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Giving early or later?

October 18th, 2016 at 04:22 pm

I'm going to admit to suddenly for once being jealous. In a few different ways. My cousin just bought a house with down payment help from both sets of parents. Neither of them have a good job and yet they can buy $800k home without selling their $350k condo. She's an only and I've heard that he's from a "rich" family. Some envy that they get help.

But I have recently known a lot of people who get down payment help from their families. I know multiple people whose parents gave them the down payment of $50 or $100k or more. Some are even paying/funding college for their kids.

I guess my thought is how are these parents able to give their kids/grandkids money now? I know my parents and in-laws are secure. I don't expect any help nor will we get any. But it's likely they will leave us something eventually.

I guess I'm jealous because how do people know they have enough to give to their children before death? How do they know when they are only in the 60s and 70s and in "early" retirement to know they have enough? I ponder this because I'd like to think that maybe we'll save enough to help our kids.

It's a stretch goal that we are able to pay 100% for 4 years of college, some money for a wedding/house down payment, and a car out of college. In that order I'd like to gift our kids with a leg up. I've really thought about it but we'll be in our early 50s and potentially retiring when they go off and finish college. But how will I know that I have enough? How will I be able to part with so much cash so early in our "retirement" position? Of course if DH chooses to work past 50 then I'm assuming we have a large cash flow.

But how secure do I have to be? Do I think maybe whatever our parents leave behind will be used to be passed on? I think maybe we'll get something but I could be entirely wrong. Our parents have paid for homes and pensions. But I'm not sure much cash on hand, which is understandable why gifting us with anything is pretty much nil.

But how do we get there? How do you know? Have you been gifted a substantial amount of cash from your parents or grandparents? Was it before death? If so why before? How did they know they had enough? If you got it upon death did you expect it? Was it more or less than you expected?

14 Responses to “Giving early or later?”

  1. debt-free by thir-ty Says:

    It's definitely not substantial when you're talking about $50k, but DH's parents gave us $5000 towards our house down payment. To me, that's a large sum of money to receive considering my own personal financial relationship with my parents, particularly my mother.

  2. ceejay74 Says:

    I've had many gifts from my parents --
    they bought me 3 (used) cars over the course of my teens/20s,
    paid part of my college education and I took out loans for the rest,
    gave me $100 per month to help out with student loans my first couple years out of college
    Was loaned $12K for house down payment (I paid that one back)
    my dad gifted each kid $12,900 one year out of the blue
    my parents accepted a right-of-way deal on some land and split the profits between the kids--$80K for each of us

    My dad has always been the main breadwinner with my mom basically just making some spending money as a babysitter. They have 5 kids and 13 grandkids. I don't completely understand how they've managed to do all this, but my parents are extremely frugal--the only vacations they ever take are driving to their rural W.V. cabin or to Ohio for family reunions. All their stuff is ancient -- furniture, appliances, clothing, kitchenware -- and they don't use smartphones or have cable; my dad finally bought a laptop a few years ago, got WiFi and subscribed to Sirius radio, and they buy a lot of DVDs but not at full price. They get takeout from time to time but never go to restaurants. My dad usually buys used cars though he did buy one new one (bare bones, paid with cash).

    My dad worked until he was about 75-80, but he didn't need to. He's just a very active guy who I think was afraid he'd get bored in retirement. (He's regretting that now because he's finding tons of things to do in retirement and wishes he'd done it earlier.) He gave us that $12,900 gift (same amount for all 5 kids) before he retired because he had the money sitting in savings and didn't know what to do with it.

    In short, I feel so incredibly fortunate that he's been able to do all that, but even with fewer kids and more working adults, I don't see how we'd be able to come close. Of course as a computer programmer, I imagine he made a lot more than any one adult in my family, but it still seems incredible to me.

  3. LivingAlmostLarge Says:

    Debtfree we got $5k from my parents for our wedding gift too. No strings attached. Interestingly it wasn't worth as much in 2005 as 1985 when my sister got married and of course less in 1989 and 2004 to show the discrepancy of gifting $5k to all four kids! HAHA. But it was the same amount so who cares?

    Ceejay, you got $80k and then the $12900 2x? Or just the $80k and the $12900 was part of it? Very generous gift. Those are definite gifts that can help for the future. I would hate to give it to an irresponsible child but if my kids were responsible I can see myself definitely gifting them some help if we can afford it. But how to know?

  4. rob62521 Says:

    When we married over 26 years ago and bought a house, neither my folks or DH's mom gave us anything. My folks didn't have it and although his mom was comfortable, she wouldn't have thought to give us money for a downpayment. I understand how you feel some jealousy there. One of the gals i worked with just posted a photo of the new house she and her new hubby bought. I suspect his parents and grandparents helped because I know what each of them make and she admitted that half of every paycheck goes for her student loans. The house is huge and looks like it is on a big lot. I felt kind of poor.

  5. ceejay74 Says:

    He gave us $12,900 back in 2010, just once. The $80K came in 2015.

    I'm so glad he didn't give it to us earlier than he did. I had enough sense to stash $9K of the first gift in Roth IRAs, put $1K in a CD for our baby, and pay off $2K of debt.

    The $80K I used about half to pay down debt, $15K for taxes and $8K for charities, $14K for living room and dining room renovation and furnishings, $3K for necessary bathroom repairs, and $1K to visit my parents. All much-appreciated stuff to get our lives back in balance after our home purchase and selling the condo at a loss, which stretched us really thin.

  6. CB in the City Says:

    I had no help from my parents -- they were just about destitute when I was young -- and moderate help from my in-laws, money which we paid back. I honestly don't think even wealthy parents should "help" their kids in a big way -- it's not really help, often, so much as control. There are exceptions, of course. But overall, I think it is much more empowering to make your own way, even if you don't have all the bells and whistles right off the bat. The things you learn from your lean years will make you rich in ways that having it all handed to you will not. Be proud that you are doing so well on your own! That's more awesome than a big house!

  7. Jenn Says:

    I don't think there's one right answer - you just have to set expectations with your kids. We plan to provide college for ours but no weddings, cars, or house down payments. And if they inherit money, it'll be because we died too soon. They know this though. We talk about our priorities with them once they are old enough to understand.

  8. crazyliblady Says:

    I did not receive any financial help from family in buying my house. However, my grandfather died in 2000 and he left me some money. I won't say how much, but it far exceeded anything I ever expected to get. At the time, it was a real blessing, as I was deeply in debt and so used it to pay off a lot of debt.

  9. crazyliblady Says:

    I did not receive support from my mother when attending college, other than spending money. I did however, benefit from numerous other sources of financial help, including 7 scholarships as an undergraduate and several more as a graduate student. I also received some grants and took out a small student loan. I paid it off years ago.

  10. VS_ozgirl Says:

    My husband is from a family who always has nice things and they pay cash for their cars. They take care of their things but live pretty comfortably. I was talking about saving for the next car and he thinks I'm mad and should just get a loan when we actually need another car (don't want to do this though). So I turned around and said your family pay cash for their cars and live comfortably, how do they afford it? Turns out they got a big inheritance and have been living off the proceeds a long time. With our inflated house prices also a lot of parents gift their kids part/all a deposit simply because these days the average home is $300-400k and you need a 20% deposit.

  11. MonkeyMama Says:

    My family are "hoard it to the bitter end" types. My parents clearly have more money than they need. I think they are just trying to wrap their brain around it and decide what to do with their financial position. (They are 65; have been retired for 8 years). I know my grandparents made annual $10k gifts to my parents, but they had very different tax motivations. My parents wouldn't have any tax/external reasons to do the same.

    You will know when you have that kind of money to give. If it's well within your withdrawal rate. I don't know anyone in our families spending down principal. They could easily afford substantial gifts, sticking to a safe withdrawal rate.

    My parents didn't even help me with college. I appreciate the ability to "give like no one else" with their approach. It's the put your own oxygen mask on first principle. I never imagined that my parents (who couldn't even help me with college) would be in this financial position just 20 years later. If we inherit even a fraction of it, we are thinking about starting a charitable foundation. (I will very likely inherit all of it). & the thing is we had every advantage my parents never had so I have no doubt we could build up the same wealth for ourselves. I agree very much with CB's sentiments. I think it means a lot more to us what we have been able to do on our own.

    That said... My bff and dh are the most financially sensible peers I have ever met. & they were handed a lot by their parents. So I don't personally have any issue helping my kids more. I don't think that alone would take anything away from my kids, given the bigger context of "teaching them to fish" and to not expect any handouts. As clearly evident by people like my bff and my dh. (My husband saved for a home since he was 15. My bff lived in the ghetto for like 10 years until she could afford a nice condo in San Francisco in a wealthy neighborhood. I think she is completely insane, but you know, both worked *very hard* for what they have. Far more than anyone else I ever met our age. & my kids are clearly of the same ilk, so I think it would be difficult to spoil them). I am just not going to help my kids unless it makes financial sense for us. I'd say that my dh and I fall somewhere in the middle of our parents. I don't mind helping a little with college. He'd rather wait until he is in a position like my parents before he starts thinking about handing money to his kids or helping substantially. We are completely on the same page.

  12. PatientSaver Says:

    I don't remember receiving much financial support from my parents in college, but the college I attended was generous in giving me a variety of scholarships and grants that didn't have to be repaid. It helps if you have good grades but i certainly was not an A average student. I'm not sure they do that these days. My mother's parents were very generous and regularly gave us money when we visited.

    But they helped us in other ways. I saved money to buy a used car and my grandfather, an auto mechanic, found a mechanically sound car for me and my grandmother made it spotless. It was a Ford Maverick.

    Both grandmothers left us an inheritance and my mother did as well, which was not expected since I thought she would live for years longer than she did. I would rather have the extra time with my mother than the money.

  13. PatientSaver Says:

    My friend, R., on the other hand, knows he has just a few more years to live after having lived with prostate cancer for a number of years and running out of new drugs to try before developing resistance.

    He has already given his niece many thousands of dollars to help her with the downpayment of her house, for a new car, various home improvements, etc. I think he would like to see her enjoy all the benefits.

  14. MonkeyMama Says:

    P.S. I realize I alluded that my in-laws are more giving but I did not clarify. I am not sure they have that much to give, but I admit my view is skewed by a lot of "extreme savers". Time will tell. Anyway, it's just $1k here and there but it seems like a LOT to me. But I think is mostly an example of how planning giving into your finances can work and be very powerful. They handed my spouse $25k-ish (college fund) after college because he chose a very inexpensive college that they could very easily cash flow. In-laws give my kids $1k per year (for college) and I expect that will end up being $30k-ish for each. That's almost $90k in gifts because they were willing to set aside $1k per year for 19 years + $2k/year for 19 years (when they had grandchildren). & double that since they have another child with two kids. But... their net worth reflects that they have given away almost $200k through their working and early retirement years. Which is why I am not convinced they are in the "slam dunk" stage of giving and why we do not plan to do the same. We only started putting away money for kids' college in the last couple of years, personally. & I am not putting that money in my kids' names or just handing it to them. But, all that said, if you want to plan some giving for your kids, it is amazing how quickly it adds up when you have a plan.

    My in-laws also started giving us $10k per year. I am not sure how sustainable that is, but it's been a couple of years.

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