The subject of kids and money is an emotional one for many people. Most of us would do anything for our kids, and often times that means doing things like sacrificing our own financial well-being to secure an education for our children. Others continue to help their adult children, financially, for many years into adulthood rather than contributing to their own retirement.
Helping children while we’re still here is one thing, but what about after we are gone? If we have managed to build wealth throughout our lifetimes, should we pass that wealth along to our children, or is to do so to discourage them from becoming self-starters? There is no right or wrong answer here, as much of it has to do with personal situations such as how you were raised, and how you came into wealth.
I do like Warren Buffet’s quote from a couple years ago, repeated in the USA Today article, Should kids be left fortunes, or be left out? Buffet said about leaving money to kids, “wealthy parents should leave their children with enough money to do anything they want but not so much that they are doomed to do nothing at all.”
We’ve seen plenty examples of “doomed” kids, financially. Paris Hilton comes to mind, although she has managed to market herself as she got older to generate some of her own wealth, rather than relying solely on family fortune. Of course, it could also be said that the last name Hilton has contributed to her success.
While I doubt I’ll ever have a fortune near that of the Hiltons, I do hope to have something to pass along to future generations. And why not? The money my wife and I leave our kids and grandkids could be a downpayment on a new home, or provide the seed capital for them to start a new business. It likely won’t be enough to retire on, but I would like to think it would be enough for them to chase some dreams.
Often times we think of inheritances as opportunities for our kids to buy new sportscars, or a Harley, or a lavish vacation home. The truth is that if we have managed to raise kids with many of our same frugal values, they will more than likely put that money to good use. Imagine leaving enough to pay for a grandchild’s education, or the down payment on a starter home? Imagine leaving enough for your kids to pay off their mortgage and experience debt freedom for the first time in their lives. These are the types of things that motivate me to build enough wealth to leave behind, not just to my family, but to people and causes that I care about and want to leave a very small legacy.
What say you? Should parents leave money to their kids?