Giving money to adult children?

[Menonut]

I don’t want to jump on the Beckham bandwagon but I’ve just read that Nicola Peltz receives an allowance of $1 million a month! Surely that’s insane?
What motivation has she got to go out and achieve anything for herself when she can basically sit on her backside and receive that.
Is that madness or AIBU?

I understand wanting to help your children and do the very best for them, and we will help our son as much as we can to get his foot on the ladder, but surely a time comes when they’ve got to be self sufficient and stand on their own two feet?

I’ve always like Peter Jones’s approach to this. He said he will double his kids earned income so if that income is 0 they will receive 0. If they choose a role that is in the charity sector or the NHS for example the amount he gives them will be increased. This means they are not scraping a living on minimum wage, but they have a purpose to their life.

I see your point but feel its a bit extreme. You can have hard working children and still elevate their life through financial gifts. I think if you've raised hard working children, they won't be less hard working because you help them.

My parents didn't help us towards our cars or house deposit or anything but have funded holidays and household works and not once has it made me work less hard. I've just put more into my pension or to my kids savings which will help out our futures so we are more secure. I think they have the measure right

The majority of us work because we have to most often in jobs we would rather not have to either. If you didnt have fo work tomorrow most of us woukdnt. Of course you need a purpose in life and seems from the very little I hear she has been out rescuing animals etc.

There are plenty of things tou csn do without having to work and still have a meaningful life.

I wouldn't give adult an allowance once they are working age, but I would pay for their university fees and expenses (so they have no debt) and give them the deposit to buy their first home. I would assist with nursery/school fees for their kids so they don't have to wait to have kids until they are older. I would also fund family holidays and meals but I don't think it's good for them to get everything handed to them.

To be honest, it's a bit of an ambition of mine to leave a family trust when I die. I'm not sure I'll ever manage to accrue enough money to make it possible.

If it payed out 1% a year and was invested in global index funds, it would hopefully double in real terms every decade. Even if it started out at something small like £6k per child per annum, that £500 per month would help pay for holidays, etc. Over time, it might grow to be a decent second wage / dream retirement for my kids and then any future descendants.

The motivation to provide a legacy for your children is a very powerful one. I don't think the people opposed to inheritances really appreciate the negative impacts it would have upon society - e.g. people retiring earlier and stopping paying tax, pensioners moving abroad to a more sensible tax environment, people that believe in generational wealth abandoning the country and taking their assets with them, etc.

Perhaps she's home-schooled?

That's where being super-rich falls down. Their children end on drugs, gambling etc to pass the time. You can only spend so much, before life becomes boring.

Although, they also have the issue of keeping up with the Jones, usually with the (invited & uninvited) paparazzi watching their every move.

Not a life to envy.

I feel like all the posters wittering on about work giving you a purpose and fulfilment aren’t stacking shelves at 4am in Tesco or working 12 hour shifts minimum wage in an underfunded care home.

Most people only work because they have to.

@99pwithaflake Yes, that’s what the wealthy people I know do, they volunteer with causes/organizations that do meaningful work. Not just occasionally, but several hours a week, because they have the time and often expertise in certain areas.

IMO, it’s important for wealthy parents to give their children a good education as well as money, because that gives them more options in life and they have some skills. I remember reading that Mick Jagger takes his children’s education seriously, for example.

It doesn’t matter what they’re interested in, encourage them to get some training.

I think there are several lessons which people need to experience and internalise while they are young:

1. how to manage money, knowing it is not unlimited, so you have control over your life and your choices and become a capable person
2. how to understand and identify with and empathise with the experience of people who are not rich, which is most people, and generally understand how the world works
3. how to strive for things you want which you do not have, so you acquire a sense of agency and control and the joy of achieving a difficult goal
4. how to have the joy of looking forward to getting something. If you immediately get everything you want it sucks the joy out of life. You become jaded and have to go looking for pleasure in more and more extreme ways
5. how to become a separate individual who has carved their own life out for themselves, not someone who is dependent on parents to maintain a lifestyle they feel they cannot do without. The risk is you cannot imagine a different way of living and are afraid of giving up what you have so you remain enmeshed with your parents your whole life. They may even retain a degree of control over you. An existence like this is demoralising.

For these reasons I do not think children and young people should be given too much money. Obviously the base level of what is good to give them will vary according to how rich you are. If you have loads of money, it is probably going too far to make them live like somebody whose parents have absolutely zero. It can be very miserable doing without the basics and struggling.

I would say however that, once they are about thirty or so, and have developed their own independent lives, you can start offloading your money onto them. At that point it will seem really exciting to them, not just more of the same.

I think 30 is possibly too young. I have friends that sold a property in London (they both owned flats before they married) and frittered it all away during their 30's. They had a great time travelling for a couple of years amongst other things, but I know the husband now regrets how much they spent.

My dad gives me and my sister money each month and we are in our 40s. He has lots of it and he says he likes to think he’s helping us out a little.

My brother and I both inherited (7 figures) when we were in our early 20s (our father preceded his mother, and, per her will, we split what would have gone to him). Neither we nor my grandparents lived a "rich lifestyle", but certainly very comfortable. My grandparents came as refugees after WWII (we live in Canada), having lost everything (both monetary and family) and prioritized savings.

Neither my brother nor I spent foolishly (I still have most of mine gaining interesting in investments while he bought a house with a large bit of his) and neither of us have anything remotely like a poor work ethic. I am hoping that I can pass on a large chunk to my niece and nephew (I'm not married and don't have children).

To add that I didn't purchase a house because, due to my career, I move (to different countries/continents) every four to five years.

They are just really dim then though? You can’t judge everyone by that level of spendthrift, 50 might be too young for those two. What did they think would happen after they spent their house value?

The paradox is that the more money the children are given, the less likely they are to spend it. Anyway, that is how it is with my dc.

For example, £5,000 might be blown on travelling or a car, but £50,000 is enough to make a real difference so they are more likely to keep it intact for a house deposit.

I also agree with another poster further down that where you come from a savings culture, the instinct is not to piss unearned money up the wall the minute you lay hands on it but to preserve and grow it. Children learn money habits and attitudes from their parents.

@blueshoes

I think a lot of people have that instinct, but then don't make the connection in terms of saving smaller amounts to end up with larger amounts.

You might need to explain that to your children because it seems like they see all their earnings as spending money, rather than potential capital, with only 'lump sums from the sky' seen as worthy of saving.

@ThisOldThang 💯agree with you.

Saving smaller amounts regularly that add up to large amounts due to the power of compounding is how the dcs ended up with the lump sums in their Child Trust Fund/JISAs to begin with. It is their money and they came into it at 18. However, they did not see the sums grow over time.

Good money habits at their age to encourage regular savings is to have a standing order to save a regular amount out of their pay every month into a low cost index fund in a stocks & shares ISA. Same with setting up a pension as soon as they have a job.

That way, they never see the savings as part of their disposable income but the nest egg grows slowly and quietly out of sight until it starts to snowball when it hits critical mass.

Saving that lifestyle coffee today and investing it at 20 years of age is worth many times more than saving that coffee when they are 35 due to the power of compounding, which Einstein calls the Eighth Wonder of the World.

We saved up so that each had a small amount at 18 .. at the time we started it would have covered a years Uni fees - then the fees tripled and now they are all subject to the outrageously high interest .. paying tax when personal allowances hasn’t kept up with inflation. Their outgoings are higher but salaries haven’t kept up. All over 26 and don’t have cars or property. I had both at that age. We help youngest with small contribution to rent …. Job is 300 miles from home so has to rent. We chose to have children, we didn’t chose for the U.K. economy to shrink and employers to increase pay gap between top and bottom, or once cheap Uni fees to triple. This has happened to our children despite their hard work. I would like to help them more but am retired and DH is retiring next year. If I could get a local part time job I would give them all money towards their student loan debts. We insisted they get degrees without realising the financial burden. Because it was £3000 a year…. Eldest missed that by one year and it shot up to £9000.

If I was a multi Billionaire then I'd help my kids out as much as possible to save them having a touch life. I'd not want them to experience hardship or stress about money, or do a job they hated just to earn money when I have enough for them to live comfortably. Why would I want that for them when I could afford to save them from it. As for Nicole having no purpose if life, I'm sure she will be involved in charity work etc that will keep her busy & give her purpose in a positive way. I'm sure she achieves a lot in her life, thanks to her Dads money & the life she has she has the time & funds to do whatever she choses. Also if/when she starts a family she can be home with her child, something many Mums wish they could do but can't afford to. When someone has that much money I think spending it on your kids to save them from the real pressures of life is admirable.