Should I Be Giving My Kids Money?

Over the weekend, I read commentary around a new book by a gentleman named Bill Perkins. The book is called “Die with Zero,” and the premises is just that—you don’t get to take it with you, so you need to enjoy it and attain fulfillment. This fulfillment, Perkins states, may include giving money to your children while you are living.

It is no wonder why something like this would catch my eye! After all, we are a bit of a hawk when it comes to making sure the oxygen tank is full for Dad and Mom. Most people want to give as much as they can. They don’t want to spoil their children and grandchildren to the point that they are worthless, but they do want to help them enrich their lives if they can afford to do it. There are just two problems with this.

1. A majority of retirees or soon to be retirees can’t afford to do very much for these loved ones without risking the security of their own retirement.

2. When most people give their children money, they give it in the wrong way that doesn’t have much of a long-term effect.

The first problem can only be addressed with a holistic view of your Life Plan. If you don’t have one, here is your wake-up call. You really shouldn’t be making any major life decisions without knowing where you are, what you need, and where the holes in your plan are or could be.

The second problem comes mostly when your child needs a little money to do this or do that. Or, you want to give them a little money to do this or do that. Maybe it is truly of value like helping with a down payment on a home or college savings for the grandkids. Most of the time, however, parents and grandparents simply don’t know how to give their kids money in the most fruitful way. If you ask us, we have an opinion. Here would be the top three:

1. Help them sleep at night! How many families are concerned with what would happen if a spouse were to suddenly pass away? Would the surviving spouse become a single parent that has to work long hours just to get by? We all know that life insurance has a role in a young family, but most young families have very little to none. Moreover, there is potentially tremendous benefits to buying life insurance when you are young, especially when you can add a long-term healthcare rider on a million dollars of death benefit for pennies so-to-speak. This is a gift that could keep giving to both your children and your grandchildren.

2. Take money out of the equation! If you ask why most young families do not have Wills or any other legal documents to support their family in the event of incapacitation, they would probably have one of two answers. They both begin the same…We really need to, but….

   • we just can’t find the time to look for the right attorney.
   • we just don’t have the money to do that right now.

3. Think of the magnitude this gift could mean for your family! Nothing else needs to be said.

   Inspire them with free money! Most employees contribute a percentage to what their employer matches. Why? It is practically free money. You can do the same. You know that times are tough, these younger generations are not saving near enough and the future of Social Security is pretty dismal. Why not empower your children by creating your own matching plan for their retirement rather than just giving them the money at the end of the road? Think of what that will do not only for their pocket book, but for their psyche.

And here is a bonus—Not every given dollar is a good gift. Sometimes “No” is the best the gift.

There is nothing wrong with wanting to help your loved ones, but ask yourself a few questions first. What would have helped you the most or hurt you? What could you do that will have decades of impact instead of moments? What would leave a lasting impression? What could be taught in the process? What legacy do you really want to leave?

You may find that the important question isn’t how much? It is how?

Just remember, we are here to help. Our mission is tried and true, which is to help you live Life on purpose!