Instead of being so honorable and making money all by yourself, maybe you should get your parents to buy you everything as an adult. Life would be much easier this way.
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.
How To Get Your Parents To Buy You Everything As An Adult
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, post pandemic rebound. Then, I told them not only could they invest their money wisely, they could also help my living situation.
Further, I agreed to pay the mortgage, maintenance, and property taxes so they could rest free knowing their asset was being taken care of. Finally, 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.
Related: The Bank Of Mom & Dad Strategy For Buying A House And Starting A Family
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.”
The Wrong Way To Ask Your Parents For Money
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.
Things I Overheard From Adult Children At Open Houses
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. At the very least, spend some time making a connection by writing a real estate love letter.
Don’t Let Pride Get In The Way
One of my biggest regrets is having children late. If I set aside my pride and got my parents to pay for many things, perhaps I would have had children sooner. I had children so late because I didn’t have the financial confidence enough to provide for a family.
The reality of the world is that life is getting more competitive by the day. Adult children can no longer build as much wealth as they once could. Wages are not keeping up with housing, college education, and healthcare. As a result, the average person is falling behind.
If you need help from your parents, ask for help in a respectful way. Parents love their children and will do anything to make them happy. At the same time, parents want to feel proud of their children for making it on their own. Parents certainly don’t want to feel used.
At the very least, you should be saving and investing aggressively instead of spending your money on wasteful things. The harder you try, the more amenable your parents will be to helping you.
Teaching Kids About Money And Hard Work
I’m a parent of two young children. My goal is to help instill in them the value of money and hard work. I will put them to work early on the online business. Then I will pay them an amount each year below the standard deduction. This way, they don’t have to pay taxes. I will also fund their Roth IRAs.
My hope is that when my kids become adults, they will be resourceful enough to launch on their own. If not, I will give them opportunities to work for their money. After more than 12 years of running Financial Samurai, I’m tired. But my kids keep my motivation alive!
For those looking to retire early and take a similar shortcut, read: How To Convince Your Spouse To Work Longer So You Can Retire Earlier. I’m still trying to convince my wife to go back to work to no avail.
Surgically Invest In Real Estate
Instead of getting your parents to buy you property, you can surgically invest in real estate across the heartland of America through real estate crowdfunding. I’ve personally invested $810,000 in private real estate since 2016.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. If you have a lot more capital, you can build you own diversified real estate portfolio.
Manage Your Finances In One Place
Be a responsible adult and get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place. This way, you can see where you can optimize your money.
Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts. Now, I can just log into Personal Capital to see how all my accounts are doing, including my net worth. I can also see how much I’m spending and saving every month through their cash flow tool.
The best feature is their Portfolio Fee Analyzer. It runs your investment portfolio(s) through its software in a click of a button to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was hemorrhaging!
There is no better financial tool online that has helped me more to achieve financial freedom. It only takes a minute to sign up.
More Recommendations
Pick up a copy of Buy This, Not That, my instant Wall Street Journal bestseller. The book helps you make more optimal investment decisions so you can live a better, more fulfilling life. Becoming an independent adult who doesn’t still rely on your parents is powerful!
For more nuanced personal finance content, join 55,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.
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?
Hey I agree but I don’t know if I could enjoy anything if It was just handed too me
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