The holiday season will be upon us soon and what could be better than having your parents give you a large gift of cash, real estate, or stock? Now think about wrestling with unwrapping the emotional paper that will come along with this gift for the rest of your life.
I have shared with people that happiness in life is largely dictated by expectations either met or unmet. When a parent gives a large gift to their children or grandchildren, there is often no discussion around the expectations that come along with the gift. (i.e.what type of wedding you need to have, what type of house you must buy, where your children must attend college) Consequently, most parents believe they have the right to start telling their children what to do with the money, and most kids feel obligated to listen to their parent’s advice part in fear of disappointing their parents or even worse worrying about never getting a gift again from them.
There is no right way or wrong way for a parent to give money to their child. However, a gift should be a gift and parents who want to give a large sum of money to their children should let them enjoy it unless they have previously discussed their agenda regarding the intended gift. If a parent wants to give money to their children with strings attached, then the best way to not strain the future relationship is to have the discussion around the expectations that come with the money before the parent makes the gift. Family happiness will be all about these expectations being met or unmet. Parents should only have a say about a generous gift they give their children when they are clear about their intentions. Otherwise, you shouldn’t judge your children’s actions with how they spend the money.
What’s the biggest misconception people have about retirement savings accounts?