I seem to get a lot of comments on this post: Why I am not planning on leaving an inheritance to my children.
I suspect that most of the ones who have read the post, are missing the point of it (I even suspect that they don’t even read the post and just skim the title which makes it all the more amusing), so I thought I’d clarify a few points about what I mean.
For the record? I am not a Baby Boomer. *amused*
1. BABY BUN HAS HIS OWN MONEY SAVED
Have you seen his net worth updates alongside mine every month? The Bun is killing it.
He has almost $20,000 and he is only 3 years old. He puts me to shame as I was in my mid-20s before I managed to clear my $60,000 debt in 18 months to $0.
You may be wondering where is all this money coming from if it isn’t coming from us.
Well, it’s from the government to the tune of about $200 a month (baby bonuses and the like). The way we see it, it is HIS money.
We get money from the government for having him, but we didn’t have him for the money, so, we save it for him and for his future.
I then take the money, and invest it. Here’s my strategy for investing if you want to follow it.
2. HE IS NOT GETTING ABSOLUTELY ZERO AT THE END
When I say I am not leaving any money to him when I die, I mean I am not PLANNING on leaving any money left when I die as in actively saving to leave him a huge nest egg, but that doesn’t mean he won’t get my assets, of which I have at least one major one — my house which I paid in cash.
I already have my half of the house paid ($300,000) which I hope will at least keep its value or increase by the time he inherits it, and seeing as he is an only child, he actually gets the whole $600,000 asset (worth in today’s dollars) from both my partner and I.
So getting a house free and clear with no mortgage on it, worth about $600K in today’s dollars when we die in 60 years (one can only hope for a long, wonderful life), is not chump change.
We also did buy the place knowing its value and the location, having purchased it at a premium because of location. I suspect he will do just fine if he decides to sell the asset by the time we both die.
3. I AM NOT LIVING IN POVERTY TO GIVE HIM A LUXURIOUS LIFE
My point is more that I do not want to scrimp and save every dollar, use 1-ply toilet paper, eat food out of cans, and save string in little plastic bags (oh wait.. I do do that), just so he can go on annual trips on spring break on vacation, or get a fancy cellphone plan that even I don’t have, and live it up on my dime.
I am not funding a luxurious lifestyle for him, the way I see my parents’ generation (not my parents of course), have done for their kids. Their kids have the use of a gorgeous home, a pool, all the luxuries of life, and their parents work crazy 80-hour jobs to provide it to them.
I even know a family who bought their son a luxury car (Mercedes-Benz) and they’re only working in a factory, although they work like dogs and do all the overtime they can! Isn’t that insane?
Then I have colleagues (older ones) who are working like dogs to leave their kids a million bucks each, but they have nothing saved in retirement for themselves, don’t take vacations yearly to enjoy their own hard-earned money, but their kids are driving new cars because taking the bus is below them, are talking on fancy cellphones and going on spring break vacations every year to Europe.
That’s my opinion on that.
I do not want to become a bag lady so that Baby Bun can live like an Emperor. That’s just ridiculous, but it isn’t also to say that I plan on living it up like some Queen and going deep into debt or refusing to give him anything in life JUST SO I can live the way I want to live.
I am talking about a balance here, where I live the way I want to (comfortably when I can), and try to squash my lifestyle inflation, and save for my OWN retirement and life.
He is already getting what I think is a very good life, because we’re shelling out for higher-priced preschools (yeah this is totally happening right now, we just doubled our costs for childcare as I am working), and giving him toys and things he will actually use and enjoy, like a bike.
Or whatever he wants within reason.
What I am NOT talking about is buying him a little electric motorcar to ride around the park, and buying designer baby shoes and custom-made clothing that he will just grow out of in 6 months.
4. I WANT HIM TO BE FINANCIALLY INDEPENDENT
Promising him a lot of money when I die is a surefire way to create resentment all around.
He is resentful as an adult that he is not getting it now to enjoy and has to wait until we both kick the bucket, which makes him even more resentful that he has to hope for our deaths to gain that money.
What kind of ridiculous life is that, waiting for your parents to die so that you can finally “start living your life”?
If he isn’t financially independent and self-sufficient by the time he is 40, he will never be, and giving him money, promising him a large inheritance and all this nonsense, is just going to make him dependent on me, and too lazy to work hard if he knows there’s a payday around the corner.
I have family, colleagues and we even have friends who are like this — they’re sadly, all waiting for their parents to die so that they can get their hands on their money.
In a way, their parents set them up for a luxurious life but then took it away from them when they were adults by saying: Oh no honey, this 3-bedroom, pool-side bungalow with 2 cars? No no, this is not for you on your minimum wage, this is for people who have worked and saved like us, not for YOU. Sorry, you only get to enjoy it when you’re younger, or if you are dependent on us, but you won’t be getting it now.
..and yet their kids are used to such a lifestyle that they are hit with the shock of realizing that they have to save more money and work like a dog to get what they are already used to.
5. I DON’T WANT TO BE A BURDEN ON HIM WHEN I RETIRE
I do not want Baby Bun to have to worry about us.
I want him to save for his own family, his own life, his own goals and dreams, and not have to think: Is my mother and my father going to be okay? Do they have enough saved? Will I have to take them in when they retire? Are they going to have enough to eat? To pay their bills? To maintain their apartment?
NONE OF THAT should be his concern.
I did not have a child to make him my financial slave, I had a child because I wanted to be a mother and I wanted to have a child to pass on our values.
I did not have him, to pay for me in my old age (although taking care of me like taking me out to lunch or calling me to update me on his life would be nice), and I did not have him to be my retirement plan.
It is a crapshoot. I’ve said it before and I’ll say it again: Your children are not investments.
Sure, you can be the best parent ever, do everything you can, stay at home with them, bake for them, teach them how to change a car tire before the age of 10, bla bla bla…. but for all of your best efforts and intentions, they could just very well turn out to be BUMS.
Complete, lazy, unethical BUMS who have never seen the value in an honest day’s of work.
Conversely, you could be the WORST parent ever, and end up with THE BEST kids in the world.
It is somewhat of a crapshoot with children; you cannot control who you have given birth to and who they will become beyond their formative years.
You can only try your best and then send them off on their way to eke out their own journey.
As a parent, I am being realistic. Thus far, Baby Bun is set up financially from his own income from the government being invested, and he seems to be displaying a sense of interest in learning and so on, but let’s face it.
HE IS ONLY THREE YEARS OLD.
Who knows what he’ll become?
I can only be here to help and support him on his path of becoming an independent adult, but one thing is for dang sure.