How much help for young adult children?

[Koolau]

Pretty common in my circles. The only way I could go to college was if it met two criteria. It had to include a scholarship and it had to be in commuting distance. I was lucky to get the scholarship but the commuting was a bear. One bus, all the way to the end of the line, then two subway trains, each one also to the end of their respective lines. School was at the exact opposite end of NYC from where we lived, so commuting was nearly two hours each way for four years. I got to be really good at doing most of my studying on a crowded train.

But my parents were happy to help as much as they could, since I was the first in my family to get a college education, and I was very grateful for what they did.

I got lucky that University was close enough I could have walked if I had to (about 3 miles.) Usually I had the use of a car (city bus was another possibility.) I too had a partial scholarship but that was WAY back in the days when I could earn the tuition AND books with half a summer's work. The other half-summer's work provided spending money for the school year. With room and board covered, school used to be (dare I say it) almost "cheap." DW (we were dating at the time) eventually lived on campus. She wanted to escape her parents' control. She was able to find student housing (no food) for $30/month! I'm guessing you'd be hard pressed to find student housing today for $30/day. YMMV

 

[Souschef]

Pretty common in my circles. The only way I could go to college was if it met two criteria. It had to include a scholarship and it had to be in commuting distance. I was lucky to get the scholarship but the commuting was a bear. One bus, all the way to the end of the line, then two subway trains, each one also to the end of their respective lines. School was at the exact opposite end of NYC from where we lived, so commuting was nearly two hours each way for four years. I got to be really good at doing most of my studying on a crowded train.

But my parents were happy to help as much as they could, since I was the first in my family to get a college education, and I was very grateful for what they did.

That brings back memories, braumeister. I lived up in the northeast Bronx, and my school was at Borough Hall in Brooklyn. That meant I had to pass through all of Manhattan and under the East River to get to school. I did that for 4 years.

 

[Koolau]

That brings back memories, braumeister. I lived up in the northeast Bronx, and my school was at Borough Hall in Brooklyn. That meant I had to pass through all of Manhattan and under the East River to get to school. I did that for 4 years.

Gives a whole new meaning to being "underwater" on your school loans.

 

[MarieIG]

Never say never, but the plan is within our means - and w/n reason.

We offered to pay in State tuition (and room & board if the major was worth it, and not available locally). Otherwise go locally, and we would buy a used vehicle for transportation.

The kiddos were always welcome to a roof over their head and food.

Some wedding expenses and wedding gifts were incurred.

Some seed money for Roths. Birthday/ Christmas gifts. Grandchildren gifts.

No, absolutely no, co-signing loans. (Would give cash if warranted, but would not get on the hook for a loan.)

One son lived at home until recently which allowed him to save up for his own 20% down payment.

Right now I'm going into the final lap getting ready for retirement, so I'm not in the mood to disgorge large cash gifts. I don't see anything wrong with gifting a responsible kiddo with a bit of cash to help them with the first house payment.

I would not get involved in buying or financially assisting a kiddo to buy a $1.8 M house a/k/a a house that they could not afford on their own.

 

[Koolau]

<SNIP>

I would not get involved in buying or financially assisting a kiddo to buy a $1.8 M house a/k/a a house that they could not afford on their own.

Yeah, I wouldn't be inclined to help a kiddo buy a house that MOM AND DAD couldn't afford for themselves! So far, we've been fortunate that our kids' homes have been more on the order of $150K to $350K. Mom and dad can help with SOME of the down payments on such properties. Fortunately, the kids' SO's side of the family have also kicked in a bit. That makes it very doable.

If the kids decide they eventually want to live in a HCOL area, they will need to do what we did - w*rk for 35 years to save for it. YMMV

 

[MarieIG]

Yeah, I wouldn't be inclined to help a kiddo buy a house that MOM AND DAD couldn't afford for themselves! So far, we've been fortunate that our kids' homes have been more on the order of $150K to $350K. Mom and dad can help with SOME of the down payments on such properties. Fortunately, the kids' SO's side of the family have also kicked in a bit. That makes it very doable.

If the kids decide they eventually want to live in a HCOL area, they will need to do what we did - w*rk for 35 years to save for it. YMMV

Actually, (with the exception of the 2 out of 3 SOs' side of the families not being in a position to assist) my MM - doesn't vary all that much

 

[braumeister]

That brings back memories, braumeister. I lived up in the northeast Bronx, and my school was at Borough Hall in Brooklyn. That meant I had to pass through all of Manhattan and under the East River to get to school. I did that for 4 years.

I was going the opposite direction. Lived in southernmost Brooklyn and went to school in northernmost Bronx. Happy to have simply survived it!

 

[samcat]

I live in the Bay Area also. I don't think we could help our son enough so that he could buy a home. I hope the kids in the original e-mail realize their property taxes are going to be over $18k per year!

Luckily our other son lives in the midwest so should be able to afford a home on his own once he decides to buy. We may help a little but he should need less than $10k in help to get him into a home.

 

[F.I.R.E User]

They can solve this problem by moving to LCOL like Texas.

 

[dirtbiker]

I live in the Bay Area where housing costs are insane. My neighbor is giving a ton of help so their 25 year old daughter can buy a $1.8M house (it's a 1500 sq ft. starter home, not extravagant). They are almost certainly helping their two other kids with rent too. If not for these expenses, I'm quite certain they could afford to retire.

This got me thinking about how much help I should anticipate giving my children in their young adult lives. It is unlikely they will be able to afford a house nearby without some significant help. However that could derail my early retirement dreams.


Curious how much others have earmarked for helping kids launch and how you balance that with early retirement.

If you haven't already, read the book The Millionaire Next Door. It has a chapter dedicated to financially helping adult children, and the deleterious effects it has on their future savings. I don't plan to help my children significantly for home purchases, etc. I want them to work hard for their home, and I want them to buy a home they can afford. If I'm propping them up, it's very likely they'll end up in a neighborhood they can't afford to live in, spending all their money that should be going to savings into paying taxes, utilities, etc.

 

[Paulz]

We are being very deliberate in how we help our kids. Our deal if they decide to go to college is we will pay room and board for four years, but they pay tuition, fees and books. Once they graduate, we work with them to identify limited tangible things that helps get them over the hump and on sure footing.

For our one daughter, we gave her use of a car for a 18 months where all she paid for was gas. In exchange, she had to put at least $400 a month into a "car fund" for a replacement car. In the end, we matched her balance plus some and she has a reliable used car to drive.

Not sure what we will do for daughters #2-4 yet, but something similar. Our trusts are also intended to help them with their retirement. Our intent is not to make them rich, but to never let them barely scrape by either. Our help increases as they show maturity and wise financial decisions. I firmly believe that if one doesn't earn it it isn't really valued. Everyone needs help, but the majority of blood, sweat, and tears has to be theirs.

 

[eytonxav]

I don't think there is any rule of thumb on what one should do for their kids or not. Everyone circumstance is different as are their views on this subject. Therefore, I would not let someone else's decision influence me one way or the other with respect to how I treat my kids in terms of gifting.

 

[Koolau]

If you haven't already, read the book The Millionaire Next Door. It has a chapter dedicated to financially helping adult children, and the deleterious effects it has on their future savings. I don't plan to help my children significantly for home purchases, etc. I want them to work hard for their home, and I want them to buy a home they can afford. If I'm propping them up, it's very likely they'll end up in a neighborhood they can't afford to live in, spending all their money that should be going to savings into paying taxes, utilities, etc.

I like MND book as well - found I'd been doing most of what it said were effective habits. We did (do) help our kids from time to time as they have proven themselves to be relatively responsible in their financial (and other) decisions. There was a time when a couple of them would not have received anything from us. Now, we are open to some assistance if WE decide it's in their best interest. Only you know your kids well enough to know when helping is really hurting. Thus, YMMV.

 

[Sniggle]

I am just at the start of this, and it is somewhat easy for me at present as my DS is in the military.

- Match his contribution to a Roth IRA
- Pay his car insurance, as long as he does not get a ticket
- Pay his phone
- Include him on vacations, once that becomes a thing again

We have already told him that if he decides to go to college after the military, between the GI bill and us he will have a free ride.

 

[Speculator]

My daughter is going to be 21 this summer and she lives with me. I pay her tuition, I gave her an 8 year-old car when she turned 18 (and I pay the insurance, gas and maintenance costs) and I also give her an allowance so she does not have to work while going to school. Her healthcare is paid through my retirement plan until she reaches age 26 and she is on my phone plan and Netflix account. She is a great kid and having her around enriches my life in so many ways. I also have been told by some family members that I spoil her. And I say: "So what." I think if a parent has the means to make their child's life better in any respect without endangering their retirement, why not do it? I don't think giving an adult child money will either instill financial acumen in the child or not. I believe the adult child, throughout their life, has already seen how their parents lived and either learned by it or they didn't. I don't think giving them money at this point will change anything.

 

[2177V]

I live in the Bay Area where housing costs are insane. My neighbor is giving a ton of help so their 25 year old daughter can buy a $1.8M house (it's a 1500 sq ft. starter home, not extravagant). They are almost certainly helping their two other kids with rent too. If not for these expenses, I'm quite certain they could afford to retire.

This got me thinking about how much help I should anticipate giving my children in their young adult lives. It is unlikely they will be able to afford a house nearby without some significant help. However that could derail my early retirement dreams.


Curious how much others have earmarked for helping kids launch and how you balance that with early retirement.

I also lived in the SF bay area near Pinole where some homes are $500K. I purchased two houses with 100% cash. One is single floor 45 years old house with an inground swimming pool and a great patio for my wife and I....and a 12 years old townhouse for my daughter. No impact on my retirement since I had the cash. My daughter is responsible for her college tuition as a registered nurse. She has rented out two bedrooms to pay for that. Buying a $1.8M house for your kids is a stretch. A $500K townhouse is not, since my daughter avoids paying any landlord rent or a monthly bank mortgage for the rest of her life and she is earning her college tuition money by renting her two extra bedrooms. She will pay me back as a nurse. The "Bank of Dad" does not charge fees or closing cost. However, I had to charge my daughter interest to make it a legal loan to avoid a gift tax.

 

[Joylush]

Very well said. Challenge forges good people. Too much help is not always kind. Becoming an adult and making your way in this world is a rite of passage. Some help is always good... but the struggle, and the adventure of getting from where they are now financially, to where they will one day be is important. Do not deny them that experience. They will thank you for it later...

Very well said. That’s my sentiment as well. I will never be an enabler of poor decision making, nor will I ever short one over another because they are the more responsible or successful.

 

[meleana]

Our unmarried son is 33 and works two jobs. 7 days per week and both long hours. We have resolved this is how he wants to live. Even if it wasn’t, he is not making any moves to change it. He rents an old, crappy apartment which is very expensive.

We would help him a little bit if he would want to buy an inexpensive condo somewhere with low HOA fees- should one exist- not likely in this market. He is not the type to want to deal with a house.

But he doesn’t even seem to want to do that. He does want to find a partner and get married but that won’t be easy.

A few years ago my wealthy brother gave him a nice amount of money to put towards a new car which he needed desperately. Our son did have a nice amount of savings also which he added to the pot to buy the car.

So we are just accepting him for the way he is and happy he pulls his own weight. He never came home after he graduated college and worked whatever jobs he could get to stay independent. We give him a lot of credit for that.

 

[Souschef]

Originally Posted by armor99
Very well said. Challenge forges good people. Too much help is not always kind. Becoming an adult and making your way in this world is a rite of passage. Some help is always good... but the struggle, and the adventure of getting from where they are now financially, to where they will one day be is important. Do not deny them that experience. They will thank you for it later..


I agree 100%. My first job out of college at the age of 20 was in Ohio. My folks drove out with me, left me the car (thank you) and flew back to New York.
As I stood at the airport watching their plane disappear, I thought to myself, "Well you are on your own now".

 

[Joylush]

Our unmarried son is 33 and works two jobs. 7 days per week and both long hours. We have resolved this is how he wants to live. Even if it wasn’t, he is not making any moves to change it. He rents an old, crappy apartment which is very expensive.

We would help him a little bit if he would want to buy an inexpensive condo somewhere with low HOA fees- should one exist- not likely in this market. He is not the type to want to deal with a house.

But he doesn’t even seem to want to do that. He does want to find a partner and get married but that won’t be easy.

A few years ago my wealthy brother gave him a nice amount of money to put towards a new car which he needed desperately. Our son did have a nice amount of savings also which he added to the pot to buy the car.

So we are just accepting him for the way he is and happy he pulls his own weight. He never came home after he graduated college and worked whatever jobs he could get to stay independent. We give him a lot of credit for that.

I’d be proud of a hardworking son like that too! At least he knows himself well enough not to invest in something like a house if he’s not ready for it. They can really limit your flexibility.

I rented an old single wide mobile home to a professional man for about eight years. He was in his 40s, worked as a government contractor as an analyst of some sort, make a good salary. This place was in a residential neighborhood surrounded by site built homes. Most definitely beneath his means. It was roughly 700 sq ft.

Great tenant but we didn’t get it. Figured he just liked to live simply. Eventually I had another house for sale, my smallest house. He wanted to buy it. I explained he wouldn’t like it because of the size. It was a cute 2 bedroom with a carport but it was 585 sq ft. He loved it and purchased it from me.

He now has a girlfriend and a relative of his I know recently told me they just love their little cottage/bungalow. Heck I own a couple dozen single family homes and choose to live in the garage apartment of one of them. Some people are just happier living beneath their means. The peace of mind has tremendous value.

 

[anothercog]

If you haven't already, read the book The Millionaire Next Door. It has a chapter dedicated to financially helping adult children, and the deleterious effects it has on their future savings. I don't plan to help my children significantly for home purchases, etc. I want them to work hard for their home, and I want them to buy a home they can afford. If I'm propping them up, it's very likely they'll end up in a neighborhood they can't afford to live in, spending all their money that should be going to savings into paying taxes, utilities, etc.

DW and I have both read it. I have 2 adult brothers that don’t work and still live with my father so I definitely don’t plan to repeat those mistakes. I do plan to pay for my kids’ undergrad within reason. I took out some loans but had lots of aid for mine. The calculus has changed a bit for college expenses since I went so I’m happy to pay for their college if I can.

I’m probably not going to be able to buy my kids’ houses in the Bay Area to keep them here. So if they want to stay they are going to have to work their asses off. More likely we’ll move to where the kids end up.

 

[dirtbiker]

I am just at the start of this, and it is somewhat easy for me at present as my DS is in the military.

- Match his contribution to a Roth IRA
- Pay his car insurance, as long as he does not get a ticket
- Pay his phone
- Include him on vacations, once that becomes a thing again

We have already told him that if he decides to go to college after the military, between the GI bill and us he will have a free ride.

I'm doing pretty much the exact same with my oldest two kids (and my youngest as they get older). My oldest, however, got a ticket, so he was booted from our car insurance. He also wasn't answering texts/phone calls from us like he should, so we booted him from our phone plan. He's now feeling the heat from additional bills, hopefully learning a lesson. My 16 year old so far appears to be learning from his brother's mistakes.

My wife works as a college professor at a local state university, so tuition is free. They'll have a free ride if they go there and commute. If they want to go elsewhere, they'll need to work hard and earn a scholarship or join the military (what I did to pay for college).

 

[SecondCor521]

With three adult offspring who each have a different financial style but also wanting to provide approximately equal treatment, it's been a bit of a puzzle for me but I'm working through it.

I think there are a lot of plans that can work as long as the parents communicate (a) ahead of time, (b) what's being provided, and (c) why. My offspring know what I plan to provide with respect to college, cars, weddings, and home down payments. I guess I would add (d) the parents provision fits within their means.

My parents did the same for me, although the specific details of what they provided differ from what I've chosen to provide my kids, although in broad outlines the plans are pretty similar. My two sisters and I have all turned out fine financially and otherwise, so I figure if their plan worked I'm going to basically copy it.

 

[2177V]

She is a great kid and having her around enriches my life in so many ways. I also have been told by some family members that I spoil her. And I say: "So what." I think if a parent has the means to make their child's life better in any respect without endangering their retirement, why not do it? I don't think giving an adult child money will either instill financial acumen in the child or not. I believe the adult child, throughout their life, has already seen how their parents lived and either learned by it or they didn't. I don't think giving them money at this point will change anything.

I agree. The decision to help their adult kids is a personal one. If the kids respect their parents and they are responsible kids, then the parents should help if there is no impact on their retirement.

My parents were struggling so they could not help me so I struggled as a young adult.... but i made successful investments later in my life. I could not live with myself to see my kids struggle when I was well off. If you read my comment #66, I only loan money via a family loan to buy a house so my daughter can avoid paying a bank mortgage. Big difference between giving money away versus letting your kids borrow money.

My daughter will be paying me back and those payments will enrich my retirement. I consider my loan as an "investment" . She is very close to her parents and trust is a foundation of most relationships. The loan has strengthen our relationship. I also expect her to retire early.

 

[habelsgtb]

Lots of strong emotions in these replies. It’s a sensitive topic.
Our daughter has a job that she absolutely loves but it doesn’t pay well. She is following her passion and is very happy. We are happy for her. Her boyfriend that lives with her isn’t very happy with his work and it doesn’t pay well. But he is always looking to improve, a good boyfriend and person. None of what we give them is expected. That means they make mostly smart decisions assuming they will not get money from us or other family.
We share our money experiences with them (eg paying off debt ASAP). When she bought a very small affordable house, we decided to give her enough money so she wouldn’t have to pay PMI (she had a decent down payment). When we got our stimulus checks, we gave them to her to pay off a dental expense loan. She’s good about always paying off her credit card in full. We also gave her the last stimulus check to help pay down her car loan more.
We have a family trip coming up in 2022 that my in-laws are paying for including our daughter and boyfriend. Neither get paid time off and they wouldn’t go if they paid the whole trip in full. Just taking the time off is very expensive for them (they never complained about it or said anything). We have decided to pay for their dog care and missed income. Besides, in the end she will get our house and what’s left. We decided to help them now vs all later and love spending time with them. A win win.