Giving financial help to adult children

[huntinstuff]

I supply a home, food and great advice for as long as they are either working or going to school, or both.

I find that big handouts backfire. I give $ to no one. Not family not charities. No one.

I think some people NEED to experience their last dollar gone to appreciate the value.

Ive been thanked more for my way of thinking than chastised. It works for us so that's just what I do.

[sns2]

Originally Posted by bobtodrick

X2 I've got two teen boys that are hard workers, both in school and with part time jobs to pay for some of what they want to buy.
Why wouldn't I help them if they need it, and I can afford it. I don't deny myself anything I want...and last I heard you still can't take it with you.
If you're not willing to help them...why did you have them?

I am in same boat and will do all I can to give them a leg up which means live at home, help with tuition, and help out with down-payment when the time comes. I bought my first house with $3500 down and assumed a $63k mortgage. Those days are long gone. At this point, both are responsible, well rounded, appreciative kids. The wife did lots right. LOL.

This is an individual decision and one size does not fit all. Good thread.

[TBark]

3 kids with pretty good careers. Ages 30, 29 and 21.
Helped them all with their tech school fees and paid half their first cars.
Assisted somewhat with weddings on the first 2 too.
That’s about it, all pointed in the right direction, they take it from there.

TBark

[58thecat]

You live in Canada, free To pick and choose your occupation unless your lazy....if you want something go get it, plan for it but your azzz has to get out of bed and go to work, don't spend foolishly on other nice to have and not a necessity items....they will do well but chucking money at them, bailing them out after stupid decisions teaches nothing but then again we live in a world were we expect a pat on the back for everything we do and are listening to the lazy more than the go getters.

[58thecat]

Originally Posted by huntinstuff

I supply a home, food and great advice for as long as they are either working or going to school, or both.

I find that big handouts backfire. I give $ to no one. Not family not charities. No one.

I think some people NEED to experience their last dollar gone to appreciate the value.

Ive been thanked more for my way of thinking than chastised. It works for us so that's just what I do.

Yup, they open the door to the fridge, full of food, roof over thier head and they watched us get up and go to work and come in after a long day when required to just repeat and eventually all came together to have the financial freedom to do what we want when we want....post secondary education all complete, work, school and sports ate up time in a day/week but that's expected if you want a career and not just a job.

[2 Tollers]

Originally Posted by 2 Tollers

Now we want to see some effort. We do not immediately step forward to help. In the case of our kids they have to earn and save for their mortgages. Once they qualified we helped out in effect to reduce their monthly payment. Our thoughts were they could get some of their inheritance early which would help them get roots and go forward. We learned a bit as we grew older.

Originally Posted by Big Sky

Like this idea.

A question for those who have given money for a mortgage. Did you just give them the money or are you listed on their mortgage as a lender?

You can get listed or give them the money as a personal loan all drawn up with the correct paper work. The personal loan approach in my view is better if there is a relationship that you are not sure is long term. Basically the loan approach protects that amount of money from the outcome of a nasty split. It is up to you to set the terms on the payment of the loan as well and you do not have the bank coming to your door in case of a default.

I believe in hard work and through hard work getting ahead. If a close family member is doing this and runs into a bit of a bad time or we can see a way to help one of kids get ahead a bit quicker without changing the need for them to keep working hard, we are fortunate enough to be able to help out. This is done very selectively now due to the past lessons. We have a couple of small personal loans, with paper in place, that have been defaulted on. So the question becomes do you take a family member to court? This is the down side of a loan to a family member. However if you co-sign you are in the same position. So make sure you are ready mentally to make the call if something goes south -- walk away from your money to keep the family together or go to court and stand the chance of ruining a relationship long term.

[2big4u]

My boys both get an "allowance" $5.00 for the 12 year old and $10.00 for the 17 year old. This is not a payment for chores done or anything else, It is to teach them money management. Keeps them in slurpees and gum all week or save it up for something big. The 12 year old saved for almost 6 months when he was 9 and asked for money for birthday/christmas and save enough for an I pad. He has had it going on 4 years now and it still shines, he says its because it is "his owned".

The older boy is driving a Pathfinder that is as old as he is. He bought off the neighbours last year. His money to buy it, His money to insure it, His money to register it, His money for repairs. I buy his tools so when he moves out he will have a set of his own.(and isn't borrowing mine) We also give him the cash equal of his monthly bus pass in a gas card.

[Twisted Canuck]

We don't have any hard and fast 'rules' about financially helping our kids. We meet their needs and always have, and 'invest' in their futures. For instance, my oldest in post secondary in Edmonton, she has a plan, and we pay her rent. She has a part time job and can almost keep up with everything else. Last I talked to her she had $6 left until payday, but didn't want any money. She is driving a 10 year old Yaris that was the first car I got for my kids to learn to drive in. Well maintained. Good enough.

My second oldest paid $2000 cash for her first car, an old 2003 Echo, with money she saved from working at McDonald's. She drove it, literally, to death over 6 years. By then she was finished her two year course at NAIT, and was working in Lloydminster at the TV station. Got a job in Prince George, a good move...and her car died. I signed over a 2014 Yaris that was supposed to be my youngest's car. Now my girl is working for ABC in Rochester MN. I had to front her $5K to move, she has paid half back. The rest by years end. She may never pay me for the car, but she is well on her way in a promising career.

Next oldest finished her vet assistant course at NAIT, is working at a local clinic, and driving a 2006 Tacoma that I initially bought for my son. It's her ride, and she is saving up to get married in a year. I told them I would give them $10K as a gift, either to help pay for wedding, or....they opted to use it to put down on a piece of land with money they have already saved (though it won't be for a while yet). She'd like to open her own clinic. Good enough.

My son now drives a 2009 Venza that I had bought new. He paid off $12K over a year and a half working for me. Debt free, living at home, and going to work with me every day. Sometimes we have friction, but he is really turning into a skilled tradesman, and he helps me out tremendously. He is going to have a good pile of cash saved up within a year, then he has considered going back to school. When he does, he is on his own to pay for it (our arrangement has always been that I paid for his hockey while he was young, and I help pay for his sisters to go to post secondary, so everyone got needs met). My son also coaches hockey.

My youngest just got her first car yesterday (the Ford Focus thread is about that). She had saved up $5K working at McDonald's to go towards it. She is at work most days at 5 AM. I will gladly help her out or loan her money any time. She always brings me cash for her cell phone bill a week before the bill comes. Faithful hardly covers how she is with money. I will be happy to help her get through nursing school.

I also payed for all their AMA driver training courses, winter tires for vehicles, and AMA membership when they moved beyond my assistance. I sleep better that way.

It's like I told my dad years ago, when he was giving me grief about giving my kids 'too much'. I told him that kids need help when they need it, and when they are starting out life is a hard enough struggle. As long as they are all working (they are), and working towards goals (they are) and are living decent lives (they are), then I will do my part as a parent to assist them towards those goals. My parent's didn't even buy me luggage when I turned 18 (they were busy being bitterly divorced and poisoning us kids), I got cut loose. I've been working since I was 13 anyway, but sure struggled hard over many years until I got ahead (now well ahead). My dad was really proud of me and what I'd accomplished, but I asked him how much further he thought I'd be ahead if I'd had a little help on the way getting started....?

We don't squander resources on our kids wants. We invest in their goals and futures, and make sure that they are very active participants in working towards those goals. There isn't a one of them that I'm not proud of, or would be afraid to introduce to any of you. Good enough for me.

[CMichaud]

I see my job as a parent is to raise my kids to do well. Both emotionally and financially.

Money is no good to you when you are dead and all that is left of you is your lineage passed down to them.

Be generous and teach them to be the same.

Be responsible and teach them to be the same.

If I die with any money left in my account it will be a poor reflection of my budgetting skills!

[Mistagin]

I believe the 'job' of a parent is to raise kids in such a way that they can stand on their own two feet when adults. Having used that philosophy to raise ours, I can report that all 4 are doing quite well .

That's not to say we haven't helped them out financially though - we have - as loans (with very good 'interest rates'), just as our parents blessed us by helping us along the way. The old saying is right, "What goes around, comes around."

[TargetRick]

I have some experience with this. The tax law of Canada is that you can gift up to $20,000 to a child without them having to declare it as income.

- Benefit for you: a gift under $20,000 per year won't screw up their tax situation.
- Benefit for them: the gift under $20,000.

As to whether they deserve the gift, that's up to you.

[CMichaud]

Originally Posted by TargetRick

I have some experience with this. The tax law of Canada is that you can gift up to $20,000 to a child without them having to declare it as income.

- Benefit for you: a gift under $20,000 per year won't screw up their tax situation.
- Benefit for them: the gift under $20,000.

As to whether they deserve the gift, that's up to you.

I assume that is up to $20k per kid per year?

What about gifts to their spouses if you so choose.

ie can you give $20k to your son and $20 to his wife?


Thanks!

[CaberTosser]

Originally Posted by TargetRick

I have some experience with this. The tax law of Canada is that you can gift up to $20,000 to a child without them having to declare it as income.

- Benefit for you: a gift under $20,000 per year won't screw up their tax situation.
- Benefit for them: the gift under $20,000.

As to whether they deserve the gift, that's up to you.

I would like to see actual proof of this claim. A gift of a donors savings that have already been taxed should not be subjected to further taxation. I could see it affecting such things as if the recipient was on social assistance and have their benefits reduced or similar, but that money was already taxed and should not be double-dipped upon.

[raab]

Im not in that situation yet as my kids are young, but the one thing I do know is that you build wealth through generations. If you look around at families that have a high net worth. Most of that net worth comes from something thats been in the family for over 50 years. So I might not be rich, but if I can help my kids be better off, and their kids better off. It really could start a chain reaction.

Best thing you can do for your children(and yourself) is to give them a financial education. Second best thing you can do is help them stay out of debt(Pay their tuition and let them stay at home). Third best thing you can do is acquire assets that you can leave them, and dont depreciate. (Stocks, businesses, farm land, etc...)

[Arachnodisiac]

Totally depends on the kid, I think, and whether they appreciate it and are responsible.

But yes, help at the start of a kid's life is probably more useful than later. I co-signed for my son's first car, and helped with insurance, registration and repairs. However, when he neglected to make any attempt to repay me for a bunch of recent repairs and spent his money on an amp instead, I drew a hard line.

[Austin]

I too was in the "let them learn / figure it out" on their own. My wife opened my eyes.

What we did is suggested our daughter take out a student loan - we will help her pay this balance off but she has to get summer jobs until she graduates. why not use someone else's money at the 0% interest for the 4-5 years. Added bonus is she gets to build up her own credit rating at the same time.

As for vehicle, first $5k is us but if over that amount, the extra is on them.

She goes to UofC... Rent money comes out of loan and her savings but we furnished the rental. Her tuition is a scholarship. We offered her a down payment to buying a house - she may take us up on that after graduation

I recall when I was young getting my first condo down payment paid my parents. After 5 years, sold it paid them off and bought my own house with my now wife.

I think like said earlier, depends on the kid, depends on their goals, depends on their personal situation and behaviours with money. I think we let them know we have their back.

[guywiththemule]

2 kids (boy and girl) both now over 40. Helped them both buy their first vehicle when they were 16. It was a loan. Later helped both of them buy a farm each. It was a loan. Later helped them both buy farm machinery. That loan was paid off by my son and my daughter`loan is just about to be paid off. NO FREE RIDE HERE.

[bobtodrick]

Originally Posted by CMichaud

I see my job as a parent is to raise my kids to do well. Both emotionally and financially.

Money is no good to you when you are dead and all that is left of you is your lineage passed down to them.

Be generous and teach them to be the same.

Be responsible and teach them to be the same.

If I die with any money left in my account it will be a poor reflection of my budgetting skills!

I read an article once that said one should live well, but pay your own way. But also that you can't 'take it with you'.
The last cheque you write should be for your funeral...and it should bounce.
I've always like that line of thinking. As long as I have money for my needs...and some put away for emergencies and retirement...if my kids need help I'm only to happy to do so.

[TargetRick]

Originally Posted by CMichaud

I assume that is up to $20k per kid per year?

What about gifts to their spouses if you so choose.

ie can you give $20k to your son and $20 to his wife?


Thanks!

Ha ha, good one! I have a notion the wife would "equalize" that pretty quick.

Best discussed with your banking or tax advisor, but in this citizen's opinion, you might be right. Whether they deserve it or not is of course another issue up to you, but in Canada, the CRA (tax department) does not have a gift tax.

As for me, I have both received and given gifts of many tens of thousand dollars. Worked well in my case.

[TargetRick]

Originally Posted by CaberTosser

I would like to see actual proof of this claim.

Have a look at Farm Business Corporation's

https://www.fbc.ca/knowledge-centre/...n-family-gifts

and

Financial Post's

https://business.financialpost.com/p...ifts-in-canada

[MyAlberta]

I’ve paid for the kids tuition, as with my own continuing education, I see it as a career investment. For car loans, down payments, I request a business plan with associated security. The oldest bought a home which I chipped in on the down, and as agreed, my name came off title when she paid it back. The youngest started her own business, and I’m hoping to retain some ownership, as it has done very well. I don’t do handouts.

[Red Bullets]

If you are able to help your kids financially now, provided they are responsible, have them sign an agreement that they will help you out when the senior's residence costs more than pension you get and you have outlived your savings.

[rem338win]

Like everything else in life: it depends.

Of they are motivated, persistent and making choices that are thought out and show a pursuit of wisdom it makes it easier.

The issue I see entitlement and dependance.

The first home example is a great one as well as education.

If the adult kid is a wastrel then forget it. Sometimes hitting the street for a bit is good for you.

I've also made a personal decision in life not to loan people money. I either give it or I don't.

Loans ruin relationships and I value them more than cash.

[aulrich]

Originally Posted by CMichaud

I see my job as a parent is to raise my kids to do well. Both emotionally and financially.

Money is no good to you when you are dead and all that is left of you is your lineage passed down to them.

Be generous and teach them to be the same.

Be responsible and teach them to be the same.

If I die with any money left in my account it will be a poor reflection of my budgetting skills!

Pretty much sums it up for me too. Though that really only applies when life is basically on the happy path. If your kid has a disability or long term or lifetime illness and things get complicated.

[Ronji]

I paid the tuition and living expenses for both of my kids to attend University. Both of them were quite frugal, and were more into their studies than the party thing while in school. And they worked summers and holidays to help out.

Daughter finished her nursing degree 1/2 term early. Son, is on his last term towards his masters degree.

To me it was the better method, as I did not want them to come out of school with a ton of student loans, and starting their careers saddled with debt.

[srs123]

If you can afford it, then do it. I never received anything from my parents and while I did good in my life , many of my friends who did receive help for weddings and home downpayment are well ahead of me on savings, investment portfolio and mortgage.

Not every child would squander such gift. And life is really expensive. It took me 6 years to pay off my student loans and then another 2 to save up for a 5% downpayment. At that time I was paying so much in rent and interest. 10k would have shaved a year off that time line for me. Am still not married cause weddings are expensive.

I plan on helping my kids with school weddings and if things are great maybe a portion towards their mortgage

[bagwan]

Originally Posted by srs123

If you can afford it, then do it. I never received anything from my parents and while I did good in my life , many of my friends who did receive help for weddings and home downpayment are well ahead of me on savings, investment portfolio and mortgage.

Not every child would squander such gift. And life is really expensive. It took me 6 years to pay off my student loans and then another 2 to save up for a 5% downpayment. At that time I was paying so much in rent and interest. 10k would have shaved a year off that time line for me. Am still not married cause weddings are expensive.

I plan on helping my kids with school weddings and if things are great maybe a portion towards their mortgage

A very good summary of what help can do to get ahead. Probably even more applicable today with housing out of sight. We helped both kids buy their first homes. Got us great grand kids. We opened RESP's for them at birth. Paid off immensely as our gal had three in University this past year. All the boys worked and contributed. Oldest graduated with honors and is now completing his Masters. Middle guy graduated in April with all courses to be a future LEO. Youngest at UA playing football with Bears and just helped win the World Junior Football crown in Mexico. Our daughter appreciated the leg up and followed the same plan. When these guys buy into homes additional help will be there if we can afford it. As they say you can't take it with you. To all the young parents get into RESP's at the earliest opportunity. Start low if you have to but START. Get grandparents involved if possible.

[pikergolf]

Maybe it's no wonder millennials feel so entitled, they get help with everything?

[Trochu]

Originally Posted by pikergolf

Maybe it's no wonder millennials feel so entitled, they get help with everything?

The one that kinda blows me away is the feeling I get from society in generally that post secondary education can't be obtained without financial help or a student loans. Its a terrible mindset. Reminds me of a guy I hired/worked with several years ago who was going to UofA, believe he was entering his third year. It was August, and I asked him how he was doing financially, it went something like this:

Me: "Do you have money enough for the coming semesters or should I throw some more hours your way"?
Him: "What"?
Me: "Do you have enough money for school or do you want more hours"?
Him: "I made enough in my first summer break for all four years of school, I'm only working for experience and so I have some play, insurance, and gas money. I'm good, thanks though".

[pikergolf]

Originally Posted by Trochu

The one that kinda blows me away is the feeling I get from society in generally that post secondary education can't be obtained without financial help or a student loans. Its a terrible mindset. Reminds me of a guy I hired/worked with several years ago who was going to UofA, believe he was entering his third year. It was August, and I asked him how he was doing financially, it went something like this:

Me: "Do you have money enough for the coming semesters or should I throw some more hours your way"?
Him: "What"?
Me: "Do you have enough money for school or do you want more hours"?
Him: "I made enough in my first summer break for all four years of school, I'm only working for experience and so I have some play, insurance, and gas money. I'm good, thanks though".

My youngest has two degrees, his help from us was living at home for the summer free for the first two years ( he then moved to his university city). He worked and worked hard, 4000 dollars in student debt that he paid off in a few months. You think he appreciates his education, you better believe it. He worked hard, applied for all sorts of scholarships and bursaries and did it on his own. My respect for his is immense.