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.
Crass and selfish. If your folks read this article, and you’re one of the ones they’ve gifted so generously, they’re not apt to want to do it again.
I wouldn’t.
What happened to standing on your own two feet and being independent? The pride you get from doing this is invaluable, even if it means you have to scrimp and save for a while. Try reading “The Millionaire Next Door” to reinforce this.
At the very least, BORROW the funds from your folks. Then pay them back.
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.