Ah, the big question and hot topic among different generations. How much do we help our children financially?
How much is too much? Should we help with college? Should we let them live in our basement rent free? Should we help them with a down payment on a house?
I hear a lot of things from the two most prominent generations at this time, Gen X and Millennials. Probably because most of my friends fit into these two generations.
However, I don’t want to make this into a generational argument.
First off, I will say this.
Never help your children financially if helping them puts you in a difficult financial position.
Now that I have covered that, let's move on to the good stuff.
As a general rule of thumb, I will say this, do not help your children until they are adults and have learned to take care of themselves. If they are adults and still don’t know how to take care of themselves, your financial support will only cause additional setback in the process of growth.
As in all things, our kids need to learn about money, how to make it, and how to manage it wisely. Typically, as with most people, they learn from doing.
If you tell them at age 15 they need to keep saving their money for college, so they have less or no student loans, they aren't going to understand.
However, they will understand when they have $20k in student loans and are making monthly payments on it.
Our society, and world, are so built around trying to prevent pain that we forget that pain and affliction can be a catalyst for growth.
It’s OK for our kids to struggle. They need to get used to it, because the world doesn't care about their happiness, as much as we think it should...
Let me explain why I hold this stance, and then I will go into solutions for gray areas.
As mentioned before, we need to learn to struggle in order to grow. Additionally, entitlement is a HUGE issue in our society.
We can't be that upset because we have done it to ourselves. We give kids participation trophies after all... (by the way, these are despised by Gen X, but they forget that they are the ones that created the trophy so their Millennial children would be happy and not experience disappointment :P).
At this point in my life, I am well established, have a good job, and don't have debt. Financial gifts that we receive from my parents or my wife's parents benefit us more than they harm us.
That is only because I can be truly grateful for the gift that was provided, and I understand the work that went into earning that money as well as the impact that it has on my family.
My family also is not dependent on that money in order to get by.
Instead of giving gifts to our children when they are still in need of this growth, why not place a contingency on the funds? Make them complete something before any funds are disbursed.
I don't say this because gifts should be contingent, but because your child is in a place of growth. They need this more than they need the financial gift.
Going back to the example of the $20k of student loans. Try and use one or a few of these options.
Let your child graduate with the debt. Have them make maybe 6-12 months of payments on the debt and then gift them the $20k.
Make a deal with your child directly correlated to school. If they keep a certain GPA throughout college you'll give them $20k after they graduate.
This should not be a performance based gift, because God knows we don't need anyone else that views performance in conjunction with success (all of America).
Instead hold the stance until they graduate, if they worked hard and actually sought to achieve the goal to get the money, then give it to them anyways, because you love them and they are deserving of love.
Now, if the goal was a 3.0 GPA and they graduated with a 2.0 and didn't put in the effort, then don't give it to them. Yes, they are still deserving of love, but you can show them love by not giving them the money.
They are clearly still in a place of growth and need to learn the consequences. In this scenario maybe reference Option #1.
Make a deal with your child unrelated to school. Require that they get a job and work every summer, saving all the money they make. If they stay committed to working and saving, you will give them a sum of money after they graduate.
You ultimately know your child best, and know what areas they are most likely to succeed in. Try to set goals that they will be motivated to work towards and that are feasible for them to achieve.
To conclude, go love your kids! However, while doing so, remember that showing someone love is not always what they may think is loving in that moment. Sometimes the most loving thing you can do is allow your child to go through hardship, or withhold something from them.
They may hate you for it in the moment, but your job isn't for your kids to like you. Your job, as their parent, is to raise them up to be responsible, confident, human beings that influence the world in a positive way.
So again I say, Go Love Your Kids!