and median priced homes. Yes, the median price in SF is high, but it’s all relative. So for SF, the neighborhood is pretty much in the middle.

        I’m reporting exactly my findings. These are not concocted statistics by reporters or research analysts who aren’t actively talking to real people. This is me sharing with everyone my findings from people I’ve met in person who live right around me.

        How is Eric right, and I’m wrong? Is Eric’s reality more real than mine?

        Will you not inherit your house from your mother as well? I’ve shared in my post that I have the option to leave cheaply back in Hawaii too.

        Everybody around me is squarely middle class with middle class incomes and jobs for SF.

        Give this post two or three days to percolate and then check back on the survey count.

        1. “Middle Class” is very relative here, Sam. You have to make a boatload of money here any more to still really be “middle class”. You yourself toss around $200,000 as the amount needed to really be comfortable in SF— not rich, just comfortable. That’s pretty accurate.

          I don’t question your “findings”, but they’re anecdotal and too limited to be any sort of support for the general statement that “everything will be ok” despite the increasing wealth gap. You appear to be extrapolating from your local findings about generational wealth transfer that the nation-wide wealth gap issue is really not all that bad. You’d need to check with folks in a lot of other places to really make that assessment.

          I agree that generational wealth transfer is real and happening, but if this many folks are having to rely upon the Bank of Mom & Dad, that generation is going to eat up a lot of Mom & Dad’s wealth. They’re not necessarily building up their *own* pool of wealth to add to Mom & Dad’s. That will leave less for them to leave to the next generation. Over time, Generation 1’s wealth gets dispersed and thins out, unless subsequent generations can continue to generate new wealth. Or unless their wealth is SO great that it’s self-perpetuating (i.e., investment returns that continue to generate more).

          So over time, unless there are opportunities for the large mass of the middle class to continue generating new wealth for their families, they’ll spend down their inherited wealth and sink down the class ladder.

          Will this happen? I don’t know. I”m not even sure I myself am *that* much of a pessimist, but yeah, the current direction does make me a bit uneasy. Will some “new economy” turn things around and even out wealth distribution a little bit more? Who knows. I don’t believe in “equal distribution of wealth”, but there’s no denying things are out of whack when wealth concentration is as extreme as it’s becoming these days.

          In my own case, I have a lot of siblings, so nope, I won’t be inheriting my mom’s house. It’ll be sold off and the proceeds distributed among us all. Large families like mine are unusual these days, so there are a lot more cases of just one or two kids inheriting the whole kitty from their parents. But the question remains: Will circumstances permit them to ADD to that wealth, or will they end up simply using it up in just a generation or two?

          1. Tricia, I agree with your views. One generation could spend a previous generation in a heartbeat.

            I’m saying that everything is relative and real estate is local. One who lives in Iowa where houses cost $250,000 should not compare the income figures I discuss here b/c the median house is $1.1 million. Take $200,000 and divide it by 3, and $67,000 a year is probably a closer equivalent.

            My view is from a SF Bay Area point of view, because that is what I’m living. There is so much angst about the hollowing out of the middle class that I feel it’s necessary to discuss the topic and help empower ourselves to create our own wealth.

            But, after learning about so many examples of parental help over the past 10 years (I have many, MANY more), I am less afraid of the wealth gap widening due to the generational wealth transfer that will occur. How could it not?

            Our parents lived through the biggest bull market in history. Unless everyone spends 100%+ of what they made, there will be a wealth transfer.

            And at the end of the day, anybody who is living and working in America is much more fortunate than a large majority of people in the world.

    2. Here’s the thing Eric. You say that my sample size is too small, and most people are running on break even, but you just said you would inherit something potentially and your kids will see a meaningful transfer of wealth. Is this not a complete validation of my argument on why a generational wealth transfer will help makes things better?

  69. I perhaps am foolish for feeling this way since it may hold me back financially in the long run, however, since the day I moved away to college I almost immediately felt guilty about taking money from my parents. They do very well but are no means extremely wealthy.
    I know in the back of mind if I ever really need them to help me out financially – they are there. But I have never, ever asked them for a loan, a co-sign, down payment assistance or anything on any sort of purchase I have made. It gets annoying when a friend buys an awesome new car or a house they obviously could not have afforded on their own income and act as though they themselves are responsible for their high end lifestyle.

    1. JD, I understand you completely. I chose a public school due to money guilt. $2,000 a year in tuition vs. $25,000 a year was a no brainer. I have a lot of money guilt, and I will write about this in a future post. Growing up in developing countries always made me question, why me.

    2. I can relate a lot to what you wrote , I am the oldest of 5 so my parents had 4 more to raise after I went to college (they are middle class). I did hit them up for occasional short term loans while in school and grad school – but always paid them back.

      I too get a little frustrated seeing the awesome new car, but understand it is either putting them in debt or paid for by Mom and Dad (which doesn’t seem as fun to me – I like to be able to do it myself)

      I don’t see a large inheritance in my future – but that is ok, I would rather have my parents spend their money after raising 5 kids and setting them up for success. If they have any extra, I would rather have them blow it on their dream vacation with the family.

  70. Good article. I always notice, when I look around at my friends (in their mid-twenties), who is still withdrawing from Bank of M+D…

    I live in a condo owned by my parents, who bought it a decade ago both as an investment and a place for my brother to live while he was in school for a while. However, now that I’m living there and employed I pay them rent.

    My benefits: favorable rental rate for the area, close to my work, flexible landlords who don’t bother me.
    Their benefits: rental income in a complex where HOA rules limit the number of rented units, a trustworthy tenant, and most of all – time for property values to recover a bit since the recession hit soon after they bought.

    I’d say its a mutually beneficial arrangement for both parties, at least until they want to sell or I want to move!

    1. There you go! And your parents are happy to rent to someone they trust most. A win, win! They helped you get a head start with housing, and you’re providing some income. Perfect.

      The question is, when they sell, will you get the windfall?

  71. Financiable.com

    I have witnessed this first hand amongst my demographic (30-34). Not only did the majority of my friends have their college paid for in its entirety but they were also provided substantial down payments or simply given a home/condo after school. Some of them are very quiet about it, while others you can see that it hurt their work ethic, though I think work ethic is instilled earlier than college/post college years. While this wealth transfer is taking place, I am not so confident it is going to help. Beyond the physical property that has been given to these people, I see no signs of savings and in many cases I see the “Free Housing” encouraging an unhealthy excess of consumer spending (i.e. continuos partying). Eventually you wake up in Vegas one day after a bottle-serviced fueled night and you realize that you are almost 40, haven’t earned a dime of your own money and everyone sitting around you is 23. That can’t be a good feeling.

    1. When you have your living expenses paid for, other expenses aren’t that much.

      I don’t know about the Leaving Las Vegas syndrome, but put it another way: If you were given the option to get a nice windfall from the parents, would you take it or refuse?

      I think I would take it, and I think most would too.

  72. This is an interesting perspective, if it’s not complete sarcasm. You said yourself, if you’re given everything, why bother with trying when there is no sense of urgency or competition? That should answer your own question I would think. I think it’s more of a personality thing though. I think some people are just motivated and driven and don’t care as much about money as they do making an impact on others and society itself. I don’t think wealth stops dreams or risk taking.

    I wouldn’t agree that all your neighbors are in the same boat. A few of those seem to have just been in the right place at the right time rather than having deliberately been given something. Also, how do you know they don’t pull their own weight? Why are they so open with you but you are so secretive and private with them? If everyone is so open to you, what harm do you see in being open with them? Obviously a struggling writer won’t make it long in San Francisco. Stealth wealth and San Francisco is kind of an oxymoron to me anyway,

    Nevertheless, interesting read as always.

    1. Definitely no sarcasm in this post. Thanks to internal motivation, no matter how much free stuff you get, inherent motivation will allow some to try hard and see what they can do on their own.

      How about your neighbors?

  73. My parents have always kept their income and savings private. I know they’re doing okay, but I also know they are not wealthy. Part of me would be surprised if I got any type of inheritance at all, but I also would not be surprised if they have a ton of money stashed away everywhere. They have always been frugal.

    No, my parents don’t help me financially at all. I believe they are living off of social security and trying not to touch their life savings.

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