When giving money to children, what criteria to avoid entitlement?

[Animorph]

There are some really cool ideas here. Thanks!

What age were the kids when you started the “Mom & Dad’s bank”?

Somewhere around 12 and 8? Pretty young, but with allowances, and time for savings to grow. Cashed them out when they went to college so that it didn't gouge me too much.

 

[FlaGator]

What rules govern your giving money to your children? When do you stop?

What age do you start giving them an allowance?
How much?

Do you pay for their devices?
Do you pay for their vacations?
Do they live rent free?
Do you give them free university?
Buy them a car?
Downpayment on a house?

To set the stage, we lost Mom when the kids were 12 and 9, they are now 18 and 15. I've been more generous than Mom, partly to ease the pain, partly because I'm more generous with material things than she was. Don't do anything that puts me at risk of a starvation diet 20 years from now, though. We came from modest backgrounds and didn't have much help growing up and as a young couple. Nice to be a better place now

The kids never had an allowance, but both work now, and I expect them to pay their share of auto insurance. I have provided a "family car" for their use during HS, and cover gas and maintenance. Better than me shuttling kids all the time. They know I have them covered until they are out of school, and they are expected to be independent after graduating. Doing what I can to get them launched and not have them look back.

I pay for their devices and keep them on the family plan. Didn't get their first phones until their mother was terminally ill and they were spending more time with other families than before. They were 8 and 11 at that point. Have provided new phones every few years since, but always 2-3 generations behind the most current models. Computers are upgraded as needed, every 4-5 years.

Mine are not independent, but I did pay from them to take a trip on their own to Disney World for Christmas. No boxes, no wrapping, no ribbon Room booked in the name of the 18 y.o., charged to my card.

Rent free at their ages. Won't charge the 18 y.o. rent when she comes home for the summer and works. Expect to maintain that policy until they graduate.

Late DW and I wanted college costs to be easier for the kids than it was for us and put money away early in the their lives for school.

As for cars, initial plan was to match their contribution 1:1. Oldest set the bar high with scholarships, allowing me to raise the match to 2:1. She drives a 2020 Kia Soul. Youngest knows what he has to do...…

Haven't faced the house down payment question yet, so not sure. If I'm flush, will likely do something. If not, they are on their own.

I also make a Roth contribution equal to their W-2 earnings as part of my estate planning. Expect that to continue as long as my finances are solid.

The critical question is "what will I do when they are grown?" I think (hope?) that I will continue to push them toward independence. It was easy for my parents to do that as they didn't have another choice. I'll have different choices. Hope I choose wisely.....

 

[Bestwifeever]

What rules govern your giving money to your children? When do you stop?

What age do you start giving them an allowance?
How much?

Do you pay for their devices?
Do you pay for their vacations?
Do they live rent free?
Do you give them free university?
Buy them a car?
Downpayment on a house?

You go first

 

[fasteddie911]

Anecdotally, I'm not strongly convinced money and entitlement for kids are strongly correlated. My spouse was given a lot of what the OP listed but is not entitled at all compared to her siblings who got similar financial treatment. Even as a child she was conscious of money and spending, not so much with her siblings. Moreover, entitlement can come in other forms besides money; attention, favoritism, etc. I've seen friends and family members that are all over the map, which as a young parent has made me reconsider commonly held notions about raising kids.

 

[Jerseytunahunter]

No allowance, but we paid for anything they needed. Everything else on the list we paid for with the exception of the house. Our children are 29, 26 and 24, all college grads, hard workers and good people. My DW and I grew up with very little. Broken families, hand me down cloths, food stamps, etc. Looking back it was tough but we didn't know any different, just do your best every day. We both had multiple jobs when in grade school and high school and put ourselves through college. Our kids see how we lived when visiting grandparents and I think really appreciate how far we've come. So far not hint of entitlement. In fact our kids have told us "we don'y want to let you down" many times which makes me really happy. I think they get it....BUT the discussion I'm having lately with my wife and FIRE friends is do you start gifting now while they're young and you can enjoy helping them? I understand we can each gift $15k per year, per child up to $1M in a lifetime tax free. Will this be straw that broke the entitlement camel's back? We'll eventually pass on our wealth via a trust when we're gone but why make them wait 30 years. What is the E-R braintrust experience with gifting?

 

[The Cosmic Avenger]

No allowance, but we paid for anything they needed. Everything else on the list we paid for with the exception of the house. Our children are 29, 26 and 24, all college grads, hard workers and good people. My DW and I grew up with very little. Broken families, hand me down cloths, food stamps, etc. Looking back it was tough but we didn't know any different, just do your best every day. We both had multiple jobs when in grade school and high school and put ourselves through college. Our kids see how we lived when visiting grandparents and I think really appreciate how far we've come. So far not hint of entitlement. In fact our kids have told us "we don'y want to let you down" many times which makes me really happy. I think they get it....BUT the discussion I'm having lately with my wife and FIRE friends is do you start gifting now while they're young and you can enjoy helping them? I understand we can each gift $15k per year, per child up to $1M in a lifetime tax free. Will this be straw that broke the entitlement camel's back? We'll eventually pass on our wealth via a trust when we're gone but why make them wait 30 years. What is the E-R braintrust experience with gifting?

My philosophy is to make sure they work for what they want when they're young, and the trust can help give them a better, earlier retirement and pay for things like grandkids' college and weddings. I wouldn't do $15K a year, but I would pay for an adult child's work clothes when they get their first office job, help them buy a more reliable car than they could get on their own...basically, more a reward/upgrade to what they're already doing, rather than an amount that will really change their lifestyle. Even at our current high income levels, another $15K a year would make a big difference...if we spent it, we might just save it for retirement, in which case our (hypothetical) parental gift might just as well be left in our (potential) inheritance.

But to each their own. A lot of it depends on the temperament and personality of the gifter and the recipient.

 

[Breedlove]

We are right in the middle of this , we never really gave our child an allowance . he needed to work . We told him he had four years of college paid for . It took him four years and one semester. He has always worked . I don't know if it is him or what but it seems salarys aren't as good as when we came up . Our financial planner talked about this saying to spend money on your family . The money buys memories , If you wait and give a lump sum people tend to not remember where it came from.
But DS has a 401K and wants to buy a home so DW has grabbed me by the neck and we are going to give him a sizeable amount of money for a down payment. He works 45 hours a week and has never asked for money.

 

[PandaBear]

What rules govern your giving money to your children? When do you stop?
Do you pay for their devices?
Do you pay for their vacations?
Do they live rent free?
Do you give them free university?
Buy them a car?
Down payment on a house?

Our kids are in their 20's (23-28). Both dh and I knew we could count on our parents, yet I don't think we've been horribly entitled or screwed up our lives. So we will do the same with our kids. My husband borrowed about 5K for his first house back in the day, and when he sold his first place and bought a new one and tried to pay his parents back they wouldn't accept it. When I bought my first place my parents bought be a fridge and washer & dryer as a housewarming present.

We paid for college and a car (usually one we bought from credit union used rental car sales.

All three have a job and youngest ds is moving out next week to his first apartment. We've helped the kids with their new apartments in that they can take furniture or other items we no longer need and we co-signed for the two older kids for their first place (and both never had an issue).

Of course, there are things we wish they'd do different ( and I'm sure dh's and my parents felt the same, lol) but I feel they are acting responsibly. The two with 401k's are putting in 15% and the one who doesn't maxes out his IRA contribution. AFAIK, none have credit card debt.

My idea is to give support that won't result in the kind of dependence described in "The Millionaire Next Door", basically subsidizing a lifestyle beyond their limits.

So we still pay for their phones, because it's not that expensive on our plan. We will probably have them start to reimburse us one of these days though. We have had a family vacation every year or so and we pay (although it's honestly getting harder and harder because they all have different opportunities for vacation on their jobs). What we will likely do is separate weekend getaways with each kid once a year, accommodating to their schedules and we will pay. If we go out to dinner, we pay for their meals.

We don't subsidize apartments/cars/etc. When oldest ds wanted to buy a car, he couldn't afford the one he really wanted (some SUV). He ended up with a Jeep instead. That was hard for me....he's a good kid and I wanted to help him out, but we didn't. I also know, though, that when he buys his next car (and hopefully he can afford what he wants) he will have the pride in that achievement and I don't want to take that away.

My husband has a family reunion every year and it's a priority for dh and I that our kids still connect to the family, so we pay for their hotel and meals for that weekend.

I've told all three kids that if they have a child, dh and I will babysit the first year or two, even if we have to relocate temporarily to do so. My mom babysat my kids and I know what a blessing that was to us.

I think dh and I will also help when the kids want to buy a place, but I don't yet know what that will look like.

Having said all this, we do help out dh's sister and daughter a little. His sister has made some poor choices in her life and her daughter had some developmental disabilities. We send more generous monetary gifts, for example and help pay for their attendance at the family reunion. When they moved, dh helped drive them across the country so they weren't alone.

 

[eytonxav]

Neither of my kids ever asked for it or expected anything from us, but we have gifted to both depending on their circumstances. I consider it an advance payment on their inheritance.

 

[aja8888]

Neither of my kids ever asked for it or expected anything from us, but we have gifted to both depending on their circumstances. I consider it an advance payment on their inheritance.

Same with us as above.

Now that we are in our mid 70's, we are passing more funds and other assets to them on an accelerated schedule. No reason to hold anything back as they can use what we give to them in the present.