Monday, March 21, 2011

Depending on our parents

During a recent dinner out, a friend mentioned thinking about buying a place with his fiance but mentioned that they'd have to get the money for a downpayment from his parents. It got me thinking.

My friend and his fiance do all right for themselves, I think. They have interesting careers, they tend to buy nicer things than we do and spend more money when we go out but overall they're probably ok. From discussions with them, I don't think they're focused on retirement at all, although I know they do save for bigger purchases. I also know his parents are quite well off.

But this to me is weird. They're thinking of buying a place but haven't been saving for it. They're just going to rely on his parents, who did not inherit their money, from what I can tell - his dad worked hard, started a business that ended up doing well, and now in his later years has money to help out his kids.

But my friend, we'll call him Alex, has not been making the same decisions all his life in a way that will enable him to help out his future kids in the same way that he expects his parents to help him out.

How is that cycle supposed to continue?

It was true in my own family, too - my grandfather started a business, invested wisely in real estate, worked hard every day of his life until just a few days before his death. He financially helped out all of his children in various ways - mostly by helping to pay for or providing housing or vehicles. My aunts and uncles expect this now (my mom doesn't but she did accept the help when she was a newly single mother with low-earning prospects). And so my aunts and uncles did nothing to save up for themselves or their children., and my cousins were raised to expect the same - only there was no money left to help them! In three generations, this family went from millionaires to welfare. Yes, quite literally.

Peanut and I expect no help from anyone. We don't expect to inherit money from anyone, and we're certainly not counting on it. When we buy a home, it'll be paid for with our savings, and we are saving with those kinds of purchases in mind. The help our parents can offer is practical, not financial - advice, the loan of a car when we come to visit. We plan to raise our kids the same way.

But when we were discussing Alex's comment later that night, we pointed out that most of the people we know DO get help from their families for non-emergencies. One friend's parents gave her a downpayment for a house. Another friend has been living at home ever since college, rent-free and not holding down any job for longer than a few months. Another friend has been employed by her father in one of those daughter-of-the-president type of jobs. Yet another was given a car as a random gift, just because.

My mother adamantly wanted to help with my wedding, and my father did too. I felt uncomfortable about it, but I did end up accepting both of their offers as wedding gifts - not as loans, and certainly not because we needed it (we paid for everything out of our savings up front). Aside from the traditional wedding assistance, I simply can't imagine having my parents help us out with anyone from now on - and I really can't imagine ASKING for them to give me a downpayment!

What do you think?

10 comments:

  1. Great post! I think many parents who weren't able to rely on family assistance when they were young see this kind of gift to their kids as a sign of their own financial success.

    In the couple of years since I graduated, I have let the existence of a parental safety net allow me to make some job and life choices that weren't financially smart, although there were some other less tangible benefits. I'm now unemployed and living at home (for free) while I search for a new job. I always took pride in the fact that I never asked for handouts, but I've realized recently that I have been just as irresponsible as the people who do.

    It's been a humbling experience, but I'm lucky that my wonderful, generous family is willing to help while I turn things around. That's enough of a gift - I certainly won't be asking them for more in the future!

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  2. Hell to the no. T and I have been on our own since 17. It's been hard, especially when everyone else we know has had a helping hand in some way from family.

    Not sure if my family will offer to help with the wedding (his certainly can't afford to) but I wouldn't want to accept it. I'm planning on a low-key, low-budget one, maybe $5k if I can manage it.

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  3. I don't expect any handouts because I know my mum & dad can't afford it. We were pretty poor when I was growing up - not hand to mouth but enough to teach me to be cautious & frugal.

    It really annoys me when grown adults - in full time, well paid work - expect their parents to keep bailing them out. The people I know in that situation seem to have no sense of personal responsibility - not just financial but everything else too - because they aren't having to suffer from the consequences of their actions. No savings for a house? No problem, mum & dad'll pay. Accidentally pregnancy? no problem, mum & dad will pay - and babysit too! Grr!

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  4. What do I think? Well, I couldn't agree more with your conclusion but I found your self-righteous, self-congratulatory, and smug tone off-putting. Seems to be a hazard of the PF blogger trade, though.

    Perhaps you should thank your "friends" for the self esteem boost you get while judging them.

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  5. I agree with you, for the most part.

    I had no problem accepting help from my parents for our wedding, because I knew they had been planning and saving for it for years. I did demand to know exactly how much they had saved specifically for my wedding, so that I could stick to their budget, and supplement with my own savings.

    But a down-payment on a house? No way. First, I know that neither of our parents could afford to just randomly help us out with a large purchase. All of our parents work hard, but they work sort of average paying jobs, with kids (and parents) still at home to support.

    We did get a few hundred dollars loan from my parents for part of our car downpayment, but my dad did it because he wanted my old used car (which I paid for half of) back for my brother, and didn't want to wait for us to save up.

    I guess I don't have a problem accepting small(ish) monetary "gifts" from my parents, or letting them buy us dinner or stock our fridge when they visit (it makes my mom happy). But for something like our condo, I feel that it was our responsibility to save the money if we want the responsibility of a home that we own.

    I think that might have made me sound kind of wishy-washy on the subject, but in my head, there's a clear line between accepting a little help (even if you don't need it) and asking for, or expecting, a downpayment, a new car, free rent, etc.

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  6. I think that if a person/couple doesn't have the money to pay the down payment and closing costs, they're not prepared for home ownership!

    I would be nice to get a chunk from my parents, but we don't do things like that in my family. At any rate it's better for all of us if they keep their financial house in order, and I take care of my own.

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  7. I'm not in that situation...I worry about helping my mom in later years. But, if I had family in a position to help with a down payment on a house, I don't know that I'd really turn it down. I'd like to say no, but in all actuality I might take it. Though I do agree that it's important to continue that legacy, so I'd want to work hard and save to be able to help my kids too.
    I catch myself juding people whose parents help them out...even in little ways, but I have to remember that every family is different, and gifts aren't necessarily a bad thing. I try not to judge too harshly, especially since I suspect some of my judgment is really thinly-veiled jealousy. (Speaking for myself and being totally honest.)

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  8. I think even those of us who are super-savvy with our money (and don't rely on our parents to get us by) won't be in such great position to help our kids out, beyond the cost of raising them. It's way more expensive to live/own a home/retire now, even adjusted for inflation, than it was for our parents. We live frugally and save for the future, and yet I cannot fathom we'd ever be able to help a child or two purchase a house unless we win the lottery that we don't even play.

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  9. We've not turned down help when offered ('vacationing' at their house, buying their used car from them for a low price, inherited furniture/household goods), or help with the wedding (5 yrs ago now). But, I agree. Our parents' money is just that, theirs. If they want to offer help, then by all means, but we would have to be in a bad way before we solicited such help.

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  10. I agree that if the kids are used to getting help from their parents all the time that they are not learning how to maintain their lifestyle financially themselves and that is dangerous.

    I'm lucky to have parents that have worked very hard to be where they are today and are also very financially savvy with their money. They offered to help us out with our wedding but I turned them down as we were more than able to pay for it ourselves. Instead they have now said that that money will be given to us to put towards our downpayment when we buy our first home.

    While we don't plan to rely on this money being given to us (we are currently saving for our own deposit), when it gets to the point when we do purchase our first property, we would treat it as a blessing that we can use this to reduce our loan.

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