Give the Money to the Kids — Now!

It was a complete surprise. A $5,000 check shows up in the mail from Ray, my father-in-law. Man, was his timing good! I was twenty-five and needed the money badly.

Kathy and I were married for a year and a half when the check showed up. Here's why the timing was so good.

The short answer was, I got us into debt. Not serious debt, but 24% credit card debt nonetheless. I was making $24,000 per year, and she was working an hourly part-time job and finishing up her college degree. Being an entrepreneur in an early startup, the hours were long and included weekends.

The money was spent on us dating as a married couple. Since the distance between my marriage proposal and our wedding day was only six months, we didn't have a lot of "get to know you" time together. She was in Denver, and I was in Atlanta. It was surely a long-distance romance.

When I opened that envelope and saw the $5,000 check, I almost cried.

The first thing we did was pay off all the credit cards. That left about $1,500 to spend on ourselves. Kathy got some new clothes. Then I made the dream purchase. We bought two Schwinn LaTours. Hers was red and mine was blue.

Every Saturday morning we would take a thirty-mile trip around Atlanta. We had some terrific experiences on those bikes. It was a healthier way to learn about each other instead of hanging at bars, drinking beer, and eating nachos. We had a blast.

And all this happened because my father-in-law sent us a check for $5,000. So unexpected and so good. I could never thank him enough.

There is so much talk in my generation about giving money to our kids.

The "no-way" argument

Most people I know don't do it. This is because when they think about it, they convince themselves it will screw the kids up. It will make them dependent on them. The money will encourage them to create a lifestyle that is beyond their means. And this will make for more cash gifts to the kids or a bad ending after being cut off.

The short answer then becomes, "We are just not going to give them money until we die."

The give cash now argument

As we age, our kids age with us. If we wait to give them money when we die, they'll probably be in their sixties. Their lifestyles will be established, and they will be too old to really enjoy it together.

It also makes sense to start reducing our estate. We don't know what the estate tax will be in the future, but we do now. Giving money to the kids now just makes sense. Most people I know that are wrestling with this have more money than they will ever need to live out their lives.

We had our experiences. Why not give the kids money so they can have theirs? Take that trip to Europe with their family or the extra beach vacation or a trip to Disney World, or buy a new car. The money gives them the freedom to enjoy life while they are still young and full of energy. While the kids are still young and want to be with their parents.

In addition to cash gifts, we rent a house on the beach once a year. This gives Kathy and me a chance to enjoy the experience with our children, in-laws, and grandchildren. It really works out well.

So have they become dependent?

No.

My daughters married well. My sons-in-law are ambitious and hardworking. They want to do well financially and support their families. They want to be good husbands and fathers.

And my son did really well, too. My daughter-in-law is a fiscal conservative and hard worker. She is being tested these days as she works with David to get a new business out of the ground. But this is all part of growing together and maturing their marriage as they grow into one flesh, as the Bible says.

So what did they do with the money we gave them each year? 

Here is a list:

• Finished their yard so they and the grandchildren have a beautiful place to hang out

• Put a down payment on their house

• Fixed the new house to include upgrades to make it more comfortable

• Attended an MBA program in the UK

• Took time off to plan a business

• Increased their savings to protect them in times of trouble

• Joined friends in traveling and experiencing special events

• Paid for private school tuition

How did it all work out?

They get up every day and go to work. They are still incredible parents. They are contributors to the neighborhoods and community at large.

And most importantly, they love and enjoy their lives and in-laws.

One last lesson learned

When we give them the money, we do it just like Ray did it to us. No strings attached. We give it as a gift. Spend it, save it, give it, it's yours now and not ours.