If I could do it all over again, I’m not sure I would have scrimped and sacrificed so much in order to come up with a $120,000 down payment for a condo back in 2003. It kinda sucked living in a studio with another guy for two years, especially when I brought guests over. I missed out on a lot of boozing and fun excursions as well.
Because I never once thought of having my parents buy me a ridiculously priced apartment in NYC that cost way more than their humble townhouse in Northern Virginia, I never asked! But in retrospect, perhaps I should have.
We know that plenty of Millennials expect massive inheritances once the richest generation passes. But is inheriting $1M+ after the age of 50 really so great? Not really. Therefore, I want to highlight some of the best strategies I’ve learned from adult children who were able to extract even more money from their parents while living.
GETTING FINANCIAL SUPPORT FROM PARENTS
My friend’s parents bought him a one bedroom Manhattan condo a year after attending Cooper Union. The condo has since appreciated from $250,000 to ~$800,000. He recently got married and plans to sell the condo and use the proceeds to buy a nice single family home for ~$1.5M in New Jersey. If only I was smart enough back then to convince my parents to buy a place for me. We’d be rich! Or at least have bi-coastal pied-á-terres in NYC and San Francisco.
It may seem a little off, or unfair as an adult to ask parents entering retirement or in retirement to pay for a car, a house, or graduate school when they’ve already supported you for 18-22 years. But what I’ve realized after listening and talking to thousands of people about their financial situations over the years is that those who get ahead are very crafty.
We already know that roughly 14% of people post college live at home with their parents. What’s yet to be fully understood is what percentage of adult children continue to receive significant financial assistance after college. Lucky for you, I’ve been able to interview several adult children on how they convinced their parents to buy them things they could not afford on their own!
1) Tell them you love them often. One 32 year old guy who got his parents to pay for his Audi A4, his law tuition, and lives rent free in one of his parent’s properties shared, “Before I plan to ask my parents for anything, I tell them I love them very, very much. I can’t tell them just once, and be done with it. Instead, I tell them I love them at least once a week for one month before I make the ask. What’s more powerful than love?”
Parents who had no contact with at least one of their children for more than a year were about 40% less likely to leave equal inheritances to their offspring than parents who remained in touch with all their kids, according to a study by the National Bureau of Economic Research!
2) Provide as long of a lead time as possible. One 29 year old events coordinator who doesn’t have to pay her credit card bills thanks to her parents told me, “You never want to just ask your parents for something out of the blue. Instead, create a strategic timeline where you butter them up for one whole year. This way, when you finally ask them for the latest 6 Series BMW, they won’t feel it’s out of the ordinary because you’ve been talking about cars for a while. You’ve showed them you’ve thought things through and will be a responsible individual.”
3) Make it clear how they will be helping you. One woman who had her entire $100,000 MBA tuition paid for told me, “Besides always keeping in contact with my parents, I created a Powerpoint presentation explaining why them paying for my MBA was going to be such a great investment. I highlighted pre- and post-MBA salaries, the top 10 employers who hired from my school, and mentioned famous alumni closer to their generation to make them proud.
My presentation worked like a charm! I was able to land a great job after business school, graduate with no student debt, and travel to amazing places for school. It was like a two year vacation fully paid for by my parents! I’m now engaged to a fellow MBA too. As soon as the wedding is over, I’m going to give them a new presentation on why they should buy us our first apartment here in San Francisco’s Marina district. We need roughly a $300,000 downpayment for the $1.4 – $1.6M condos we are looking for. Eventually we’ll pay them back!”
4) Use the “what’s mine is yours strategy.” A 26 year old woman who currently lives in a ~$1.2M two bedroom, two bathroom condo paid for by her parents told me, “It’s all family money anyway. I made an argument why San Francisco real estate is a good investment (tech boom, inexpensive compared to other international cities, low interest rates), and told them not only could they invest their money wisely, they could also help my living situation. I agreed to pay the mortgage, maintenance, and property taxes so they could rest free knowing their asset was being taken care of. I also rent out the second bedroom to a girlfriend of mine for $1,900 a month.”
5) Demonstrate your worthiness. One parent who supports her 31 year old son who works at a startup said, “I needed my kid to show me his 5 and 10 year career and financial plan before I opened my check book. The last thing I want to do is write a $200,000 check and have him quit his job and use the money to travel the world for several years! When I bought him his condo, I made him sign a contract to follow his financial plan for at least five years before doing whatever he wants. He agreed, and after two years, he hasn’t quit his job yet!”
6) Sound like a real estate expert. One 26 year old fella whose parents bought him a $1M loft in San Francisco’s SOMA area said, “I’m a real estate fanatic! I studied real estate in college and am always reading everything there is to know about real estate taxes, 1031 exchanges, up and coming areas, and so forth. My favorite TV show is MTV Cribs. I’ve read your entire Real Estate Category section, and have plenty of books at home about making money in real estate. There’s nobody more knowledgeable about real estate in my family than me!”
Following along the lines of point #5, pretend like your parents are private equity investors. You must demonstrate to them you have a strong grasp of everything real estate. Discuss various price appreciation or depreciation scenarios and why they may occur. Talk about the tax benefits, leverage effects, and the ability to generate future passive income with tenants. Discuss the downsides of ownership by discussing realistic ongoing tax bills, association dealings, and problem tenants. Highlight historical interest rate cycles and where you see the local economy going over the next 10 years. The more you can sound like you know what you’re doing, the more they’ll likely fund you.
7) Sacrifice long enough. One 37 year old founder of a gin company whose parents bought him a $2M+ Greenwich Village loft told me, “I’ve always been close to my parents. They live in Long Island and I live in Manhattan. I see them once a week when I’m not traveling for business. For almost 10 years after quitting my banking job, I’ve lived in a dinky 2/1, East Village apartment on the ground floor with random roommates. I scrimped and saved to put everything I have into my gin company. If I stayed in finance, I would have lived a much more comfortable life all these years, but I didn’t. I went after my dream of being an entrepreneur, and my parents are proud of what I’ve done. They had money to spare, so when my lease was up they decided to buy a loft in their name, with the understanding it would one day go to me.”
Coming up with a 20% downpayment can take a while without parental assistance
THE WRONG WAY TO ASK
The worst way to get your parents to buy you anything significant is to tell them, “All my friend’s parents are buying them homes and cars after college, why can’t you?” This argument reeks of entitlement! No effort or love is spent in this ask.
Your parents will likely start questioning whether they raised you right after all these years. They’ll probably even alter their will. Yes, we all know that hard work is not the only way to get ahead thanks to the massive generational wealth transfer that will be taking place over the next three decades. But it’s important adult children never let their parents know they are expecting anything.
Think about what goes on in your parents’ heads.
- They want you to be happy and not struggle more than you need to.
- At the same time, they don’t want you to take them and their money for granted.
- They’re curious to see what you can do on your own after all these years of support.
- They know that nothing is more satisfying than achieving something on one’s own. Therefore, they don’t want to rob you from fulfilling your potential by handing you money.
- They’re hoping you’ll stick around when they’re sick and need help.
If you are incapable of taking on side jobs, saving aggressively, and being patient with your desires, it’s more important than ever to convince your parents to buy you everything you want due to growing competition. Just take a look at this time frame of the typical home buyer:
Pre-1970s: The typical homebuyer came from a single individual income source, usually the husband.
Post-1970s: The typical homebuyer came from dual income sources as more women entered the work force full-time.
Post 1970s – 1990s: As home price appreciation far outstripped wage growth, a third source of money started coming from adult parents.
Today: When buying a home, we now compete against quadruple incomes (couples + parents) + increasing international demand from developing nations such as China. There is no way a single person can compete any more.
Over the past 15 years I’ve probably been to over 2,000 open houses. It’s part of my 3-in-1 Sunday system to exercise, learn about new design, and understand the investment landscape. The consistent trend I’ve noticed is that there are more and more young adults checking out homes with their parents. Here are some of the things I’ve heard from the adult kids,
“But I don’t like these countertops.”
“Where’s my media and game room going to be?”
“I liked the higher floor apartment with the view.”
“I wouldn’t pick out those tiles for the bathroom!”
“Oh, this is so cheap!”
What I don’t hear is a more in-depth discussion between adult child and parents about the financial merits of the particular property. This is where this post comes in. To educate adult children to sound much less entitled, and much more knowledgeable about large purchases.
Don’t think for a second the reason you lost a bidding war is because the 26 year old complaining about the countertops has a lot more money than you. It’s the 26 year old + her parents’ balance sheet who are blowing you out of the water! Recognize the state of the common buyer now, and realize competition is only going to get even more fierce from wealthy foreigners looking to diversify their wealth.
Loading ...Related: How To Convince Your Spouse To Work Longer So You Can Retire Earlier
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Updated for 2019 and beyond. Please note the estate tax exemption amount has risen to $11.4 million per person. Parents who have an estate lower than this threshold might as well give us much to their adult children as possible while they are alive then after they are dead.
My parents have given my husband and me each the gift tax limit per year for the past 18 years. (We’re both 48 years old and have married for 18 years.)
My parents do the same for my brother and his wife.
The amount has gone up a little bit each year. So we got a total of $30,000 in 2019.
My brother and I never asked for the money, as it was our parents’ idea to “gift” us each year, as they put it.
My husband always feels a little bit guilty about accepting the money, but we do go ahead and accept it (with much gratitude).
My parents are not super wealthy, but rather were middle class when I was growing up, and are upper middle class now. They are wonderful people, and we see them several times a year, and text them several times per week. (My parents are in their late 70’s.)
My parents also pay private school tuition for the kids, which is a healthy sum.
Both my husband and I work full time as attorneys. We have 3 kids (teenagers) and live in a high COL city. My parents know we all work very hard. If I showed signs of being a slacker, I’m sure that they would not give us the money each year.
The money has been very helpful in terms of paying for tutors, expensive kids’ sports, home remodeling, etc.
I am guilty as charged. I payed for my son undergrad and bought him 2 new shiny cars.
But, honestly , I bought them for myself.
College- I gave my word to my dad, that I pay for his education.
The first car was red cast-iron Ferrari 1:30 on a first day of Christmas in USA in a toy store in Colonial Williamsburg . We were in shock No Christmas decoration in store like this we seen before. We did not have cash( $30 on 6/hour salary) , wrote the check , my boy is holding a new car(the first toy I ever bought for him) and clerk says :”No checks. Do you have credit card?” No. “Ok,then , no credit card- No toy.”We accept that (did not know, that people can write a rubber checks). Nobody was happy about it.
Fine, I will take your check and ship this toy to you. – Ok.
Ferrari holds it’s value very well. Still sits on the top shelf in his office.
The second car was Hyundai Touring. It was our F** You to Used car salesmen. We drove in 100miles radius to buy a car for our son after 3 year in college. Mamma didn’t want to put another 250 in to his 22 y/old Honda. We started from 1.5 th through 6. At the middle of right turn in to the shopping center during the test drive on the 6th car engine stops. No steering, now brakes, steam from the under the hood, Enough is enough. Next day we bought another new car.
It was in 2010. Another 10 to go. Used cars were expensive, and new ones were on sales all the time.
Where I came from parents help to buy a condo just to move the kids with the grand kids out from their place. I lived with my parents, wife and son in 500 sf apartment for 4 years. My neighbors even had grandparents. 4 generation in 2 rooms. You see, It is a problem with socialism. People have small income but nothing to buy, So, people save. And than government makes an inflation and all savings gone.
This article never mentions TAXES. Gift Tax. If your parents buy you something over $10,000 (not sure if that’s the correct current tax law), or make you a loan with low interest below the federal rate, that is considered a taxable gift. This is important as it appears many of the examples in the article didn’t take this into account. Maybe add a footnote or consider another article? If you can make a secure loan in the family and pay a family member interest instead of a big bank, it can benefit all. But you have to follow the law :)
You are absolutely right! The gift exemption amount per year is now $15,000 and one can leave up to $11.4 million state tax free when they die today in 2019.
Given less than 1% of households pay the death tax, it’s safe to say that it’s OK for parents to give as much money as they can to their adult children before they die.
I plan to pay my daughters rent and other large expenses and bill it to my credit card to which she will be added as an authorized user.
In exchange I will ask that she puts the value of the rent into a Roth IRA and the balance into a target date fund with some put into a value fund.
This is in lieu of gifting her money each year.
Interesting subject matter with some even more interesting examples. Love the tongue in cheek but some of the interviews sound like they were from The Onion or a Netflix true crime 5 part series.
Adult children essentially plotting for a year the most effective way to exploit their parents resources for a BMW? Chilling. And kind of funny in another dimension where Thanos lives.
Adult children entering into a mutually beneficial real estate arrangement has some risk which could negatively impact the family dynamic, but if you can afford it and tolerate the risk, what the heck.
What I would challenge is the theory that you are forced to have multiple income streams and/or family assistance to buy a home or afford college.
This may be a necessity if you live in NYC, SF, or attend college at an expensive university. But those are choices you make. If you have a beer budget don’t finance the expensive champagne. Unless you have a capital one card right? There are many places to live, go to school, and work that don’t require multi cash streams.
But seriously A PowerPoint presentation for a down payment? Genius! Or is it Evil genius?
I am the parent. My kids are both entrepreneurs and both got a bit of a lift from grandmother – other than that they followed your method and have done very well but not without financial challenges along the way. I truly think they are far more life and finance savvy having taken this route.
A great article, my parents are definitely well off compared to most and have thankful paid for a lot of things growing up such as a car and private high school at 8k a year and one year of college. Untill thinking about I didn’t really realize how much stuff I take for granted that they pay for. I like the philosophy they have, they will never give any of there kids cash or write them a check but they will let them use there vehicles pay for part of schooling, cell phone etc. as long as they are financially responsible and are saving their money.
I am a social worker, I work with an astounding number of adults who steal from their parents, allow their parents to support them, and even abuse their parents. These are people who cannot afford to live well themselves let alone help adult children. These are people who are suffering because of their adult children. I have enjoyed your website and your blog. But I am very disappointed in this post, it is very irresponsible to encourage adults to take advantage of their parents. The lack of attention to the downside of your title to this article shows how little you actually know about what can happen when adults get their parents to pay for things.
Hi Lisa,
This post is actually real life. They are actual examples of people who manipulate their parents into paying for everything, even when they shouldn’t.
Try to keep an open mind and think that perhaps this article can serve to WARN parents today and future parents what their cunning kids might do to them one day.
Keep positive!
Sam
Our Future political & business leaders, folks.
Yikes
April fools, right? But shocking how many kids do guilt-trip their (not so rich) parents into supporting them excessively. Probably stems from the surprisingly common attitude that the world owes me a good living just for being alive.
I can’t believe that a blog supposedly about finacial independence would cover a topic as silly as this. An adult, by definition, isn’t someone who schemes to get mommy and daddy to still pay for things. A child might, but not an adult.
Of course in some cultures kids who are in their 30s still live with mommy and daddy – but that’s not my culture. Grow up.
I wonder if I need to explicitly write Humor in my humorous articles to make sure people understand when I’m having fun.
Thanks for recommending PolicyGenius.com. The tool showed me that for the $30/month that I’m currently paying for a $400,000 policy with AIG I could be getting a $500,000 policy. Oddly, that $500,000 policy is with AIG too! A phone call to AIG is in order. Hopefully, they’ll change the terms or I’ll move on to another company with the same terms.
Very interesting! Definitely take a snapshot and e-mail them the proof to get more life insurance or reduce your premium! Gotta love the internet and its ability to more efficiently price discover.
I didn’t have to ask, I had to decide to take up on my parents’ offer to help me with the down payment of my 2bd/2bth condo in SF after the housing crash.
Since I started working full time after graduating college, my parents had been pressuring me to buy real estate. I was living in NYC, they wanted me to get an apartment b/c 1) their excess asset can appreciate b/c NYC apt = appreciation 2) why pay rent when you can pay a mortgage and get the tax benefit 3) if I ever moved, the rental could be retirement income for them. I was in my early 20s and proud. No way was I going to take up on their offer to help me buy my own place and be indebted to them when I am exercising my independence.
I regretted that decision. If I had bought in the early 2000 in NYC, the apt value would have at least doubled while I benefited from the tax deductions. And to this day my parents still mention how I refused to listen to them and let a great opportunity slipped through, that opportunity could have made myself and my parents some extra cash. Lesson learned, after I grew out of my ‘finding myself 20s,’ better late than never. I did not hesitate to buy when I moved to SF. I took my parents’ offer up once I’ve familiarized myself with the SF real estate market. My 2bd/2bth apartment has appreciated in value since I bought it.
After I had my baby, my parents offered to pay off the mortgage on my apartment and instead of me paying the bank I would be paying my parents. The thoughts were 1) My parents’ excess assets can appreciate as my apartment appreciate but my payments to them created another income cash flow for them now 2) less pressure for me to remain a working mom, if I so inclined I could stay home with the baby. However, i am well aware that I lose out on the tax benefit by paying my parents.
Long ago, my parents bought life insurance policy and told me I would inherit about 350k once they pass away. Really, I think 350K is not much help when I am in my late 40s/early 50s. By then I should already be established. The 350k will be nice to have in my 50s, while 350k now in my 30s is more helpful when I am establishing myself and growing my young family.
I don’t think all parents with money help their kids for the heck of it. I know my parents certainly picked and choose who to help and on what. My parents will never buy me a nice car, but they will definitely help me with any real estate purchase, provided they see the potential of said real estate. If today I wanted to buy a nice fancy mansion in a neighborhood that has no appreciation/rental potential my parents would laugh in my face. The two things my parents always made clear they will consider helping: education and real estate. Anything else, no dice.
Method 8: Pay them back, with interest. Take a down payment assistance gift or tuition assistance gift and repay them over time with a modest interest rate, maybe 2 to 5 percent. Put it in writing and honor the deal. It is both charitable to the child and the parent is left with something of a return.
I have to say, I’m not in this generation, but I’m one of these. When my grandfather died when I was 11, my dad chose to leave a portion of his inheritance to me to pay for college. (Yeah…I collected well before I was 50.) All told, I think it was $10k. I ended up getting paid to go to college (hello, scholarships!), so the only time I touched it was when I full-filled a life long dream of studying in London. My parents were so THRILLED that they didn’t have to support me as an undergrad that they bought me…my very first washer and dryer in my very first apartment! I know, I know. I’m one of those spoiled ones. I took it! I had moved 3 hours away, so carrying laundry back and forth to the parents’ house was no longer an option.
I lived in a crummy two bed/two bath apartment in a not-so-great part of town, while working full time and getting my MBA, because I was determined to pay cash at a private school. I did. Again, because I’m spoiled, my parents paid for my books during grad school. Yeah, I took that too. It was private school tuition!
The irony is when I got divorced, my parents offered to help me with my finances, while I tried to figure everything out. I was offended. SERIOUSLY offended. I’m an adult. I work full time. I make more than my parents! But, I could appreciate where they were coming from. They have hearts of gold and wanted to make sure I was okay. I opted not to be offended, but instead thanked them for the generous offer. But I also didn’t take the money. I told them at some point, there may be an emergency. And then I would need their help. I needed the option to ask for help to be there THEN, when there was something out of my control. I’m currently living in a one-bedroom apartment, while I save up for a down payment on a house. And I’m okay with that. I live well below my means and will someday be back in a house. But I would much rather learn to support myself than rely on the bank of Mom & Dad.
Oh, and that inheritance? It’s still in the same account it’s been since I was 11. Seriously. I worry my parents haven’t saved enough for retirement, so they may need it some day. And if/when they do, I know it will be there for them. Because THEY deserve it. (And that same logic is why I try to pay for groceries for my 92 year old grandmother. These are the people that raised us! We should willingly GIVE, not expect to RECEIVE!)
Okay, the spoiled kid will stop ranting now. :)
you are seriously the best
Hi FS, Thanks for this post as I completely agree with the phenomenon that you’ve noticed. A lot of my colleagues in London cannot afford to buy homes in the city. Hence a lot of them have had parental assistance for the initial deposits. I’m sure you know how crazy house prices are in London!
However I have to ask, what advice do you have for those of us who do not have the same option of asking parents for financial assistance? I’m tempted to leave the UK altogether if I’m being completely honest!
I’m a little late to the game here, but I have another tip for getting your parents to support you. This one comes straight out of my sister in law’s playbook. First, you have some kids with a few different horrible men. Then, you initiate numerous custody disputes so that you can reasonably convince your mom that there’s no way you can keep a job and make it to so many meetings/court dates. As a bonus, you might be able to get her to pay for your preschooler to be in daycare, even though you don’t work, because you need to be free to go to all of those appointments. Then, after your mom is fully supporting you, be sure to guilt her into buying you a new car by telling her that your birth mom is going to do it if she doesn’t. Oh, you don’t have a birth mom who is inexplicably eager to buy you a car? Well, sucks to be you, I guess. Anyway, while you’re mooching off of your mom for 2+ years, don’t forget to make her feel like she needs to also pick up your kids from school and take care of them because you’re always just so tired. It’s not just millennials who pull this crap, my sister in law is 46. The only thing that saves us from being absolutely livid is that my mother in law recently decided to give us the same amount of money that she has given to sister in law. We invest every penny of it, we have no intention of squandering it, but we feel much better knowing that the money will be there for us or mother in law in the future if sister in law manages to siphon away more than mother in law can afford.
My parents didn’t have enough money to help 5 kids when I was growing up, so even if I could have mastered the art, it wouldn’t have helped much. Families were just bigger back then. There wasn’t enough to go around. I worked a part time job during high school to save up enough money to buy my first car. As did my siblings. Looking back on it, I guess it was tough, but at the time I didn’t think so. It’s just the way it was. It was the expectation. A rite of passage…
I feel like it gave me a strong work ethic and that has served me well in life.
And yet, I am supporting my 2 millennial children in big and small ways. It is the expectation of this generation of kids. The norm used to be you earn what you get. Today it’s so much different. Kids expect to fall back on mom and dad if they don’t make it on their own.
I guess I’m glad I wasn’t handed everything on a silver platter, because it’s made me the person I am today. Still, the challenge for me as a parent is to instill that in my kids, while at the same time I am paying for all of the things they need but cannot afford. Go figure…
What are some of the things you are paying for that they can’t afford? How old are you two children? You look very young! :)
Closing on a $1.2 mil house not with help from my parents, but whilst helping my parents. Married with 2 kids and single income earner. Wifey wanted to stay home with the kids, and I wanted the same. Can totally see what u mean about competing with couples, group investors, and Asian investors. Its insane in NY. 32 years old, and after reading this article, padding self on the back and thanking God for his blessings.
As someone who has been in school for a fair amount of time, and is currently finishing up a PhD, I can’t imagine ever asking my parents for that much. They helped pay for my living expenses for 4 years while I was in undergrad, which is not an insignificant amount of money these days. Currently, they only pay for my phone bill as we all share a family plan.
I’m looking forward to finishing up grad school and getting a good job, so I can have greater ability to give back to them. After all, I wouldn’t be where I am without them. I generally don’t cast any judgment against peers who have had everything gifted to them; however, if they strategically took advantage of their parent’s wealth then I do.
That’s a good attitude. BTW, I wrote about whether one should get a PhD here. Let me know your thoughts and whether you think it’s worth it so far!
If you think about it though, isn’t everything a strategic ask?
Working on a PhD is a very stressful, but an overall great experience. I’m in my 4th year now, and my committee seems to think I’m slightly ahead of the standard 5 year plan. The monetary payoff varies an incredible amount by field, but I’m sure almost nobody does it solely for the money anyway.
I would agree that asking for support almost always has a strategic element to it, and that’s why I would prefer not to ask. If someone’s parents set up a college fund for him/her that covered all college expenses that’s very different from choosing to go to college and expecting mom and dad to pay for everything.
I was in a PhD program in a “hardcore” science field. While I learned a lot, it was ridiculously stressful. I started out knowing I was NOT in it for the money, but boy I was naive. Being rich does not make one happy; but it is very hard to enjoy life while being poor all the time. The PhD experience varies wildly depending on many factors. But the choice of subject matters the greatest and the choice of supervisor comes a close second.
I definitely hear you on that one. Honestly, as much as I’ve always wanted to be a college professor, I’m not sure I would have gone back to school to pursue it if I were in one of the humanities or some other field where professors don’t make quite as good of a living.
Luckily I still enjoy my field a lot after several years of intense study, and my department and dissertation committee seem pretty laid back…at least for now. I have some friends in other fields who had bad advisors and many of them left after receiving a Master’s as they could not get out soon enough.
That’s great that you still enjoy your field after years of work. I still love my chosen field, but I am choosing to leverage my specialty and actually make an awesome product instead of staying in academia. My grand goal is to reach financial freedom early so I can launch all kinds of cool research projects on my own terms in my backyard or garage. :)
My parents gave me a small gift (I think it was $2,500) because I was just shy of being able to cover my 20% down payment in my first home. They also give me money yearly at my Birthday and Christmas as a gift. I don’t ask for it but have gotten over objecting. They refer to it as passing along their social security that they don’t need. I try to do something fiscally responsible but annoying to them with it. (like paying down my mortgage or using it to fund my IRA) I know they would rather I just spend it on something fun.
I don’t know what world you are living in, but most baby boomers my age that I know, are struggling to make ends meet, worried about how or if they will ever be able to retire and have no extra money to buy their own home, let alone a home for their children. Those who do own their homes are barely keeping up with their mortgage payments and struggling to keep their jobs, or once being laid off, find another job that pays anywhere near what they were earning previously.
I found your tips on how to “butter your parents up” to get them to buy their entitled, privileged children houses, cars, etc., stomach-turning. I’m really hoping it was a satire, (I am quite gullible),and if it was a satire, please forgive me.
Otherwise, do some research and write an article citing statistics for how much money and debt, the average 50 to 65 year-old has. Here’s a good place to start: https://www.fool.com/investing/general/2015/05/17/americans-average-net-worth-by-age-how-do-you-comp.aspx
I would like to hear your feedback, as I’ve enjoyed many of your past articles, but this one made me question everything you’ve ever written and truly wonder how you can be so out of touch with reality.
Sherry,
May I ask whether you believe your reality is more real than my reality?
Also, do you believe the seven real people I’ve profiled are not real?
The fact is there is a huge population of people out there who have parents who saved and invested for the past 30-50 years and are sitting on huge windfalls. A lot of adult children are getting ahead through parental assistance.
There may be some satirical parts to this post, but that’s only because society finds adult children who figure out a way to ask for more money from their parents as comical.
Please share where you live and your story? You SHOULD question everything you read and think for yourself at the end.
Thx
I don’t think my reality is more real than your reality, at all. But a national study of median retirement savings and average debt by age done by the U.S census and other respected sources seems far more reliable than a case study done on 7 people.
I think it’s great when parents can help their children get a leg up in this economy, whether it’s by helping with a down payment, college debt or connections for networking.
I just think that the percentage of Americans who are able to do this is extremely low based on the statistics I’ve researched regarding an average American’s net worth, debt and retirement savings.
Mainly, I was disturbed by the “seeming” suggestion to butter your parents up by manipulating them to get what you want. I’m still hoping that you were being facetious.
My story is that I am a 2nd generation native Angeleno, raised in a middle class environment by 2 extremely intelligent parents who placed more value on integrity, education, reading, hard work, culture, social activism and civil rights than the almighty dollar.
We never had a color TV or many of the “fancy crap” my friends had and I never had a color TV til I was in my 30s and that was only because someone gave me their old one. Same with most of my appliances. I wore a lot of hand-me-downs from my sister and my mom made some of my clothes. We shopped at the May Co., which sold quality merchandise at much lower prices than most high-end department stores.
My dad is an architect and always had his own business. He taught me by example, the value of hard work and the benefit of being your own boss. By the way, if anyone reading this is thinking of becoming an architect for the money, I suggest you put the brakes on that idea and become involved in finance, biotech or alternative energy. Architects are notoriously underpaid, considering the amount of extremely expensive education and hard work it takes to become one. The pay-off is usually disappointing.
Although a college drop-out, I literally crawled my way up the ladder in the advertising industry, starting at rock bottom and working my ass off to succeed. Here is my story of how I did it: https://medium.com/the-coffeelicious/i-recently-read-a-story-here-by-allesia-who-wrote-about-being-23-and-broke-e7a27febb3ac#.veoyex870
My parents did help me over the years here and there, as did my older sister, but I would NEVER have considered buttering them up or manipulating them into giving me anything. My sister lent me $1500 to add to my down payment for a house and I promptly repaid her.
My parents gifted me some money over a period of 5 years and I used that money to buy my second house after the first one didn’t work out (long story.)
I bought low and sold high which enabled me to buy my current house for cash, three years ago. I’m disabled and it is a Godsend not to have to pay rent or a mortgage. I also bought in an inexpensive area – a gorgeous mountain forest in Southern California, so I got my house for $68,000, buying low again and fixing it up. Today it is worth double (still very little by most standards.)
Today I am happily married and live in the forest with my soulmate and our 2 cats. We get by on very little and are quite content.
Thanks for sharing your story! I’ll check out your Medium post.
Contentment is the key to riches!
“Contentment is the key to riches!”
I absolutely agree with you :)
I will share a bit of my personal story here. :) I am an only child growing in a family that went from low-income to middle class over the years. From where I come from, China, we put tremendous amount of focus on academic excellence and I was very good at it. So I got myself into elite schools all the way by being really good at taking exams. I saved my parents ton of money by just doing that and when I got to college, I was offered a full scholarship which covers tuition, as well as boarding, and living expenses. By the time I got out of college, I earned more scholarships and saved about 20 grand in US dollar value. I gave it all to my parents and asked my mom to supervise and invest as I started my new life in US as a graduate student. Living very frugally and continue to save whatever I could with my below poverty line salary. By the time, I started my own family, we were ready to make down payments. My family came together for me and my parents generously gave us the money for the down payment. And my parents continue to help me out when I see a good investment opportunity but don’t have enough dough to do it myself till nowadays. And I am sure whenever they need me, I will reciprocate without a second thought. Here are my few points, 1. for me, as an only child or maybe it is just Chinese culture, I have the mentality that my money is my parents, and their money is mine, there is really no division here; 2. money has its (I call it) “time value”, the then $300k (by the time I inherit for example) vs. the now $100k can make a big difference. And we cannot negate that time value of the money; 3. I am always open with my parents about my money decisions, and we really feel we are working towards a greater goal as a team, whether it is them or myself making a good investment choice is all for the greater good of the family. Just my 2 cents. :) As in how my upbringing helped me shape the way I treat money and finance, I think being really good at maths makes it very clear to me at a very early age (probably around 7, I started asking my mom to invest my pocket money into stock market, lol.) that seeing that exponential growth of wealth is very rewarding and extremely motivating, just by knowing myself a little bit.
I benefited massively from financial assistance from my father. After my mother died my father couldn’t bear to live in the family house anymore so he sold it, moved cities and rented. He had an excellent pension. Over here in the UK we have to pay inheritance tax of 40% above a certain threshold but it tapers off if money is given 7 years before death. A morbid subject I know. But he really wanted to void all that money going to the taxman rather than his kids so he split the proceeds of his house sale between us kids. I used it to buy my house which has since doubled in price since it is in crazy London.
The reality is for us Londoners that it is impossible to buy a home here now without parents recycling their property gains to their kids. The average price is now about 20 times average salary.
Can’t believe some actually said they respect LeBron James more than Stephan Curry because LeBron came from an impoverished background vs Curry who came from a rich NBA father.
What about LeBron being inherited the most monstrously gifted physical talent vs Curry being a scrawny little guy by NBA standards, hustling to hone his craft, and soon will be considered the greatest shooter in the history of basketball and have changed the entire approach to balling for the next generation.
My point is we are all dealt a hand of card – it might be rich parents, it might be good looks, it might be intelligence, it might be tenacity, it might be emotional intelligence.
It’s like saying Bill Gates came from a rich family which allowed him to drop out from college, and he is smart, determined, and tenacious. But I would respect him more if he came from a poor single parent family on food stamps, and he is stupid, can never own a computer, and still end up building the biggest software company in the world.
Do the best with the card you are dealt with. And sure, I acknowledge that riach kids need to be aware that they may miss some important life lessons by having too much handed to them.
I really like your blog but two things bother me about your recent posts:
1. You seem really fixated on how other people make or spend money and “get ahead” rather than yourast focus on sharing what you’ve learned from your experience
2. This is actually only for this post. You cite the example of buying an apartment in Manhattan, and how if you had convinced your parents to do that, you would all be better off. But you never consider what would have happened if the deal estate market tanked. Both you and your parents may have had some financial difficulties. I know its easy to say in hindsight that housing in NYC was a great investment, but clearly not everybody thought so at that time or it would have priced much higher. You’ve worked in financial markets long enough to know that there are no sure things in investing.
I suspect these posts are a bit of s rise on your part, but either way, I plan to keep on reading!
Tom, this is one post out of 1,100+ over 7 years. Are you new here? If so, happy reading! I’d love to hear your story and whether you got financial assistance from your parents as an adult.
Hi Sam,
I typed my comment last night on my phone, so just to correct a minor typos…
In my point number 1, I meant to type “your previous focus on sharing what you learned…” also meant that I think some of the items you post may be a bit of “a ruse” (not “s rise” like I posted).
I’ve been lurking on your site for probably 4-5 months – it is one of the blogs I consider “required reading” these days.
As for me, no, I never received any support from my parents after graduating from college. I had an ROTC scholarship to pay for 80% of my college tuition, but my parents did foot the other 20%, as well as room and board charges. Then I spent some time in the military and got out to attend business school, graduating with my MBA in 2006. I got loans to pay for business school, and have since paid them all off. Like you, I now live in the Bay Area, though I’m in Cupertino and not in SF.
I really don’t have an issue with other adults receiving $ from their parents, and like many people posting here, I also know friends who have received a significant amount of support from their parents. I guess I am more focused on my family’s (I’m married with 1 child and another on the way) journey toward financial independence, rather than worrying about how somebody else got ahead. That said, I don’t run a financial blog (yet! maybe I will start one some day), so I think at some point, maybe you find different topics to write about that may or may not be that important to you.
Anyways, hope that helps, and keep up the good work!
I think taking help from parents when you need it and they can afford it and helping them when they need help is totally fine. I think it is a cultural thing. In India (where I am original from) parents do help kids and kids help parents.
We are first generation here so we did not have any help financially what so ever and my husband helps his parents back in India quite a bit.
Having started with zero here and no help I would be glad to help my son in anyway we can but at the same time we teach him the importance of working hard. A good worth ethic is what we would like him to learn. Once we know he works hard we will help in anyway we can (pay for college, maybe even down payment for his house as long as his job can support the mortgage and other expenses that come with owning a property).
Case study #7 is from an Indian family.
It would be interesting if you could also list the nationalities and ethnicities of the 7 people you interviewed.
This is pathetic. What happened to learning to be independent, solving ones own financial problems and goals. Millennials should grow up and learn to attain what they want the way the older generation did; by driving inexpensive cars, living in inexpensive housing, and learning to prioritize their spending. The old saying “Shirtsleeves to Shirtsleeves in three generations” is alive and well.
Let me add another first person perspective here, as a millennial who owns a home in the Bay area.
I grew up in a lower middle class family. Always had food on the table, clothes from JC Penny (Macy’s? Are you rich?!), drove domestic used cars, etc.
Fast forward to today – I worked hard and paid for my own education, moved to the Bay Area, got married and bought a house. We make a combined $250k a year thanks to our educations/ chosen fields (Medicine and Consulting).
My wife’s family is very rich. They paid for my wife’s graduate degree, and gave us a 0% loan for the down payment of our home. They didn’t want us to feel like we were given a gift, or to feel lazy and entitled. (The house was new construction for $750k and is has grown to >$1M in the year we’ve owned it).
At first I felt weird about their wealth, but they don’t define themselves by it (drive old cars, shop at outlets, but have a SICK house). My perspective is now much like I think theirs is: Help my children as much as I can without ruining them or making them spoiled entitled brats.
My wife and I are very fortunate, but I still feel the need to work hard, grind, and continue to build our own wealth.
Thanks for your perspective. If you were not given a down payment 0% loan for your home, do you think your feelings of living in the Bay Area would be different? I’ve literally talked to over 1,000 people here in the Bay Area who are so frustrated/pissed off they cannot come up with the $150,000 – $250,000 downpayment to buy an average home. Even if they could, the competition is fierce.
Getting a DP for a $750,000 home is pretty big imo.
I agree, it was very generous. We intend to pay that DP loan off as soon as possible.
I would be frustrated with the real estate market to a degree, but honestly up until a couple of years ago I never thought I’d be able to own a house. I’d just resigned myself to the fact that if I want to live in a cool city where jobs are, then I’d need to rent.
Strangely, friends of ours just bought in the area with a 3% down FHA loan. I was shocked that the buyer would play ball.
I’m an almost-27 year old millennial. Parents gave me my mom’s ’93 Bonneville as my first car when I was 19, didn’t have to pay for my undergraduate or graduate degrees thanks to scholarships and compromising on school selection (best decision ever!). Bought my own house that I’m paying off and plan to rent out after my fiancé and I get married and buy one together. My parents have offered to contribute to our wedding, but we’ve decided not to take their money. If they insist, they can put it towards our down payment, but we’re planning as though we’ll never see that money. I’m fiercely independent (financially; I’m very close to my parents), mainly from years of being labeled as spoiled by my friends. My parents have already reached retirement age, so I wouldn’t feel comfortable taking the money from them now anyway. I want to give back to them instead. For the record, I’ve always felt like an outlier in the millennial generation.
Winnie, your attitude and appreciation is commendable. As a parent i have little problem taking funds from my retirement to further help my daughter. I 100% paid for her undergraduate degree and i still continue to help her but i am always looking to see if she has the right attitude to appreciate it and not get “spoiled”. She is a tremendous saver so she doesn’t waste money. Kinda sounds like you.
I haven’t heard or seen many instances of parents buying houses or cars for their children.
But many times, I see parents contributing or outright paying for their grandchildren’s education, thereby freeing up their children to spend on houses, cars, and living expenses.
Whether it’s paying for private school or contributing funds to a 529 plan for their grandchildren, this allows a parent to effectively transfer wealth to the next generation while not feeling like they’re just funding another lifestyle purchase.
I have even seen this when the second generation is earning good money ($400K plus) and could afford the tuition on their own. But the grandparents still want to be a part of investing for their grandchildren’s future.
Are you sure you aren’t my brother? He could have written this himself. So far he is 32, still lives with my mom (who has in the past paid for 3 cars, rent for 4 years, college, clothing, and a $50k credit card bill) and he is constantly finding ways to get her to buy him stuff. I always joke that I wish I had a mother who bought me everything I wanted ;)
But in all seriousness, I would much rather get the things I want through my own hard work that letting my mom buy it (which she really can’t afford to anyway).
When I bought my apartment I got help from the parents. It allowed me to take a lower mortgage. That was a nice gesture I appreciated a lot.
My plan is to educate my children well, to become real fire fighters. This would be more valuable according to me. Off course, I plan to help them out with the first house they by, especially if they demonstrate to be responsible.
I am not sure I will buy them a car or pay credit card debt…
I’m not jealous of millenials and I don’t begrudge them their parents help. I do feel it makes their character and inner strength less than the rest of us who are hustling.
It seems like a common theme is that we won’t be proud of ourselves if we get a hand out from our parents. But does our self worth really depend on our personal achievement or lack or achievement? Should we be so hard on ourselves.
I confess I had a safety net from my parents. They gave me gift money for years. That along with my own income, I was able to put a down payment on my house. I also took out a second mortgage from my mom at 3% interest. My income is in the top 95% in US. BUT, I feel under achieved. I feel don’t feel as worthy as my friends who came from nothing, and built everything from ground zero. Should I be that hard on myself?
I know a kid. Instead of backpacking through Europe in college like other kids, his dad hired a producer and a camera crew and followed him as he partied through all the hottest night clubs in Europe. He interviewed all the famous DJs in the clubs, and hooked up with the cutest girls from every country. He is tall, out going, handsome, with a chiseled body. After he came back from his rampage, he use that material and created the most popular electronic music website on the internet. Should he feel guilty and unworthy for being rich, handsome, good looking, 6’2″, and creative?
If you were handed 20 million of f-u money, would you slave away to stash that 401k or would you rather do something fun and creative that resonate with your soul while living in a penthouse in SF?
Maybe is time I start giving myself the credit I deserve.
FF123,
If you told the story of the kid you know, but he didn’t have a camera crew with him, he would be yet another rich wastrel, and the rightful subject of derision. But, it seems clear he had a purpose, while having fun. (assuming your last he–the he that put that actually created the website–is the kid, and not the father) There is nothing wrong with leveraging the resources you have–all of them–for some purpose. In fact, I think we could celebrate that.
It also seems in your story that you are not just gainfully employed, but quite successful in your own right. Again, to me, if you are using your talents to leverage your resources, then you are a red-blooded American, and should feel proud. But, as you point out at the beginning, what really matters is that you are at peace with yourself, where you are in life, and what you are doing. Sam has written several times about the perils of comparing yourselves with others, particularly with those close to you or who you hang out with.
“When buying a home, we now compete against quadruple incomes (couples + parents) + increasing international demand from developing nations such as China. There is no way a single person can compete any more.”
This. The only way to come up with a downpayment on a house in the Bay Area by 30 these days is to win the startup lottery or to become a banker. The former means getting lucky and the latter means selling your soul and spreading misery around the globe. Unfortunately I rolled snake eyes in the startup game and would rather blow my brains out than work at a hedge fund. That doesn’t leave too many options if I want to live in the bay area, even though I’ve lived within my means, saved a large portion of my salary and invested wisely over the years.
To me, what that really signals is an unsustainable situation. Ultimately, societies need first responders, teachers, community minded individuals and so on to function. For now, a lot of those folks are still grandfathered in to the bay area through rent control, prop 13 and other measures. But, once they die off, if all we have left is bankers and startup founders, the quality of life here is going to suck. I’d much rather move to Austin and live without a mortgage than slave it out in the bay surrounded by a bunch of sociopaths.
When do you plan on moving? It is pretty absurd that people need to spend at least $1.5M for a reasonable SFhome nowadays here.
I’m planning to move to HONOLULU eventually? although Austin looks pretty nice too.
I’ll stick around as long as the math works out and my friends are still living in the city. For now, living in an apartment, making a big-city salary and splitting rent with roommates makes financial sense… and it’s also a lot of fun! I imagine at some point, though, we’ll settle down, start families and probably spend fewer nights out till 2 at the pub. That’ll probably be the point at which “starting life expensively,” as you put it, will begin to make less and less sense.
Sam – This was a great post, you can tell from the # of comments and attention it has gotten. It was also quite hilarious and sad.
I’m honestly not at all jealous of trust fund babies, I am surrounded by them all the time and count many of them as my close friends. In fact, I pity them a little, as they will always wonder what they would amount to and achieve if they were on their own without the safety net of their parents. They will never get to experience the satisfaction of succeeding on their own. If you value *only* material aspects of your life, I guess it’s easy to be envious of the person with a 5 million inheritance. You Sam, are a self-made man, you are very successful, rich and happy and seem to enjoy your life more than most, and I can’t think of any better place to be.
Your point about being outbid by quadruple incomes in cities to buy real estate as well as foreigners looking to diversify, definitely hits home. I’m in NYC, and its unaffordable now to buy your small family a modest apartment in a good neighborhood with public schools for less than 2 or 3 million, and even that would come with so many compromises. All cash offers by trust fund babies and foreigners will continue to make this the case in the face of shrinking housing supply in NYC and SF.
Like you Sam, I took a banking job after graduating college (ivy on full scholly bc parents make 70k combined). Been banking the last 8 years and am now 31. I feel moderately successful bc I earned everything I have including a 7-figure brokerage account. I even lived in a shitty Manhattan apartment with roommates for 6 years while making decent money. Most of my coworkers grew up wealthy and have many things given to them including access to the “Hamptons beach house” which will eventually be given to them. While I’m secretly jealous, I do feel like I’m more appreciative of everything I have bc I didn’t come from money (although I never felt poor) $70k in the Midwest was plenty and I never felt lacking–everyone in the area was the same financially and were ignorant to try wealth of NYC! Ignorance is bliss.
jeez.. it’s amazing to me some people are lucky enough to live like this. I wonder how common this is in reality since an obvious pre-requisite is parents with significant wealth.
my parents gave me the boot ASAP; and i didn’t grow up poor or anything either. growing up with them was difficult and they liked it that way. i was paying basically all my non essential expenses (essential => food, shelter, health insurance, etc…) since i was 16. sometimes i think they would really like to see me fail and be homeless or something. i guess parenting is easy when you don’t give a shit about your kids. they did get a lot nicer after i moved out, which is nice because i wasn’t planning on putting up with their shit at that rate. and now i kind of have a lot of respect for them for some odd reason, because the world is a fucked up place but at least i have 2 people close to me that “get it”. it made me independent and all, hopefully some day i will be the rich parent which would be worlds better than just being a rich leach kid. but sometimes i think it would really just be nice to live the easy life and have everything handed to me; because what’s it matter in the end?
Judging by some of the other comments, apparently it’s very easy to feel resentment towards people who are given things. I’d wager it stems from some amount of insecurity about their own situation. Personally, I don’t see how someone having a house or car purchased for them makes them a lesser person. More importantly, someone else’s situation doesn’t affect me (or you, for that matter) so why get all up in arms about it?
That said, I have a mother who is more than willing to help out (she does so for older sibling). I could easily take advantage of this to get ahead, but I choose not to. In fact, I felt great relief the day I cut myself off completely. But that decision doesn’t make me superior to anyone why asks for help. In fact, maybe it’s just me being too proud to accept help. Maybe there is something to be learned from those who are willing to ask for (and receive) help from their parents?
Never grew up with a lot, and never received a lot, I also never asked because my parents didn’t have a lot. For my kids, if they grow up being business savvy like my girlfriend, I’d be giving them money too for investments. My girlfriend was given a condo from her parents, a year later, she took the equity and saved her cash to buy two more, she was only in her mid twenties. And these are not cheap condos! She has kept them for over ten years and has added a house to the collection. She wasn’t working in any fancy job either.
If my kids can prove that they are business savvy and great with money, I would support their adventures ( just no depreciating asset) because the money would go too them anyways.
My parents gave us $1,500 for the down payment on our first house, and helped out with some wedding expenses. They buy occasional dinners and beers but I think that is pretty normal – tying back to the last article about inheritance, I would rather have them take the whole family on vacation while they are still here, instead of giving us an inheritance or spending money on things they can’t enjoy with us.
Guess i’m from a different generation but i believe that asking for an early inheritance is extremely selfish. My parents money was their money which they worked for, not my money. Their was no way in which i could every pay them back for the many things they did for me. The paid for my undergraduate degree as i have paid for my daughter’s undergraduate degree. If my daughter chose to do post-graduate work (which she did) it was her financial obligation and part of the growing up process to learn how to budget and make financial decisions regarding the paylment of that voluntary decision. I do help her to some degree still but she understands its her responsibility.
If i paid for it i feel it would interfere with her becoming a young adult and it would require her to obtain my approval for financial decisions she wants to make. I feel its my responsibility to teach her how to become a fiscally responsible young adult capable of making her own decisions and be accountable for them.
I view anything else as my failure to help her become a young adult responsible for her own decisions. Frankly, the attitude i see you proposing i would more describe as immature and spoiled. Anyways, thats my viewpoint and obviously many others disagree.
I laughed about 6 times while reading your post today. Hilarious.
I despise all the rich kids in the world getting expensive stuff for free and yet I am jealous and wish I had rich parents. Lucky you bastards!
My parents bought both my brother and sister their homes since they were not financially responsible enough to save up on their own. It doesn’t bother me because it makes them happy to help them out now while they are alive vs. waiting until they have passed. I think this has probably occurred for centuries and is really not a new phenomenon…the only thing that is tough for me to get around is the sustainability of pricing that is 10-15X the household income. Seems bubble-ish to me but I definitely am the farthest thing from an expert.
Nbsdmp, you are a better person than me! Trying my best to not be bitter about working my ass off since 15 to now enjoy a nice lifestyle, while my sister is now living in free house number 2, courtesy of my generous parents.
This article is correct. Beg, whine and cry poor for long enough and the parents will open the checkbook – even if it means putting themselves in a compromising financial position.
I agree with the previous commenter. Sickening.
If nobody wanted the family shack on the outskirts of Diamond Head and I got a freebie by default, could freebies by default be a future choice on your list? :)
Thanks for the great reads!
It has actually improved my work ethic. Im naturally a lazy person. As we have added to our holdings, there has been more work required – renovations, maintenance, legal issues, leasing, etc. Since im the only male in the household, most of these duties fell on my shoulders. I multitask like a mad man, and it was only possible because I was thrown in the fire right away. People are always capable of more. They just need to jump in and figure it out. Taking that first step is the most important one of all.
Yes i am very open about how I got started in real estate. I always tell my friends to tap into the equity in their parent’s homes. We’re chinese, and almost every parent has a house with 500k+ equity in it. One friend listened. Bought a property all cash at the bottom of the market in 09 for 500k. Appraised at close to 2m. Another friend couldnt convince his dad. Doesn’t trust him.
congrats. i like your life story. i own a lot of properties around NYC as well. would love to sync up with you on the state of the market and neighborhoods to buy more, if you want.
I’ll use my life example to further illustrate how millenials can get ahead of their peers with family help. My mom owned a house in a class c neighborhood in NYC mortgage free. My sister and I tapped into this resource by getting a HELOC, and used that as a downpayment for 3 properties. Fast forward 10 years later, we own 9 properties with a growing rent roll. I tried convincing my friends to follow the same path, but some were too immature, some had parents with no money, some could not convince their parents. Im 32 now, and my sibling and I could retire if we chose. All my friends are busting their ass in corporate, or struggling to make ends meet. Most ask me how to get ahead, and I dont know how to tell them its kind of late to the game.
My path isnt quite what Sam is advocating for, but parents are a great way to get ahead. In fact, I’d say our family bond is strong because we work together all the time, have topics of discussion at dinner, etc.
Sounds like you made a smart move with the resource you’d had! Has it affected your work ethic as a result of having 9 rent rolls? What stops you from taking it down a notch?
Do your friends who ask you how to get ahead know you got the money from your parent’s property initially? If not, have you suggested they do the same to tap their parent’s wealth now?
As several other commenters have mentioned, so much of this is cultural. “Sunshine” received lots of help from his/ her parents but mentioned (1) expecting to take care of his/her parents in their own age and (2) never understanding the “kick your 18-year-old-kid-to-the-curb” mentality. I think both the “I’ve done plenty for you for 18/ 22 years….now it’s on you” and the “I’ll help you out as long as possible but then its your responsibility to help me out when you are able” mentalities make sense, but if you’ve grown up with one, it’s really hard to understand the other, hence the knee-jerk reactions from middle-class folks (including myself!) that children whose parents fund an MBA or an initial down payment must be spoiled brats. (Notice, though, that I have never considered myself a spoiled brat just because my parents paid for my college tuition; tuition is “normal”, which of course really just means, “a normal part of my culture and hence a reason for gratitude but not not an instance of indulgence”). Moreover, I have thought myself many times that college, certain graduate programs, and housing prices are so ridiculous that no normal person can afford them (on their own) at the time in life when they would be most useful, so why in the world do I think anything is wrong if a parent realizes this and provides for their child accordingly? The answer is that my gut reaction follows my culture more closely than it follows my reason. Having said all of this, I DO think there is a huge problem, whatever your culture and whatever your parents’ means, if you are trying to manipulate your parents by “buttering them up” or using affection as a tool.
Random net worth question: there’s some debate about what people should count when calculating net worth. Should I count home equity (diff between amount owed and property value) in my net worth?
Check out: Why It’s OK To Include Your Primary Home Equity In Your Net Worth
Perhaps I’m misinterpreting your intent but this post is a little too righteous for my taste. It sounds like you’re mocking those who receive assistance from Mom and Dad. Who cares? Many parents want nothing more than to help their children. My parents help me here and there and why should I feel guilt about that? They have told me many times that they receive satisfaction at being able to provide for me and my siblings.
I get that some people exploit it or milk it for all its worth but that doesn’t bother me. Too many other issues to give a shit about. I don’t think it’s fair to fault someone for something they lack control over. You want to motivate those poor fuckers to save and invest and get rich, awesome. But to deride those who are recipients of generosity is just smug and self-righteous. Or maybe I’m being irascible…in which case, carry on.
Not sure how highlighting 7 real adults who successfully were able to get their parents to help pay for a house, car, and credit cards is mocking. It takes a lot of time to interview people, record, and write.
Here’s my intent with this post:
* Find a solution to the “problem” that Millennials and others might not receive their $1M+ inheritances until after 50 years old. This was a common theme in the comments of the post, No Wonder Why Millennials Don’t Give A Damn About Money. The solution is to figure out how to extract money now, while the adult children are in their 20s, 30s, and even 40s to better live. Hence, my investigative reporting.
* To reflect on my life, and my mistakes. I was TOO PROUD to ask my parents for assistance after college because I wanted to prove to them that I wasn’t a failure since I got into lots of trouble in high school. They also paid my college tuition ($2,800/year at W&M), and I was anxious to stop getting assistance from them once I graduated, and make them proud. I knew they weren’t wealthy as government employees.
If I wasn’t too proud, and followed what my one year studio roommate did from Cooper Union who got his parents to buy him his one bedroom, our family would have been financially better off today. Pride got in the way of having a sensible dialogue about convincing my parents of buying Manhattan property in 2000.
* Help the Boomer generation figure out a way to responsible transfer money to their children and not create a society that is even more full of entitlement due to not having to work as hard for the money. I hope my generations talk to each other about money.
* Learn from other adults how they are able to feel guilt-free accepting so much financial assistance as adults, so that others might learn how to benefit from their parents as well.
As for yourself, I don’t know your situation, but it does seem like from your comment that you have had significant financial assistance from your parents. But I don’t want to presume, so I’d love for you to share your story. To start, did you go to a very expensive private university?
I just want to hear everybody’s perspectives.
Got it, thanks for the clarity. If that’s your intent then I have no beef with the post.
What I think is this: Sometimes by reading people who’ve accomplished a lot (without a lot of help) — they make the rest of us (through societal peer pressure or direct disparaging) feel guilt – when in reality we should not feel guilt (we meaning those who are the receivers of such generosity). Perhaps the intent is not to make those who are recipients of these things feel guilty, but often (not accusing you) there is open hostility to those folks who accept assistance or are beneficiaries.
Let me provide an example. Steph Curry’s father Dell was a great NBA player. Steph and his brother got to literally shoot around and learn from the absolute best players in the world when they were growing up. Now, Steph is the class of the league.
Now let’s look at LeBron James. No real father figure around. Poor neighborhood. Had to work his ass off to make it to the top ‘self’ made. Totally bring himself up by his bootstraps kind of guy.
I respect both. I don’t fault Steph for his luxurious/fortunate upbringing. He didn’t choose it. He just maximized the opportunities provided. And I don’t respect LeBron any more for coming from nothing. I respect both players equally as I know that being the best in the world at basketball is no easy task no matter what your background was.
As for me – I stand to inherit quite a bit of money when I get older. Probably $1-2 million for each of me and my two other siblings. My folks also fly us out on occasion to visit them. They also paid for my education so I don’t have any student loans. So yes, I am quite privileged and also quite grateful. Both my wife and I work and we save and invest just like you.
I’ve learned not to look a gift horse in the mouth and realize how tremendously stupid it would be of me not to get some help from my parents for certain things. They accelerate my success and I will accelerate my children’s success. Generosity is super important and it has to be learned and I am learning it each day from my folks. I do not take advantage of the situation and I am also not ‘too proud’ nor do I venerate those who refuse to accept any outside assistance.
Also, I went to Juco for two years and a state school for two years so no expensive private school (although they would’ve paid for it had I decided to).
I admire Steph for his character. But given you juxtaposed Steph and Lebron in this way, I admire Lebron more b/c he didn’t grow up a millionaire with an NBA father. But of course I like Steph more as a Warriors fan!
May I ask when you knew your parents were wealthy? And did that influence your decision to go to Juco for two years after high school? I was thinking of doing the same to SAVE my parents tuition. But, I opted to go to the state school of William & Mary instead b/c it was an affordable $2,800/year, and I knew worst case, I could pay them back with my $3.65/hour salary at McDonald’s if I had to.
Great article for me and reminds me that I need to be friendlier to my parents:) I’m an only child and my parents are multi millionaires. My mom still works with no plans to retire making 150k+ and my dad is retired, but gets more from his pension and SS then what they need to live on. So in theory they will never need to touch their retirement account, but the only thing I’ve gotten was my college paid for.
My husband and I live super frugal and want to retire as early as possible. My mother constantly comments on how horrible we live(newer 3000 sqft, 3bd house) since our kids have to share rooms, we never go out to eat, I never shop, get my hair done..etc. She tells me to quit living so poor because I will inherit all their money. I keep telling her I don’t want to wait until we’re 70 to retire. We have never made less then $100k combined and this passed year I quite working to stay home with our new baby and now when she talks about my husband she makes it sound like he doesn’t do enough to support us when he is currently making 120k a year and that I need to get a job. I feel like we don’t get along because I get so tired of her comments and she always acts sad that we aren’t closer. She grew up on welfare so it seems that she has a hoarder relationship with money and I think it will be many years before I could talk her into sharing some.
Yes! A key takeaway from this post is for everybody to give their parents a call and tell them how thankful they are for all their support.
In fact, CALL them and VISIT them more. Check out this post on inheritances for those who call and spend more time with their parents: https://time.com/money/4181277/just-call-your-parents/?xid=tcoshare
Sounds like all is well with y’all! 3,000 sqft is large for SF!
There’s another strategy to use on your parents – tax savings. Remind your wealthy parents that when they die, the government is going to tax them through the wazoo with estate taxes. To keep the money in the family, and out of the grubby hands of government, they need to figure out ways to legally transfer as much of the money to the next generation while still alive as possible. Use the annual gift-tax exclusion, provide housing, provide vacations so the kids don’t have to spend their own money on them, sell real estate to the kids with 100% seller-carry financing at low interest rates, etc. etc.
I was surprised Sam didn’t mention that as well, I can only assume he will go more in depth in his future posts of all the intricacies of this soon to be transfer of wealth from the baby-boomers.
First $5.43M per parent is death tax free, so for those parents who’ve been able to accumulate much more than that, I hope they do give that money away to causes they believe in, and perhaps some to their kids.
Hi Sam – I’ve been enjoying your posts – often for what I learn (thank you), and always for the creatively thoughtful topics and sense of humor. This one made me laugh out loud. If either of my 20-something kids tried any of these tactics to extract money from me, I’d laugh at them, tell them to quick being manipulative shitheads w/ family, and tell them to channel their deviously scheming energies into extracting money from a job at a large corporation where that BS will help them rake in cash. I’d also tell them to come back and talk to me about using my money after they’d proven to me they don’t need it to live their own lives with honesty, grace, courage and financial success.
I grew up relatively poor for the U.S. – food bank poor when I was young, then a less poor in the teen years. I paid for everything, including college, on my own. I’m now in my 40s and have gone from nothing to net worth of $1M+ twice w/out any parental help – first time as millionaire was late 20s. Youngest kid is finishing college now (paid 100% by us) and my wife and I will retire w/in 10 yrs. The wife’s family is outside the U.S. They have some money and gave a significant chunk of it to us years ago…enough that we’d be retired in our 30s if we’d kept it. But it came with control, so we gave it back w/ a “thanks, but no thanks – love you, but we prefer to earn the right to live how we choose, not how you choose.” We’ve told my wife’s family to spend their money on themselves…we don’t need it and don’t include it in our financial plan. We also help my mom financially.
Our kids grew up comfortably – decent home, boat, international vacations, nice clothes etc, but they have no illusions about getting any financial support from us after college unless they are in serious trouble (health, accident etc). We’ve told them we’re going to retire early and spend the money we earned and they’ll get whatever is left, if anything. We gave them every opportunity to succeed and they know our hearts and minds will always be open to them…just not our wallets. They’re stronger for it. They’re leaders among their friends/colleagues because they know how to take initiative and can handle conflict. They’re impatient with rampant everyone-gets-a-participation-trophy entitlement and apathy in their peer group. They’ll be the kind of adults I respect…and who knows, maybe they’ll get some surprise help from the ‘rents one of these days. :-)
Awesome to make you laugh! That was one of my New Year’s resolutions as a writer. To inject more humor and irreverence in my posts.
Sounds like your kids have indeed had a great lifestyle!
I’m still not clear if this post is a joke. Is this just a list of anecdotal tips on how to manipulate our parents?? I’m beginning to question your judgement!
I wouldn’t judge the seven real examples I’ve included for manipulating their parents to help them as adults. Instead, I would keep an open mind to learn how so many adults secretly figure out a way to get ahead of their peers without making their parents feel like they are being used. Try to always learn from others to make yourself a better person.
The more understanding there is in the world, the more acceptance and harmony.
Congrats on writing a controversial piece here, Sam! :)
You raise some valid points (of course). Now that my parents are financially set with more than they will ever need, I’m starting to think it would be best to start the intergenerational transfer of wealth sooner rather than later to optimize our tax situations.
I don’t need the money and they don’t need the money, but we would all be better off having and spending the money instead of donating to ole Uncle Sam down the road.
However, growing up, I never wanted to ask my parents for money and particularly didn’t want to ask them for money once I was an adult (age 18 = adult). They paid for a little bit of college until I was independent and able to pay for it on my own. They eventually gave me $7k to pay down my mortgage to get rid of the PMI. Otherwise it’s been just me supporting me in my adult life. I’m raising my kids with the same expectations. It worked well for me so hopefully it will serve my kids well too.
In the end they will probably receive most of our wealth and most of my parents’ wealth unless we figure out a fun way to spend it in the next 4-5 decades. But I’d rather they set out and make their own path in life and then get the windfall once they are established (maybe when they are 30, maybe later). At least that way, if the going gets tough they can survive on their own in the wild without parental assistance. I’ve seen too many 30-somethings that can’t live without a paycheck from their parents and then when it dries up (when the parents wake up to their own debt!) their life is turned upside down.
I like this. I just turned 30 and am in a comfortable place with my financial future. I know I will make it with or without my parents help. For my kids, I’d like to wait until they reach that realization before I start infusing their life with my wealth. If I were my parents, I would feel confident transferring wealth to me at this point because I know how to properly manage it and I can finally appreciate it because I know how hard it is to build that wealth in the first place.
This is the most ridiculous thing I have ever seen. Lets get our parents to pay for things because we are either to lazy or spoiled.
Fist time here, last time here.
Everybody deserves some love. Why work hard when we have Big Government and our wealthy parents to take care of us?
Like several others here, I too felt the need for a shower after reading some of the stories Sam shared. (BMW girl needs a serious bitch-slapping.) Several of these kids are shockingly, shamelessly manipulative— to a disturbing degree.
On the other hand, Sam is right, as demonstrated by some of the other stories, that in many cases helping the kids out amounts to a wise investment for both the parents and the kid. IF, and only IF, the kid treats the gift with the reverence, respect, and responsibility that it demands. The real estate investments, made with the understanding that the kid will pay the mortgage and, ideally, eventually pay the parents back, especially make sense. Especially here in the Bay Area!
I’m the youngest of a very large family. My Greatest Generation parents paid for college for ALL of us (which now strikes me as a bloody miracle— there’s no way you could do that today for 9 kids). I always joked about how rich my parents would have been if they’d quit while they were ahead and had only 2 or 3 kids.
They helped out at least one sibling with a house down payment, and I know they helped the others in various ways over the years. I was the child of their old age, and when I finished college they were delighted to have me come back home to live.
With 20/20 hindsight, I WISH I had asked Dad to spot me a house down payment 20 years ago! The result here in the Bay Area would have been equivalent to Sam’s musings about doing so in New York.
But alas, I didn’t. Damn. And now I’m faced with Sam’s stark insight here:
“Today: When buying a home, we now compete against quadruple incomes (couples + parents) + increasing international demand from developing nations such as China. There is no way a single person can compete any more.”
Absolutely true. Sure sucks to be single!
I also wonder, though, how many 22-year-olds are sufficiently mature/savvy to fully appreciate such support from their parents, and think about its impact on their future. Some are, no doubt (like poster Justin). But what about the majority?
Anyway, VERY interesting topic, Sam. Good job on this one!
Wow, that is incredible your grandparents paid for the college education of all 9 kids! That would literally be like $2.25 million dollars for kids going to private school nowadays. Also impressive that all 9 kids went to college!
Oh gosh… 20 years ago, if only we coulda bought property in Manhattan, NYC, SF, London, Hong Kong, Beijing, Paris………………… we’d be set for life!
The globalization of assets has made the world a much more competitive place. From jobs being outsourced, to wealthy foreigners parking their money by buying homes. It’s hard to get ahead, which is why we NEED to pool resources, and figure out a way to leverage the internet to scale.
Sam – I found this article entertaining. There is simply no one size fits all approach. I’ve seen parents help out and their children are the hardest working people I know. I’ve seen parents help out and their children are lazy. Many parents just have an abundance of money and need a way to use it – one great way is to help out their children. I have not directly asked, but my parents have helped me out in certain ways. Not any of the ways in your poll. But if they want to take us on a vacation, I see no reason to not accept. Each child and each family is different.
But as is often the case with people I know, their parents are helping out immensely. Good for them.
I have always felt that colleagues who were from wealthier backgrounds were a little less motivated (on average), and hustled a lot less. This leaves huge opportunity for those of us without financial support , much less competition.
I would urge all wealthy parents to continue showering your adult children with BMW’s, free houses, vacations, etc. Give your kids enough to make them so reliant and lazy, that they are barely employable. Frees up so much opportunity for the rest of us.
You missed an example and what I feel to be a better model. A more complete thought on this would be (in my limited understanding, I am no expert) the model of the Rothschild family. They loan money out of the “family bank” at a favorable rate, and they continue to propagate the family bank indefinitely for future generations. The opposite of the thinking for the rags to riches and bank in 3 generations thinking that has come and gone over time in America.
I think having a family base to help grow the family is the right message to take out of this, the effort to maintain wealth is insane, so if you grow your family into that effort and leverage generational experiences the whole can become quite wealthy and free.
Thought provoking piece, as usual.
In my younger years I’d be morally outraged that “kids” were taking advantage of their parents and/or parents spoiling their “children” like this. Nowadays I realize everyone’s different, and I’m not going to judge someone getting a leg up by using their family, or anyone else.
That said, I certainly won’t be doing this for my children, no matter how much they try to manipulate me.
If you can’t stand on your own two feet, you aren’t standing, you’re leaning. My children will still be standing after all the leaners have fallen down.
I grew up in an upper middle class family and college is mostly on the parents in my culture (I can’t imagine not paying for my kids college). My parents paid for my undergrad and grad school tuition and living expenses so I didn’t have to work. They also purchased a townhouse for me in Houston and I have no mortgage. I take care of all the costs relating to owning the home, HOA, property taxes, maintenance, and home improvements, and I opted out of getting a roommate because I’m in a good paying field and I value my privacy.
My dad is now retired and about 80% of his income is rental income from other real estate in my home country (8 houses), the rest is from Consulting. I take care of my parents with gifts, spa treats, paying for some of their (economy class) tickets to the US when they visit and buying school supplies for my sister.
I definitely don’t have any feeling of entitlement to all my parents have done for me. I continue to work hard in my field and I earn a good income. I recently purchased property back home, paid in cash and politely declined help from my parents because I was in a good place to go at it alone and I didn’t want them to bother. I plan to use the income from that property to fund my future children’s private school tuition. Their subsidies obviously have made my life much easier. I have no student loans and no mortgage, and so I know I won’t be stranded in the event that I lost my job or something. However, I still work hard, show up to work on time and hustle to the best of my ability. I braid hair on the weekends for extra cash.
I plan to give my children a minimum of what I received, while continuing to spoil my parents as much as I am able to and plan for my (early) retirement. It’s the give and take that makes the difference to me.
Parental help can only make someone lazy if they are already lazy, I’ve seen loads of people with no help that are still lazy and would rather starve than work hard, and I know people with billionaire parents that are pounding the pavement. I think it’s more effective to have honest conversations with your kids about money and sharing how you were able to make it rather than pretending you’re poor. My dad was my hero growing up and he told me all these stories about his senior colleagues that retired with nothing and how he didn’t want to be like them. I was very aware of the perils of not planning for tomorrow from a young age.
Thanks for sharing your background!
Where is your home town?
Are you doing work you love since you don’t have to worry too much about money? I’m always curious to see whether financial help allows people to pursue their interests with great vigor, or whether they still focus on the economics of a job they might not love.
Thx!
Hi Sam,
I’m from Nigeria.
I’m a Process Engineer and I love it. As far as the corporate world goes, there’s nothing else I’d rather be doing. I plan to get about 9 more years of experience (15 yrs total) and retire to do some light Consulting from Nigeria. If anything, I’m more motivated to make money and secure my future so I don’t have to do without the things I’m already used to.
Always nice to see a comment from a fellow Nigerian :). Can I ask if you’ve ever considered moving back to Nigeria?
Hi there :)
Yes I have. I’m just trying to gather as much experience as I can to prepare myself for the move. What about yourself?
I grew up poor from a single parent household. However, my wife’s family is well off. Initially I was wary when they would give us money because I wanted to prove I can support my own family. Also I was afraid they would use that to gain control.
Eventually I realized that they give much to my wife’s siblings – at least a house and car and more from time to time. My wife’s siblings are all multi-millionaires because their spouses parents also did the same which they plowed into investments. We live too far away to be controlled so that is not a worry.
At first I felt a bit guilty accepting their gifts, but realized this is pretty common. Now I see it as a blessing. I spent the first 22 years of my life with less than most people so why would I refuse an opportunity? I just don’t ask for anything and neither does my wife. I also don’t incorporate any expectactions in my financial planning.
Looks like you hit the jackpot! :)
What have your in laws given you guys so far?
It’s nice to be multi-millionaires thanks to our parents!
They want to see that we have some stake in it. So after putting money down on a house they offered to pay the mortgage. They also convinced us to trade up our cars which we did and they paid the difference. Other than that they pay for international airfare for our family to visit them.
It doesn’t put me on easy street but it adds a nice cushion. My wife’s siblings are rich because they also got into the family business which is in Asia. We live a middle class American lifestyle.
my parents didnt pay a dime for my college. so a downpayment sounds a little too far off. working my ass off did get me very far in life (im 25), but i would have loved to have a more normal life by not having to worry about tuition/rent/food payments in college.
anyways, i do feel that parents should be financially stable enough to afford tuition and possibly some sort of a down payment or grad school assistance. if not, then dont have more than 1 kid or any. i dont see the point in popping babies if you cant give the kid the basic necessary tools required to make some positive change in society.
I am of a different mindset. It is not a parents responsibility to fully fund college or provide a downpayment for a house. Most average American’s are only brining home around $50,000 per year….how do you expect them to pay for college and provide a downpayment to their kids while also saving for retirement?
We are better off than average, and I have made it clear to my 9 and 6 year old that college is expensive and while we are saving for them, it will not be enough to fund their entire 4 year tuition. We expect them to work, save and hopefully get scholarships or student loans. As for a downpayment for a house…that will have to be decided on in the future, but I doubt it. We made our own way in life without much help from our parents and I think we are better off for it.
i agree, its not. but then it makes life very hard for the kid if he decides to get a job in a city like NYC, SF or any of the other major cities where all the high paying jobs are at. lets assume a kid makes 100k out of college and lives in SF, half the 100k take home pay goes to rent, how will he ever buy a house or have major savings for anything?
Hopefully it’s not half! $100k gross = $70k net or $5,800/month. Many graduates rent for $2k or less here in SF due to getting roommates. Only 35% to rent :)
Then I guess the kid will have to think outside the box, get a roommate or move to a different city. SF and NY are not the only places where money can be made. One can live very comfortably in different areas of the country, still make good money, save and live well.
We are good examples of that. We may not end up super rich, but that is not our intent in life either. We are still likely to have more money than most of our peers at this point in our life and in the future. Help from mom and dad would have been icing on the cake!
my rich uncle gifted my cousin a brand new M3 for getting into Stanford a few yrs ago. ofcourse the tuition was paid for as well. when dear cousin graduated, rich uncle gifted him a 2mil apartment in SFs most prominent high rise. the kid studied physics in college, and went on to start a startup which he just sold for 8 digits this month. must say, the cousin is very smart and very successful for a 30yr old. i feel proud.
rich uncles brother (my dear daddy) didnt give me crap. i even had to crawl my own way into America. but i was always fascinated by rich uncle’s ways of life and i did some smart things and now i am not too far behind dear cousin. and im 5yrs younger, so im pretty sure i have enough time to make the difference.
moral of this real life story is: you can pay for car/house/ho*kers/whatever but if you raise the kid right, it will benefit both. im pretty sure im gonna gift my son a red ferrari for his 16th (pink 911 if its a girl), fancy manhattan condo, and maybe even a donation check to Harvard if the kid is wack. Not only because i can, but because i think it strengthens the family line is many many ways.
Have you seen the wealth of the families of Bill Gates, Evan Spiegel (Snapchat), Mark Zuckerberg before they went off to make their fortune? They were all ALREADY rich.
If you do not have to worry about money, you can create things that you want without fear of financial failure. This is a big reason how the rich get richer. I wonder whether people understand.
exactly. thats my point as well. you’ve chosen great examples, specially frat boy Spiegel. my favorite pass time for the last 10yrs of my life has been very very carefully studying how the rich got rich. and paying your own tuition, or for your own car, or worse of all – rent, is not one of them. No matter how good of a programmer he was, Zukerberg would have amounted to nothing more than a 120k/yr software engineer if it hadnt been for his dad who paid for Philips Exeter and Harvard
My parents and I immigrated here when I was 3 years old. As you can imagine my family never had a lot of money growing up but my parents paid for my undergrad tuition and rent. They also insisted I take 20k from their home refinance towards my masters and paid for my rent then as well. Growing up they constantly told me they came to this country for me to succeed and they sacrificed everything for me to do so. Since graduating, I’ve earned 150k+ a year and paid the rest of my masters student loans (80K in all with interest) in two years. Our family holds to the old country principles of helping each other out as much as possible. If my parents ever need help in retirement, which they most likely will, I’ll be a multimillionaire by then and will be able to support them. I never understood why people kicked their 18 year old kids to the curb and were surprised when their kids didn’t give a damn about them and stuck them in the cheapest nursing home to rott when they’re old and dying. I’ve appreciated every dollar of help I’ve gotten from my family and respected that with this privilege comes the responsibility to use it for the good of not just bettering myself, but taking care of my family to the best of my ability. I hope to teach my children the same philosophy and pay for their college.
Wonderful comment! This is exactly why I added this section to the post.
Think about what goes on in your parents’ heads.
1) They want you to be happy and not struggle more than you need to.
2) At the same time, they don’t want you to take them and their money for granted.
3) They’re curious to see what you can do on your own after all these years of support.
4) They know that nothing is more satisfying than achieving something on one’s own. Therefore, they don’t want to rob you from fulfilling your potential by handing you money.
5) They’re hoping you’ll stick around when they’re sick and need help.
I feel like a lot of people here are simply jealous of parents who help their children. It seems like in most cases their parents just let them sink or swim. But if the only way you can teach your children hard work and financial responsibility is refusing to help them financially after high school, I think you’ve failed as a parent. I learned hard work from my dad who worked 16 hours a day for decades. He only came home to eat and sleep for years. My mom worked full time at nights to go to college during the day. They were great examples for me. I wasn’t about to take the money they gave me and backpack through Europe or demand a new BMW. I was always more careful with the money they gave me than the money I earned because I respected it.
It’s ridiculous to me to let your kids and grandkids struggle to get ahead and then donate your money to a dog shelter when you die. I am more successful than my parents, and I’ll do as much as possible so my kids are more successful than me.
Agreed. People are so quick to make judgment about how parental help makes people failures but how can you be so sure if you haven’t been in that position? I don’t feel any different with the car I bought for myself than with the one my parents got me. Should I be walking the streets expecting a cookie for buying my own car, as an adult? Or will the house come with a sticker saying ‘I paid for it with no help’? A ferrari is no less of a ferrari because daddy bought it, and a toyota you buy with your sweat still ain’t a ferrari.
Sunshine,
Speaking for myself personally, the part I had most problems with was that these children were specifically and overtly pulling for these gifts–they were scheming for them, seemingly from a sense of entitlement, rather than being grateful for something their parents decided to give them or thinking of the good of the whole family, rather than just themselves.
My undergrad degree was paid for by my father. (I paid for grad school) I fully intend to pay for an undergrad degree for my son–unless he is a manipulative, entitled baby. At that point, having to take on college debt could be a useful way to get him to grow up, and take life more seriously. And if that happened by the time he graduated, then his graduation present could be paying off that debt immediately. But I will act throughout his childhood to try and make sure I don’t face that stark choice. allowances, budgeting, discussions with the family about money, part time work, etc. are not about the cash, but experiential learning about responsibility and making smart money decisions. I intend to grow and launch a responsible adult into the world. I will love him no matter what. I hope he returns that love. But, if all I get is a “best friend,” who constantly looks to me for support (not just help) without a direction in his life, then I have failed as a parent. I intend for my child to thrive after I am gone, as well as while I am still here. For that, he needs independence. And that is priceless.
College tuition = yes
Big, memorable family vacations = yes
Down payment on first house = yes
Walking though an open house or inspection to lend advice = yes
Buying a whole house (other than for investment purposes) = no
New luxury car = no
continuous paying of credit card–while working, no less! = no
Agreed. One thing that really annoys me is when people say “When I bought MY house”…people who obviously had huge help from their parents (or their parents bought the property for them). In that case, it’s not YOUR property – it’s at least partly your parent’s.
And the bank’s. It cracks me up to hear people say they own their own homes, when they pay a hefty mortgage to make somebody else’s kids rich.
I really liked #’s 3, 4, 5, and 7. As someone who grew up in an upper middle class household (with one stay-at-home parent), and who is married to a partner who grew up in a lower wealthy class household, there are a couple of things readers may not think of. Specifically:
– One of the strongest motivations for high achieving parents is that their children find similar success in their own lives. If that was through entrepreneurship, they may urge their children to start a business. If that was through athletics, they’ll probably teach their kid how to shoot a basketball or swing a golf club. If that was through politics, they’ll probably make connections for their children. If it was through education, they’ll probably emphasize that. And if it was through business, they will probably be motivated to support a similar outcome for their kids. Everything above takes time and money.
– Similarly, wealthy parents probably have tastes shaped by that wealth. It could be for expensive hobbies (restoring old cars, racing), luxury travel, wine, real estate, etc. Those things are important to them, and just like we look for partners with similar backgrounds and interests, they are going to want their kids to be interested in them as well. I have two small children, and I would absolutely love for them to get the same kind of international exposure I got growing up living and traveling across Europe and Asia.
– Sam has talked multiple times about the differences in mindset between the rich and everyone else. While others are focused on managing costs (not eating out, taking public transportation instead of driving, buying goods and services at the lowest price) the rich are focusing on side hustles, investment strategy, education, and networking. Thus it should come as no surprise that they would be interested in a proposal for jointly buying property, or a CBA around a top MBA. They probably even find if fun, and live vicariously through their children, remembering their own experience in graduate school or buying their first apartment.
– Lastly, wealthy parents often have the luxury of extra income / wealth that does not need to be put towards required expenditures. They could spend that income on themselves (and probably already are for a good portion of it), they could donate it to charity, they could save it, or they could spend it on friends and family. The majority of wealthy people I know do all of the above, and there are strong arguments for spending in each category.
In my case, my wife’s parents often pay for family vacations (That we take with them. Ie. renting a beach house), and are paying for our children’s college. My father-in-law’s father paid for all of his grandkids’ college, and my father wants to make that a tradition. He has made it clear that, if circumstances allow, he would appreciate me doing the same for my grandchildren one day. The benefits here are clear: you don’t have to start saving for college not when your children are born (and you’re probably between the age of 25-40), and are trying to save for retirement / pay for childcare / buy a house. Rather, you contribute to college accounts when your grandchildren are born, and you’re hopefully more financially secure, with lower annual costs, and already a home owner.
I also think it’s not a coincidence that the majority of investments I see parents making in their children are related to education and housing, two types of purchases with are commonly thought of as sound & forward-looking investments. Yes, there was mention of a 6 series BMW, but I think that’s very different than paying for an MBA or gifting a down payment on a house. Remember, it’s still up to the child to pay the mortgage/taxes/insurance (assuming the gift is restricted to a down payment), and to get into that top MBA program, as well as get the high paying job afterward (as a graduate of a top 20 MBA, I can assure you that it’s not quite as simple as walking across a stage at graduation, and receiving your $40k start bonus along with your diploma).
You bring up a very good point about disposable income and charity.
If the wealthy parents are going to donate $10,000 or $100,000 to a charity. They best donate $10,000 or $100,000 to their kids education or housing first!
Living vicariously through their kids as adults must be so much fun. I hope to one day go through that experience.
It must also be an interesting dynamic if a successful parent raises a child who ends up not coming close to being as successful. On the one hand, I’d imagine you wanting to push your kid harder to do XYZ what you did. On the other hand, you just want your kids to be happy.
Another way to look at this issue is to put yourself in your parents’ shoes. If you were your parents, would you help yourself out with a downpayment or with any financial support?
I think it all really depends on the circumstances.
Sam-
In reading your blog as a 22 year old it seems to me from your last couple posts you are frustrated that all these millennials are receiving a free ride from their parents. You have every right to feel that because of how hard you have worked. Sure, maybe on the surface they have it easy but many of these kids have never pushed themselves once in their life. They don’t know what its like to feel pressure, to feel pain, to feel restricted. From you being frugal, working your ass off you have turned yourself into a man. So, in my opinion who cares if these children receive the money as an inheritance. Just because they have money doesn’t make them a better well rounded individual than you. While it may be unfair, many of them will piss the money away. Their *lifestyle* is not something to be jealous. It’s something to feel bad for them about because they are not developing their skills at all.
Note* I am 22 years old, freshly graduated out of college. Yes, I currently do live at home however, I have forced myself to save 90% of my income and invest it so I can start my own business one day. I probably “work” over 90 hours a week in terms of through my job, studying to be a CFP and other business books I study from. I am never home because as soon as I get off my job I go straight to my University where I graduated from to work out/ study/ become smarter and then repeat. From a financial perspective, it wouldn’t make sense to throw away $800 a month when I can live at home with my parents and invest in the stock market. So while yes I admit I am a beneficiary of living at home for free, I am using it as a stepping stone to make myself ready to start a business by putting as much “pressure” on myself in every other area of my life.
It is better to be tough minded with nothing than to be given everything with having a soft mind. Sam you have developed something very few people have and that is character, discipline and intelligence. Once something goes wrong in these kids lives they will crumble because they won’t know how to recover. You on the other hand, will continue to rise to the top when adversity strikes because you are used to solving problems!
All the best!
Justin
Justin,
I hope you don’t take the strong negative reactions to the examples in the story as applying in your case. There is a world of difference between moving back to your parents’ house for a reason (and, I presume, as a temporary measure) vs. being gifted a *whole house* or a luxury car with no more purpose than to continue existing. Your choices may be surprising to some, but it sounds like you have thought deeply about your decision, and can explain it to someone else, even if that person would choose differently. You are also working every day toward specific goals, which is a good sign no matter what your current circumstances are.
Howdy Justin!
Thanks for your thoughts and kind words! You do have some insightful thoughts I’d like to address. The purpose of this article is to:
* Find a solution to the “problem” that Millennials and others might not receive their $1M+ inheritances until after 50 years old. This was a common theme in the comments of the post, No Wonder Why Millennials Don’t Give A Damn About Money. The solution is to figure out how to extract money now, while the adult children are in their 20s, 30s, and even 40s to better live. Hence, my investigative reporting.
* To reflect on my life, and my mistakes. I was TOO PROUD to ask my parents for assistance after college because I wanted to prove to them that I wasn’t a failure since I got into lots of trouble in high school. They also paid my college tuition ($2,800/year at W&M), and I was anxious to stop getting assistance from them once I graduated, and make them proud. I knew they weren’t wealthy as government employees.
If I wasn’t too proud, and followed what my one year studio roommate did from Cooper Union who got his parents to buy him his one bedroom, our family would have been financially better off today. Pride got in the way of having a sensible dialogue about convincing my parents of buying Manhattan property in 2000.
* Finally, the post is to help the Boomer generation figure out a way to responsible transfer money to their children and not create a society that is even more full of entitlement due to not having to work as hard for the money. I hope my generations talk to each other about money.
For you, it seems like you got your head on straight. Keep on hustling. Tell your parents how much you appreciate everything they’ve done for you. Take them out for a surprise dinner. Fix those pesky home maintenance issues that won’t go away.
Best of luck!
I completely agree with Sam, look for the win-win and have open communication in every relationship, especially when it comes to finances and family!! I disliked the last post due to the one sided, close-minded and blaming tone of it (that most of this country’s population admires), but this kind of post is why I visit FS daily! Perhaps the previous post was just a lead into this one, so I understand why it was presented the way it was.
Good post, Justin!
I hope this article is a joke. While I wouldn’t mind helping my kids when they are older, there is no way I will buy them a BMW. I am hoping that we are raising our kids correctly that they will not need to ask for help. It is one thing for a parent to gift their child money for a down payment and another to have the kids ask for help. I actually find it repulsive that people my age (37) ask their parents for money for cars, houses, etc.
OUr 9 year old asked for money this Christmas so she could buy more stock….I hope this trend continues and she understands its important to save and invest.
No joke. There is a HUGE portion of the population who is getting ahead, sometimes way ahead due to parental assistance as adults. When you’re scratching your head wondering how the heck Joe and Jane could afford to buy X house, Y car, and go to Z place for vacation, there’s a high likelihood they’ve received parental assistance.
Trust me on this. My eyes and ears have been open for the past 7 years as a personal finance writer who’s looking to share interesting stories.
Oh I believe you. I have friends like this….however, they are not getting ahead in the world. They spend like there is no tomorrow while their parents fund their future, house, car, grandkids sporting equipment and fees. I see it…..I just don’t think that the parents are doing their kids a service. In fact, I think that enabling kids like this makes it harder for the kids in the future.
In America, we like to think that people will be rewarded for hard work, but the truth is many people are given significant advantages because of the wealth of their parents. It isn’t just coincidence that wealthy people are more likely to have wealthy kids. Also, the idea that rich kids who are given significant amounts of money by their parents will end up spoiled and poor is something many people tell themselves to feel better, but it isn’t true. The rich know how to invest in their kids–they send them to the best schools, introduce them to other wealthy people, and teach them how to make money.
Although not as extreme as the cases you listed here, I am an example of this myself. My parents were upper middle class and paid for my undergraduate degree. When I was 15 and got my first job, they helped me open an IRA and gave me money to fund it. They gift me about $5k a year and contribute $5k a year to my daughter’s college fund. They are also giving me and my husband a low interest loan (3%) for $100k for an investment property. These are a lot of advantages and they are working out well for me. I have a good relationship with them, but it is not because of the money. I think they are very proud of the way I have turned out and are happy that I am happy. I have a good job making $150k a year and at 36 years old, I have a networth of about $2 million. I would consider myself privileged, but not spoiled because I appreciate what they have done for me and try to spend my money in ways that they would approve of (no BMWs).
Can you share how you got to a $2M net worth at age 36 with a $150,000 salary? That is very impressive!
Some people will say, even if you saved 100% of your after tax income for the past 14 years (~$100,000/year) that still only equates to $1.4 – $2M, if you started with $150k gross a year out of college.
Thanks!
The $2M includes me and my husband. He also makes about $150k. These are salaries and do not include investments and side businesses.
Ok cool. So $300,000 income combined.
Can you elaborate on your investments and side business?
How much of the $2M do you think came from your parents?
I’d say I’ve received about $50k cash from my parents in total throughout the years (excluding them paying for undergrad). But, they made sure I spent the $50k well. Like I mentioned earlier, I’ve already been saving in retirement accounts for 20+ years and I lived at home for about four months after college to save up for a down payment on a condo. I bought the condo for $120k (just 5% down) in 2001 and sold it for $300k in 2005. Many of my peers were still paying off student loans at that point so having a little help early on really paid off.
Side businesses include 2 rentals which are only breaking even on cash flow but we pay off $50k in debt every year and they have appreciated. One will be paid off next year so we will see positive cash flow then. We have also bought homes, renovated those and flipped them. From flips, we made $60k in 2014, $20k in 2015 and $85k for 2016. We are roughly $1M in stocks and cash and $1M in real estate.
I’ll also add, that I plan to help my kid(s) in a similar way.
Great job! I dig the split. Let’s hope things don’t get to ugly over the next two years.
Although it would be nice to have rich parents, I do enjoy making my own money and paying for stuff. Whether the stuff be food, house, or whatever else.
Example number 3 is sickening and I don’t believe that money will ever be paid back.
“Look, Mom and Dad! I made a powerpoint!…Now where are my hundreds of thousands of dollars?”
At least example 4 is paying the mortgage on the down payment investment made by her parents and thus, growing their investment.
I’d be interested to see how much, if anything, she expects if the parents decide to sell the property due to her principal contributions! Could get sticky if the parents view her monthly contributions as paying rent in their investment property whereas she sees increasing partial ownership after each mortgage payment. She will probably inherit it all eventually, anyway.
Her parents are wealthy. I’m sure they will gladly let her have the place.
She went to private undergrad, and then private b-school, oh and private high school. We are talking $40,000 – $70,000 a year for at least 10 years of her life.
She’s a nice, enthusiastic person. She just had no idea how lucky she is as she decided to work at a hedge fund recently. That’s right. A person whose family already has money decides to take a job whose sole purpose is to try and make more money. I’ve got a post on this coming up!
Funny how you think #3 is sickening, where first commenter Chris thinks it’s the only unsickening tip!
Looking forward to the post!
I’m sure it’s difficult for someone in those circumstances to fully appreciate their situation as they’ve never known anything other than having the best education and the bill being picked up by Mom & Dad. More power to them if they have that kind of FU money.
Chris and I are evidently very different people :) Chris, did you make many powerpoints growing up?
Egh, I hate taking money from my parents. It’s a sense of pride, but I see your point.
Aren’t you glad you learned how to save for a downpayment on your own? That’s how you became a samurai…
Undecided yet! If I was smart enough to convince my parents to help me buy a 2/2 condo on 21st and Madison with two balconies and a view of the Chrysler building in 2000 for $800,000, it would be worth probably $2.5M or more right now. I would have lived in it for two years, taking care of all expenses, and then we would have rented it out from 2001 – now for big bucks as I worked in SF.
When I left the work force in 2012, I would then have time to manage the property in Manhattan, or just given it to my sister at cost to help her live an easier life as she raises her son. Given the property is in the family, I would feel happy crashing at her place for a week or two at a time during the US Open or other events.
The biggest uncertainty I’ve found in big cities is shelter. Once you’ve found shelter with a fixed or affordable price where nobody will ever kick you out, everything else isn’t as hard.
I hope this post is a parody. Maybe it should be re-titled “Affluenza outbreak on America’s coasts!”
I think I just joined Bernie Sanders’ campaign. And, I need a shower.
Bernie Sanders only wants to raise taxes on people making over $250,000 a year so we’re safe. He’s read my posts on $250,000/year being the ideal income for max happiness, and I’m glad he’s adopted the belief!
Yeah, my conversation would have gone something along the lines of:
“Hey, have you guys ever considered buying me a house?”
“No”
End of conversation.
And I wouldn’t have it any other way :)
Haha, awesome! But what if they had money they wanted to invest? You could help them invest the money and provide shelter for you. Perfect!
My parents never had anything when I was growing up, so this wasn’t an option for me. I had to work part-time jobs during high school just to have new clothes to wear to school. My first car cost $1,250, and it didn’t even have working windows!
With that being said, I wouldn’t have it any other way. I’m glad I wasn’t given everything, because I get a lot of joy and satisfaction out of earning what I want the hard way. I love succeeding based on my own hard work and creativity, without the crutch of rich parents to help me.
And now I’m going to be able to help my parents financially should they ever need it. As a real adult, that is probably the most rewarding feeling I can imagine.
Figuring out how to responsibly help the next generation without ruining their motivation is one of the main purposes of this article. I absolutely agree that it is much more satisfying and rewarding to earn something on your own. This desire to prove oneself leads to more innovation, better products, and happier people.
I don’t begrudge anyone who can get help from their parents or anywhere else, because I think most of us do get help somewhere along the way. I had help from mine in the form of an undergrad college education, so that I would not have the life that my grandparents, who were very fair-skinned, blonde haired sharecroppers who worked in blistering South Carolina sun (and died of skin cancer). I paid for vet school, and then any real estate I’ve owned, I’ve bought (or we’ve bought–husband works for a non-profit): trading up when we could. We live in a modest townhouse in your old home town that is older than I am. I’m a Gen-Xer, and do not expect to inherit massive amounts of wealth. I checked the “help my parents” choice.
My children are adults who are done school now and they are now on their own financially student debt and all. I contribute with advice on taxes and making large purchases and I cook their favourite dishes and send left overs home when they visit. They reciprocate by lifting heavy things and doing things up the ladder because I do not like going up ladders.
I would help in an emergency but it would probably have to be a health related emergency for me to open my wallet. I will also volunteer my labour when they buy houses and need fixer upper help even though I am not handy.
They had to work and save for what they wanted from a very young age and it made them very responsible adults.
Glad to hear Beth! I’d love to have some of your home cooking. Sounds yummy.
Your situation sounds like an ideal trade.
I wish I could provide a more constructive comment, but the only item in this whole post that doesn’t give me a sick feeling is #3. Were the millennials coddled so much that their parents are now paying in spades?
Do adult children getting significant financial assistance from parents give you a sick feeling? Or does the fact that many Americans require at least three incomes to afford a home make you feel worse?
I can assure you that it is very common nowadays for adults to continue getting financial assistance, it’s just not widely publicized. So when the media drones on about how people are spending more than they make and are in trouble, it’s not that bad due to the parental balance sheet.
It gives me a sick feeling, too. I can’t imagine asking my parents for financial help as an adult. I feel like my self-worth would take a blow.
Hmm, that’s not good.
I think that’s why we need to LEARN from rich folks who post about all their wealth, possessions, and travels on Instagram, Facebook, etc on how they are able to NOT feel sick showing off wealth they did not earn.
Always be learning from others!
I very much hope this is full tongue in cheek.
I’m from the Stealth Wealth camp, so I try to do the complete opposite of showing off my wealth by driving a Honda Fit and live in a humble home. I’m serious about trying to learn how others DGAF. There’s always some good tidbits to learn from others!
The only thing I ever asked my parents to help me with as an adult was to temporarily loan me some money to buy a mattress when I moved into an apartment after college. I paid them back within 2 months. There’s absolutely no chance in hell my parents could ever afford to buy me a car let alone a property. But there really are parents out there who do!
Two of my friends from my 20s (they were Gen X) were often pampered by their parents. One got a brand new VW from her parents when she was in her early 30s (!) and the other got a brand new condo in the heart of SF to live in for free.
I’ve often seen adult kids at open houses with their parents. I find it amusing. That actually reminds me of one of me colleagues who is a millennial – she is a super saver and accumulated enough money to buy her own rental property (granted she does live for free in a family owned building). Her parents were going to buy her brother a property so he wouldn’t be left out but she protested and her brother agreed that would not be fair for him to just be given something that significant. I really wonder what was going through her parents heads. Guess that have lots of money to burn!
Our parents offered to loan us some of the money to buy our condo. There’s no interest in that part of our “mortgage”, so it really helped, and we are paying them back every month. It wouldn’t feel righ just taking the money, this allows us to still feel like adults. Gosh it would be strange to go to an open house with your parents! And if they’re the ones paying, would you even get to choose what you wanted?