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Old 02-26-2021, 10:19 PM   #61
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No point in hiding it if you want to splurge. I mean it does not make sense at all why you want to 'Fat FIRE'. and not spend that money, right ?

If I want to hide my wealth from my kids or family, I will do a Lean FIRE and not spend on toys and shiny things to brag and just be content with a small house and a trashy car.

But since your goal is a big huge Fat Fire, go ahead and buy that Lambo sports car or that nice vacation home. Show it.
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Old 02-27-2021, 05:05 AM   #62
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My daughter is only 17 and we have shared everything high-level financial with her since she was young. Now we also share certain numbers. More specifically I share with her how we invest our money and how they grow. We are extreme LBYM so some times she complains as to why we don't spend money if we are rich! I have to remind her that we are poor people with money and that we have money BECAUSE we DON'T spend them all.

I also share how much I earn approximately so she knows why a good education is important and that you don't confuse passion with career. I truly believe that lot of the passions of today's generation are due to social media age and I don't want her to go down a career that would not sustain her life.

We also share a lot more from early age partly because we have a special need son so she needs to hit the ground running if ever croak too early. It is too early to tell where she will end up financially but she is already thinking of ER if I hear between the lines.

PS: We also make it clear (in a subtle ways) that she needs to chart her own financial life and can not count on our money.
PPS: I should add, extreme LBYM as in we save major portion of income but my income is kind of high. We live a good life, used luxury cars, modest vacations, and all but DD feels we are misers compared to all the Joneses around us!
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Old 02-27-2021, 07:54 AM   #63
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I grew up that way (mom and dad were closet millionaires by the time I was in college as we were by the tim our kids were college age) so it wasn't ever much of an issue for us for our kids, more for my parents for me. For both my parents and for us, we don't hide it nor do we flaunt it.

We lived in a better than average but not luxury home, drove modest cars and kept them for a while.... you got the idea... modestly but not miserly. We both had nearby vacation homes.

We are LBYM as are our kids... I think it is more through osmosis than training.
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Old 02-27-2021, 08:20 AM   #64
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Watched my parents live a high-income but also high-consumption lifestyle from a young essentially went broke after the divorce trying to keep up what here in flyover country would be called a mansion...nothing "Mc" about it.

That made things very difficult when she became ill and there was little money left to care for her, so it made me much more parsimonious, something I also see in my oldest kid...youngest kid is not yet on their own.
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Old 02-27-2021, 09:19 AM   #65
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Originally Posted by brett View Post

We have never 'hidden' our financial situation from our children...consciously or otherwise. They have never asked specific questions about our net worth or financial resources-perhaps attributable to how they were raised.

We have not hidden anything but neither have we bragged or openly discussed it with them. The extent it is they know they were well provided for and we are financially secure. Isn't that enough?
Same here. I'll add that when I RE'd, we did tell our kids that they did not have to worry about where the $ would come from as DW and I saved, invested. and LBYM our entire lives. And, probably more important to them at the time, we told them 529's were fully funded so that was covered, too.
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Old 03-02-2021, 04:50 PM   #66
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Originally Posted by capitalhockey View Post
My fear is that the past 20 years of frugal living that resulted in our wealth will be lost on our kids since they were not born yet or still very young. If we moved to nice homes and new cars in the near future, that will be the formative years for our kids and the experience they will mainly remembered.

We can try to explain how we live below our means to achieve our financial goals but it will be like telling a story that they could not see.
It is so much more than what they see, its how much responsibility you put on them. When they are doing chores and helping out... a real part of the team, it builds work ethic and comittment to a goal. When they buy their own first car and have a defined portion of their education to pay etc, they are earning their way. It is going to be about teaching them to be personally responsible for their situation and their welfare.

That being said, there is likely plenty of negative examples in upper class neighborhoods, but all neighborhoods will have them to some extent. Do what you can do inside your walls and the rest will take care of itself. When the kids have jobs to save for their car and their education, they will understand what it is like.

My daughter worked and saved for 4 years prior to starting college. She paid for a $1000 car and drove it for three years of high school, maintaining it herself and paying for everything but insurance. She sold it for $1500 after 3 years ( and new tires and a little maintenance) and bought a nice car from her older brother and sister in law for $5000 cash. That still left her with $40k of her own savings to tackle her college education with.

I am not too concerned with her work ethic or her spending habits and she has a healthy understanding of the role that work and money play in her life. She is well on her way.
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Old 03-02-2021, 05:05 PM   #67
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I think you should be open with your finances in an age appropriate way with children. By the time they graduate high school, they should have a rough idea of family income and expenses. Ours started IRAs when they got their first W2 type jobs-16 for my daughter and 18 for my son. I cringe when I hear about parents refusing to fill out the FAFSA- my kids got significant merit based scholarships from the school which they would not have gotten if we did not submit the FAFSA.My children are very grateful they got BAs with no debt. They see their childhood friends ( who might have had all the latest toys) burdened with loan payments.
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Old 03-02-2021, 05:53 PM   #68
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Originally Posted by capitalhockey View Post

1) Will living in big house and having nice cars dilute their motivations in life? We are hesitant to live in high end neighborhoods since they will be surrounded by families/kids with high mean lifestyles.

Looking to hear from folks who are in the same situation and how they raised their kids. We are a first generation of wealth and don't know how to use our financial means the right way without harming our kids.
We are very similar to you albeit older. Our youngest is now 16 and our oldest is 22 with two other kids in between. We lived a very blue collar life but did splurge every year or two for nice vacations...more experiences than buying things. Roughly 10 years ago we made the mistake of moving into a more affluential part of our county. We found out that a large population of the kids were gifted cars when they turned 16 to the point that the student parking lot was bigger and had nicer cars that the faculty. Wealth just oozes from every pore of this area. This made our job raising them a lot harder! That being said, they all had chores and jobs which was uncommon in our area!

We raised then differently, so no cars so they rode the bus. When it came time for college, we covered room and board and they have to cover tuition, fees, and books. I don't think they know how much our assets are, but we'll eventually let them know as well as help them pay off their student loans (note help, not just do it!).

The one thing we constantly drove home to them is that people can look rich but be poor and people can look poor and be rich. They learned about loans and how you can buy some nice things with it, but now you owe money. Saving for a rainy day was constant as was helping those less fortunate. We never taught being miserly, so they saw us donate time, money, and things to organizations, church, and others around us.

My advice is if you move to a high end neighborhood start to teach them that you live in a nice house, but you don't own all of it yet. That some people judge others by what they have or don't have which is wrong since spending money just turns into a contest...and the winner has less! I think the key for us was we didn't talk about our assets too much when they are in high school because they would expect us to pay for more things, such as college. We had our monthly budget on the fridge (after our savings and 401ks) so they saw how there was very little left over each month and we kept a list of our spending on the fridge so they would know if we ran out of food/gas money. We never did as we made the amount high enough to cover, but wanted them to experience what most households do...that there wasn't unlimited money.

Finally, I think when we do talk to them about our assets it's important to us that they understand we didn't just get this. It was a deliberate action every payday for 35+ years. It's important to us that we never become a financial burden to them, so we did have less to ensure this was the case. If we have more assets than we need, then when we pass I hope when they inherit helps them to make similar good choices.

Just by you asking the questions you did tells me you are good parents and that you will do fine. Don't forget your roots, and ensure your kids know where yours are.
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Old 03-02-2021, 07:46 PM   #69
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True independence means being independent of the sheep expectations around you, whether flash or frugal. Fighting for the independence to be ... just like everyone else? Grasping defeat from the jaws of victory.
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Old 03-02-2021, 07:50 PM   #70
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I can't hide it from my kids because I go over our finances with my wife and then my wife discloses EVERYTHING to my kids. Not a big issue since I am getting close to age 70 and it is best for the family because the family is close. If I do kick the bucket, my family will be well taken care of.

On the other hand if my kids are doing drugs, spending money like water, being irresponsible, etc, then that will be a reason to hide my finances.
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Old 03-02-2021, 10:05 PM   #71
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I grew up in a white collar family in a mostly blue collar town. My Dad would mostly buy the cheapest things he could find: food, clothes, cars. I viewed him as a cheapskate and it is not an example that stuck. I have always felt that the value that you get for your money is more important than just price. My wife and I raised our children in a middleclass neighborhood living below our means and being conservative in our spending. We tried to pass along our values about spending, saving, and investing. Our children are grown and two are extremely disciplined with their money, far more than I was at their age. The third is literally the least disciplined person with money that I have ever known. He makes decent money but it is all gone before the next paycheck, always.

My suggestion is to live the lifestyle that you want and try to teach your children your values. Maybe they will stick, maybe they won't.
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Old 03-03-2021, 09:10 AM   #72
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DD was an mechanic and DM was a SAHM, we lived modestly, I'm the oldest of 4. They were not financially savvy. They made it a point to send us to private schools, but they saved enough to buy a house when I was 5, and a bigger one just before I moved out. When I started cutting grass for neighbors at 12, and working in a retail store at 16, I learned what hard work would/could do. Seeing the despair/hard times of the 73-81 recessions, I swore I'd never be poor, and I learned the principals investing, and I agrreed with my folks that I would pay for half of my private college education. I worked full time during college at the retail store, and co-oped in coal mines between terms. Once fully employed after graduation, I saved the maximun in all company saving plans,401ks, tIRAs and Roths as they came to be, for 35 years. Once DW and I married, she did the same, although she stayed at home until the kids started school. DW, who didn't have 2 nickels to rub together as a child, wanted to buy a Mercedes Benz 450SEL as soon as we saved up $100,000.

The kids went to private schools and it was the best investment my parents and I ever did. DW was a teacher, and went to public schools. She was raised by her mom, who divorced when DW was 10. DW started substitute teaching when the youngest started school, after teaching FT before the kids. While the private school parents didn't drive Maseratis, many owned businesses, were doctors, lawyers. They took frequent vacations, drove the latest luxury vehicles, had cleaning services and some had maids. We drove our used cars til we decided to upgrade. DW's mantra, when the kids wanted the latest gadget upgrade the school parent/children had, was "As soon as I get a full time job, we'll buy X". And that happened, we bought our first brand new car. The kids also worked through high school and college, and paid for half their college education at private colleges, via academic scholarships or cash. DS was offered many athletic scholarships but turned them down, as he knew he was never going to go pro, he knew what side his bread was buttered on. We took vacations every year, and big vacations every other year. Finances were never discussed, but unnecessary spending was the key. Allowances were paid when they were young, the kids saw what hard work could produce, and graduated 2003 and 2008 from private college, student loan free. They did help DW and I with the rentals and were paid allowances from them. DS learned enough about the business and maintenance side of things, and he and his DW have a rental, also. Exact numbers about our financial situation have never been discussed, but the dear kids have been taught/mentored/lectured about the economy/investing/saving over the years. Both are doing well. Some folks were surprised when we built a 26x26 detached brick garage to match the house. It all came to a bigger head when we retired at 56, and we started traveling, taking 4-5 trips/yr, even during the latest pandemonium.

I bought a new pickup in August 2019 and DW finally got her Mercedes in November of 2019, 37 years after her request. While it was not brand new 450 SEL, it was used and had less than 50,000 miles. While over the past 38 years folks thought we were living pay check to pay check, the Benz was our really first time to spike the ball, and let the cat out of the bag.
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Old 03-03-2021, 09:15 AM   #73
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The word "hide" can be interpreted in different ways. I don't actively do anything to hide my financial situation from my kids but neither do I tell them how much I have saved. I do live in a modest house and drive a modest car and I am not flashy by any means so I think they just assume I have moderate middle class means. On the other hand, pre covid, I have taken several trips to Europe and South America and I like to travel so that and other clues may alert them that I have a bit more than average means and I think they know that, but they do not know the full extent. I think they would be very surprised to find out.
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Old 03-03-2021, 09:31 AM   #74
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Originally Posted by Paulz View Post
We raised them differently, so no cars so they rode the bus.
Did they resent you for that?
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Old 03-03-2021, 09:35 AM   #75
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Originally Posted by capitalhockey View Post
We can try to explain how we live below our means to achieve our financial goals but it will be like telling a story that they could not see.
Explaining might do something depending on the child but the responsibilities you put on them will be, IMO, more important.

To provide some depth to my opinion. The rule we had, and had zero family agreement from either side of our family during their growing years, was they paid half for any activities they wanted to be involved in. We started young with that requirement (~ 10 years old) and would occasionally modify the percentages but for the most part held to it. One year a child wanted to go on a DC trip via an academic activity and they worked and saved any gift money for a year to pay their portion of the trip. Another example is telling them we would not pay for college and might help but don't plan on it. We have helped each of them a little through the years but kept it limited, intentionally, so they learn life's financial lessons early. All of our kids are adults now and doing pretty well. 2 got undergrad full rides for college plus scholarships for "extra" money.

My approach has always been to undercommit and overdeliver. You are better off stepping in to help when you choose versus promising things that become entitlements.

Read up on multigenerational wealth and you'll get an idea of what to do to keep your kids performing in life.
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Old 03-03-2021, 09:42 AM   #76
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Originally Posted by teachme View Post

My approach has always been to undercommit and overdeliver. You are better off stepping in to help when you choose versus promising things that become entitlements.
+1 The quote of the week!
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Old 03-03-2021, 04:54 PM   #77
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Originally Posted by capitalhockey View Post
We have hit lean FIRE target thanks to good salaries and living below our means over the last 20 years. So we are technically FI but will work another 10 years for RE (also hit fat FIRE target). We are financially comfortable but chose to live in a modest house and drive old reliable cars....nothing flashy compared to what we could afford. From the outside, we live more like a blue collar family than a white collar family.

Our kids are under 5 years old now but my wife and I have talked about how we want to raise our kids. Both of us did not come from much but worked very hard to become professionals in our fields. Our parents did not give us any financial support because they could barely put food on the table. That gave us a hunger to study hard in school and succeed professionally. We want our kids to have the same motivation in life. We could obviously provide much more to them than what we have growing up but don't want to spoil them.

1) Will living in big house and having nice cars dilute their motivations in life? We are hesitant to live in high end neighborhoods since they will be surrounded by families/kids with high mean lifestyles.

2) Do we continue to fringe blue collar living conditions (basic needs are met with occasional nice things) to create environment why they are hungry to excel?

Looking to hear from folks who are in the same situation and how they raised their kids. We are a first generation of wealth and don't know how to use our financial means the right way without harming our kids.

It's different as your kids age and as you reflect on your upbringing. I think my parents gave me a few tools, but, my grandparents gave me more on being frugal, saving, etc. as they were closer to the Depression era.

Ask yourself what $1000 meant to you as a 6 year old or as a 16 year old or after your first year on the job. I was a saver. My adolescent kids didn't have much idea on the value of money, until they get money to spend or save. Making money will be another eye opener for them. I started investing for them and they have no interest.

Each kid is unique in that some are happy with the simple things in life, some want more. They or I have never gone hungry, so, I assume that would put a different perspective in anyone's life to not let it happen again if it did once. My wife likes to travel. I like to fish. Both of these can take as little or as much money as you devote to them. My daughter is happy to read books and be with friends. My son likes to game and be with friends. Both pretty cheap. We ask them things like where they would go if it could be anywhere, and they don't have much ambition for travel. "lets drive to grandma's." Same as me. But, the wife drags me along on a few long trips, and I love it when I get there.

My parents never discussed money but I always saw them working very hard, looking back. But seldom at the time. They usually had one nice trip a year and other vacations were see family or long weekend type road trips. Finally after I was in my mid-teens they sold their business, bought their lake home, and their lifestyle became better from my perspective. At the time, I still didn't think much about what was going on in the grand scheme of things.

They paid 1/2 or more of my college. I worked summers to pay the rest. Took a few cheap (at that time) student loans. College, to me, was a "stamp of approval" or pedigree that you had a brain and I didn't try very hard if I wasn't interested, but made it through. I worked much harder at work than school and was promoted soon and often. I feel I have become successful after I figured out what everything meant - what matters, as far as hard work, teaching myself investing, etc.

They retired in their mid & late 50's, and are doing fine or probably great financially, it would appear. They still don't discuss finances but are very generous. My wife is generally shocked by them at Christmas.

So, back to the kids. Give them the tools you know, and learn new tools about what "rich" people do, not just the conspicuous consumers.

When, as a kid, when you were spending time with rich friends and poor friends, did you even pay attention or did it matter? In my case, no. It's only (for me) after you get to where you are in life and ask if it was enough, could I have done more, could I do more, etc.

Maybe too much of rant...but maybe you know where I'm coming from, if nothing else.

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Old 03-03-2021, 05:33 PM   #78
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Originally Posted by SnowballCamper View Post
I think it would be prudent to live in a neighborhood with good public schools. Going to a private school kinda makes it untenable to maintain the "we're not rich" theme. .
Interesting observation which is probably, generally true. However, in the early '00s, 3 kids totaled $6k/ year (that's total - not each). We were not even members of the church which had the school. The education (and love) they received was outstanding. Oddly, enough, we lived in the old "homestead" at the time. A quick look at the place and its location would have suggested a notch or two above a slum.

THEN when it became time for HS, we moved to an established upper middle class area in the new school district. THAT's when it would have been difficult to say "we're not rich" - though I still maintain that we were only comfortable.

Where we live now, I think starting private (parochial) school costs are around $12K EACH child - IF you are a church member. They go up - way up - from there - especially if it's one of the "name" schools. YMMV
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It's a crap shoot, but you can help your odds
Old 03-05-2021, 02:00 PM   #79
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It's a crap shoot, but you can help your odds

Originally Posted by marko View Post
No kids here but grew up surrounded by a lot of trust-fund kiddies.

My take is that it's a crap shoot. Some of my classmates are now responsible bankers, lawyers, doctors --or just genuinely good people.

Some are dead (or should be) from drugs, booze and dangerous living.

Seems to me that is the case across all income levels. Some kids do well, others fall off the tracks. So, maybe it's not what they're surrounded by but how they're 'instructed' along the way. Just my two cents but I don't think depriving yourselves will change who those kids are.

Some of the wealthiest kids I knew growing up are the nicest, most decent people, others are complete losers and you can see that even between siblings so go figure
+1 Grew up from upper middle to lower middle to lower class as parents fortunes went up and down dramatically through entrepreneurial efforts. As a result, have lots of childhood friends/acquaintances from different economic stratas. While it appears to have been a crap shoot those kids who had a strong family connection and learned a hard work ethic and delayed gratification mostly have turned into happy adults. While some form the same family for whatever reason have completely different outcomes despite the same upbringing. Those traits of self reliance, hard work and delayed gratification were much more important than the "class" they were raised in. In business, worked with hundreds of very wealthy people and in many cases knew their children, many were very humble hard working people that were mindful of the advantages they had in life and they were not only focused on their own success, but how they could make it a better world. Of course their were also plenty trust fund kids, whose parents were mostly absent throughout their life and many were drug addicts, alcoholics, committed suicide or dead as a result of their addictions. No one wants to talk about those kids. From the lower strata their was a much higher rate of failure in life due to bad influences that took over and destroyed their life. Communicating and teaching your children how to be good people will improve your odds no matter what zip code you live in. Then sometimes, no matter what you can do, kids get led astray.
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LBYM lifestyle - It is all relevant to what?
Old 03-05-2021, 02:26 PM   #80
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LBYM lifestyle - It is all relevant to what?

While we lived below our means, kids had an extravagant lifestyle compared to our childhoods. Thankfully, with the exception of a stretch at 16 for #1, which cleared up within a year, both are now fully launched, happy, independent and working towards their own FIRE goals while following a LBYM philosophy. They went to private school and had many friends whose parents lavished a luxurious lifestyle upon them, but many parents were rarely home and some of those kids really went down a bad path. Others are now outstanding young professionals Don't think where you live matters. A loving relationship with you, your spouse and your children does.
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