Tag Archives: adult children

A Gift Better Than Money: Financial Literacy

In my last post, I talked about a conversation with co-workers regarding life insurance and one co-worker said that he preferred a whole life insurance policy because he wanted to leave a legacy to his children. My co-worker is not great with his finances and lives paycheck to paycheck, so I can see why he thinks that leaving a large sum of money would have life changing effects.

Another co-worker said that she and her husband were ready to retire, but continue to work because they want to make sure they have enough to pay for their kids’ college tuition and to help out with their future wedding and downpayment on their first house. Yet another co-worker who is of retirement age continues to work to support her adult children who have failed to launch. While I won’t have to worry about how to deal with money matters with an adult child since my son just turned 2 years old a few months ago, this topic has been on my mind after having those conversations.

I can understand wanting to to help out your child, and I would want to help my child out with college and other milestones they have in life. It’s natural to want the best for your child. Millenials nowadays often have a heavy burden of student loans and an unstable job economy. I think it’s wonderful if a parent, who is financially able to, lends a helping hand to an adult child. However, I’ve seen with a few of my co-workers where they are financially support their adult child who constantly gets into trouble with money. Enabling an adult child who constantly gets into money woes is a disservice to them.

If every time your child struggles with financial issues, you step in to fix the problem, your adult child will never learn to deal with those financial issues. Inevitably, those same financial issues will pop up again, causing a vicious cycle, which the adult child has no incentive to remedy since the Bank of Mom and Dad is always there for a bailout. By always stepping in to financially help out an adult child who makes financial mistakes, you prevent them from learning to solve problems, from learning that there are consequences to bad financial decisions, and from learning to take responsibility. While the adult child might think that receiving money from a parent to help out with a financial crisis is a great gift, I think that the biggest gift I’d like to impart on my child is the gift of financial literacy.

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. – Chinese Proverb

Shannon Ryan, who blogs at The Heavy Purse (which is a valuable resource for teaching children to be financially literate), recently wrote that one of the greatest responsibilities as a parent isn’t to tell her “children what to think, but to help them think for themselves, which means they have to learn how to make decisions, good and bad, on their own.” For another great resource to help you in raising financially literate children, check out the free e-book How to Teach Your Kids About Money, written by Laurie who blogs at The Frugal Farmer.

In my opinion, the best way to raise a financially literate child is to lead by example. Often times, children will learn bad financial habits from their parents and continue those bad habits in adulthood. Another great way to teach them to be financially literate is to talk about money and money decisions, and giving them an opportunity to make their own decisions and learn from their mistakes. I am always thankful that my parents have been great financial role models, and have taught me the benefits of saving and of investing.

In a recent news story, a wealthy real estate mogul passed away and left a large inheritance to his daughters. However, the inheritance has many strings attached. His daughters will receive $687,000 when they get married, but ONLY if her future husband signs a prenuptial agreement. Another $1 million is given if the daughters graduate “from an accredited university” and writes an essay describing what she intends to do with the money (the essay is subject to approval by the trustees appointed by their father). In the year 2020, the trust will pay out three times the daughter’s salary (apparently as incentive to earn a high income). What if the daughters became a stay-at-home-mom you ask? Well, that’s covered too. The daughter will receive three percent of the value of the trust, but the child must not be born out of wedlock. It is as if their father is trying to impart his financial values from the grave. Granted, it is a large inheritance, but if he had taught his daughters to be financially literate as children, then he should trust that they will be responsible to handle the money.