Want to gain financial independence sooner rather than later? Well, you can gain financial independence the hard and honorable way by doing everything yourself. Or you can gain financial independence the easy way by depending on your parents for money.
When I graduated from college in 1999, a bunch of my fellow first-year classmates at GS proudly proclaimed they had either found a great one bedroom to rent or had purchased a condo somewhere in Manhattan.
At the time, I always scratched my head and wondered how they could afford to pay $2,000+/month for rent or $500,000 for a condo when our base salary was only $40,000 at the time.
As I got to know my classmates better, however, I learned many of them came from very wealthy families. There was a disproportionately large number of classmates who went to private universities.
One classmate's dad had been the Prime Minister of Canada. Another classmate's parents were GS Private Wealth Management clients. To become a private client, the minimum to be a client was having $25 million in investable assets.
Here I was, sharing a studio with my high school buddy for a total of $1,800 a month because neither of us wanted to spend over $1,000 a month on rent. A year later, my roommate abandoned me because his parents bought him a one-bedroom condo near the United Nations building for $260,000. Now that was a good buy.
Over time, I've come to realize there is no one specific way to achieve financial independence. Many people actually view having their parents buy them cars and homes after graduating from college as perfectly normal. As the bull market rages on, there will probably be even more support for adult children.
Although it feels GREAT to make your own money, the slog is often extremely difficult to sustain. Relying on your parents to get ahead is a much easier way to go.
Gain Financial Independence By Depending On Your Parents
Let me share a wonderful example of how one married couple has gained financial independence by depending on their parents. The example comes from a comment to my post, Never Ask To Borrow Money From Friends Or Family.
Nona, who lives somewhere in Europe, writes,
“Oh boy, we just asked my husband's parents for money to be able to afford our 4th rental unit. Do I feel like a loser? Hell no! We are a family with three young children and we chose to be financially independent, without a ‘real’ job, as they say.
Problem in our country is that rent doesn't count as income. And if you don't have a ‘proper’ job, banks won't give you a mortgage. So, even though we had 90% of the money we needed to buy the property, just sitting there in saving accounts, our bank wouldn't allow us the mortgage for the remaining 10% of the money.
So we politely asked my husband's parents if they would be willing to help us out, and they did! We agreed to pay the full sum within 24 months back. They didn't want us to pay any interest (I'm grateful for that!).
The parents are happy they could help us out. Our investment properties are part of the inheritance we want to give to our own kids. We are grateful we could get the loan from our parents. Now we get the freedom to pay as much/ as little as we can, within the given time period.
So no, I think it's great if people can help each other financially. I plan on helping out my own children when I feel the money will go to a good cause.
Financial Independence Overview
Nona's comment is very insightful. She has shown that it's not that hard to achieve financial independence with three kids. Nor is it hard to afford your 4th rental if you can politely ask for money from your in-laws.
I used to think that having a job was vital for being able to get a mortgage or refinance a mortgage. Without a job, we are dead to banks. But my mindset is slowly changing.
For men out there who might feel too embarrassed to provide for their families, don't be. Get your wife to ask your parents for money for you. This way, you can save your ego from taking a hit. You can also soften any of your parents' disappointment in you.
Gain Financial Independence By Having Wealthy Parents
I also got feedback from another reader who proudly explained that she had saved $100,000 by the time she was 25. She's 27 now.
Leanna writes,
“Sam, I know you harp about not going to a private university due to the cost. But I'm here to tell you that I was able to save $100,000 by the age of 25 and so should more recent college graduates if they work hard and diligently save. I'm well on my way to financial independence by 35, if not much sooner.
I went to the University of Portland where the tuition is now roughly $47,000 a year. After food and lodging, the total comes out to be around $67,000 a year for students entering this year. Despite the cost, I was able to get a $1,000 a year scholarship towards tuition. My parents did pay for everything else.
But I made a pact with them. I wouldn't go on an extended European vacation like many of my classmates after graduation. Instead of going to the Amalfi Coast or Mykonos, I decided to stay back in Portland and look for a job.
I landed a job in publishing as an assistant editor for $38,000 in Portland. Three years later, I worked my way up to $52,000 a year after one job change. Due to my frugality, I was able to save on average $15,000 a year for three years. I lived with roommates, didn't eat avocado toast every day, and didn't own a car.
My $45,000 in savings was mostly invested in the stock market. As a result, it grew to about $60,000. Yes, my parents also gifted me $15,000 a year for the past several years. But I'll happily accept the gift tax-free over having them pay a death tax when they pass.
Financial Independence Overview
Although spending $47,000 a year in tuition may sound like a lot, 16 years from now I expect to face over $100,000 a year in tuition expenses if my son chooses to attend a private university. At this stage in my financial journey, I'm not comfortable paying that sum of money.
Given the massive bull market we've experienced for decades, we shouldn't be too surprised if there aren't more people like Leanna who've been able to amass a tidy sum of money while still in their 20s. The Boomer and Gen X generations are rich as heck. It's only natural they'd prefer helping their children while alive, then after they've passed.
Finally, I do commend Leanna for being frugal and investing the majority of her savings in the stock market while young and unencumbered. That is huge!
More Wealth Out There Than You Know
The point of these two examples is to show that there is more wealth out there than we all realize.
You can gain financial independence on your own, or you can gain financial independence by depending on your parents. You can also gain financial independence by finding a supportive spouse. Choose the easier route.
You do not get extra brownie points for achieving financial independence on your own. Instead, you might just get burnt out. You'll see your friends getting way ahead and wonder how on Earth can they have it so good when you're just struggling. You might even get jealous and angry.
Just know that it is highly likely that if your friend bought a $500,000 home at age 25 or a $2 million home at age 30, they probably got help from their parents. Doing simple math makes it really obvious they couldn't have bought their property on their own.
The sooner you realize parents are helping their adult children with many of life's largest expenses, the less agitated you will be. You must also realize that it is becoming more common for people to believe they earned all their wealth, instead of attributing most of their success to luck or help from parents.
Once you recognize and accept how society is changing with regard to wealth accumulation, you can then 100% focus on building as much wealth for yourself and your family as possible.
Gain Your Own Financial Independence
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Gain Financial Independence Through Real Estate
One of the best ways to gain financial independence is through real estate. Once you've convinced your parents to help you out with a down payment on a primary residence, you really should try and build your own wealth. One of my favorite ways is through real estate crowdfunding. Here are the two best platforms today.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.
Both platforms are free to sign up and explore.
I've personally invested $810,000 in real estate crowdfunding to diversify my holdings and earn income 100% passively. After I had my son in 2017, I wanted to simplify life as much as possible.
This article is interesting, because I do feel that others resent that fact that my parents helped me. I think if you provide help to an adult child and do it responsibly, then you are setting them up for future success. My father lent me $200k for a house. I was able to pay him back much quicker than a bank. (and save the interest) However, that loan was a great start but I would imagine does not account for the $1.7m net worth I have with my husband and 5 kids at age 40! I think help is great if your adult kids are already hardworking and frugal.
$200,000 is a nice loan! At what age did he give it and what were you doing then for work?
Independent means not dependent upon others or autonomous. Simply by the act of asking parents, or anyone else, for money, the child wouldn’t be considered independent.
One would think. But that’s not why many adult children who receive massive financial benefits from their parents think, as I’m trying to demonstrate with the two examples in the post.
Handed my recent graduate $15k last year, and another $15k earlier this year.
He saved me 6 figures in after-tax dollars by applying to and being admitted to a military service academy (USA) for his undergraduate education.
Military pay is initially low so my gifts allow him to save 30% plus in his Roth TSP as well as $6,000/year in a Roth IRA…hopefully a good jump on retirement.
Like some of your other commenters, I can’t tell if this is satirical or not. From my perspective, I have never liked the idea of handouts from parents and think it’s more admirable to achieve FI on your own. If you’re already FI, what’s the point of pursuing more? But this is also because I paid for my own education and haven’t had any help from parents at all. Admittedly, it does make me a bit envious sometimes to see how easy others have it. I could never act like I bought a house when I didn’t, you know. But on the other hand, I realize that this is the hand they have been given and I would take it if it was available too. Interesting read.
Essentially the lazy man’s way to get wealthy. Even if they use their own spouse to save their own EGO!!
“For men out there who might feel too embarrassed to provide for their families, don’t be. Get your wife to ask your parents for money for you. This way, you can save your ego from taking a hit. You can also soften any of your parents’ disappointment in you.”
This is sadly pathetic.
Work hard to play hard. Not work hard to live off of other peoples’ fortunes from their hard work. What a blood sucking leach mentality.
Great article and other one that made me think when do you stop supporting kids.
A couple of years ago my Dad and I were having a conversation, and he personally thanked me and my brother for never asking for money. He told me all of his friends kids have asked for(and received) money in the last couple of years. I was almost 50 when I had this conversation and was SHOCKED. My parents and there friends are mostly upper middle class, but they are all retired and most had to take money out of retirement accounts to help them. I did realize that when comparing myself to the other “kids” that I seemed equal or a little behind. I didn’t know that they were receiving money from mom and dad to inflate their lifestyles!
This is actually a good and valid article. The fact is, many people are born into privilege and able to leverage the network and wealth by their parents to make things happen.
Meanwhile otherwise are looking for ways just to stay afloat.
I’m 30 myself and know maybe one or two people who are TRULY self-made. Everyone else had major handouts and got lucky with them as a result. For example, people getting a house they were able to sell for double the price while others were working just to stay afloat.
Or people who were given a stipend to try and get a business of the ground for a year or two. The reality is that for most people, those options are nonexistent hence the financial strategy should also be different. I myself am always wary to discuss this topic because I find that many people who received major financial handouts get really poopie-pants about it and want to validate their self-worth by convincing that they did it themselves. Whatever.
I’ve been a reader for years and this has got to be one of the best articles that Sam has ever put out there for sheer entertainment value. Three things:
1. People can and will see situations however they want to be the “hero” of their own story. Almost everyone does this. I have a good friend who lives rent free in a house that was completely paid for by his wife’s parents in Silicon Valley. They live there by themselves. He informed all of us that he does not get free housing because he contributes his labor to maintaining the house. Keep in mind that houses like this routinely rent for $6,000 a month easily. Since that’s post tax money, that’s $72,000 a year post tax, probably at least $100k, per year, pretax.
Lesson – You can believe anything you want if you tell it to yourself enough times. Absolutely anything.
2. Getting lots of money from your parents, at least anecdotally, will make you a nicer more positive person. If you do not need to strive, sacrifice, or work as hard as others to obtain the same goods and services. However, if you decide to go this route as a parent make sure that you can continue this practice throughout the life of the beneficiary. Again, at least anecdotally, when the money runs out it will hit them much harder as they did not develop the life skills to compete with others who were not similarly funded.
Lesson – It is very possible that you can influence the outlook and demeanor of your children and relatives by providing for them. But if you are going to do this, make sure you can continue this throughout their life. You are not doing anyone favors if you support them until they are 26 and then cut off the funding.
Would just like to point out that there are outliers who really can afford things on their own at a young age…There are also those who went into trades and gained 4 years of income over their peers who went to college and gained student debt. I have a friend who became a chemical plant operator in field at 18, making about $40k per year out of high school. Not sure if his salary has gone up, but if it didn’t, his total income by the time he’s 22 would be $160k. He lived with his parents during that time so all spending was discretionary. They are not (nor have they ever been) wealthy. Meanwhile if he went to college and took out student loans, he would be worth something closer to -$100k. Another guy who worked straight out of college now has his own crew and small business hauling dirt and excavating. He just built a house in New Braunfels, TX worth over half a million. Is he in massive debt? How would I know? But the point is, life isn’t so black and white and there’s no point worrying about everyone else.
True about no point worrying about other folks. Although it is fun to see how other folks are doing for self-assessment purposes.
Everything is rational in the end! If you want it bad enough, you’re going to take enough action to get it.
Sam, I have been an avid reader of “Financial Samurai” for the last few months after being referred by a colleague. Congratulations on your new addition! I am in your target demographic group (maybe a bit too old for FIRE, but not too far off) and love your blog. Certainly, I see your parody/sarcasm in the article, but also ask how you are preparing to support your children without giving them a sense of entitlement and undo advantage? All kids need to fail on their own to learn life’s lessons, but we don’t want them to fall to far…
I have 2 ½ concerns about the financial future for my high school senior daughter. The ½ concern is that she has a well-funded 529 (~$200k) that with well-earned academic scholarships will either match her needs for a private college, or have significant excess left over for a public university. We can certainly re-direct any excess as we deem appropriate, hold it for potential future grandchildren, or cash it out with taxes and penalty. While my wife and I worked our way through undergrad in the late 80’s and had fellowships for grad school in the early 90’s, those options are not as easily available for kids entering college today, so no serious regret for saving for her college, thus only the ½ concern of not making her work for it.
The first full concern is that we started a custodial brokerage account for her a while ago. As luck would have it, investment choices in her account have done quite well compared to our overall holdings. She will have ~$180-$200k available to her when she turns 21. I hate the thought of her getting this “lump sum” but don’t want to lose money in the account, nor know how to delay what has been set up. My best hope is to help educate her before she turns 21 to start her on her own journey for investment. The challenge is that teenagers can be somewhat uninterested in their parents when they are about to graduate high school.
The second full concern is bigger. With the provision for funding of the SECURE Act that inherited qualified accounts (IRA’s, 401k’s) will need to be distributed to heirs in 10 years is truly scary. While we will direct non-qualified assets through a revocable trust with good planning for distribution requirements, most of our assets post-retirement will be in qualified accounts. Obviously, we hope to live very long lives; but if we don’t, she will need to take several hundred thousand-dollar taxable distributions for a decade. If this is too early in her life it could be disastrous for her.
I know, these are undeniably “first-world” problems and concerns and I am not looking for any sympathy; I truly appreciate how blessed our family is. Thanks for your consideration and advice.
You can name a trust as the primary or contingent beneficiary of a 401K.
If she isn’t yet 18 (or 21 depending) you can take the $200K out of her custodial account and put in a trust in her name under the same spendthrift provisions but you still need a trustee to manage the funds if the assumption that both parents are gone.
The two key things about wealth transfer is transparency and education.
IANAL or a CPA. Talk with yours to make sure what I stated is correct for your state but it’s what I did/am doing for my kids.
Well mine is a little more complex…I elected to start a family LLC rather than do a trust. A little bit overkill at the moment but with a little grace (and a normalish stock market) I hope to have a nice little pot of money to carry forward for the next couple generations.
Hopefully each kid will have $200K, a condo and ownership units in the LCC that provides some additional passive income where the principal is protected for the future generations.
I still need to find a corporate trustee I like.
The flaw in executing “Gain Financial Independence By Depending On Your Parents For Money” as financial strategy is the human’s nature.
Most of you have “never have enough” mindset. If your parents have deep pocket, you will become addicts to their money.
In turn, You will never achieve Financial Independence because money becomes the Conditioned Stimulus (as in Pavlov dogs experiment).
‘Nona’s comment is very insightful. She has shown that it’s not that hard to achieve financial independence with three kids, nor is it hard to afford your 4th rental if you can politely ask for money from your in-laws’
Sam, this sounds a bit bitter, doesnt it? Situations are always more complex than you think.
We helped out the inlaws with a loan of similar value 10 years ago, when they bought their appartment. We re talking about some 10000€ s, not a million. Thats silly! We re financially independent, not rich like most of the people reading your blog. I m sure your hottub costs more than that. Hell, I m sure your new house costs more than our 5 properties together!
Beeing financially independent is not about how whealty you are, its about what you do with your money. Its a state of mind.
It feels as though people dont believe in your accomplishments, as soon as they hear you got some help from family.
So our family works like this: you need money and we have it? Ok, we ll hapilly lend it to you! And if we need money and you have it? Ok, we ll be happy to accept the same loan.
I never said it was easy to become financially independent with three kids.
Hope this helps to put things in perspective,
Nona
Hi Nona, I don’t think my response sounds bitter. I think it sounds hopeful.
For the past several years, I’ve struggled with believing maintaining financial independence with kids is possible, given how much work it takes to take care of young children and the cost of raising them here in San Francisco.
I shut my mind off to the financial help from my parents and decided to come up with an Early Retirement Master Plan. But this master plan is going to take so much work that I feel that perhaps during my time of exhaustion, it’s better to just ask my parents and my in-laws for whatever remaining money they have left. I feel bad doing so, given they are retired and should enjoy the fruits of their labor, but your example and other examples have given me more some courage.
Like I said in my post, we get no extra brownie points for achieving financial independence ourselves. So I want to thank you for giving me the courage to ask for help. I haven’t gotten there yet, but maybe when things get really painful.
Without your comment, this post wouldn’t have been created. Nor would my follow up post: A Real Estate Goal Every Investor With Kids Should Consider
Please keep your comments coming! All thoughts and ways of life are welcome on FS so we can find better ways to achieve FI!
Hi Sam,
I agree with this strategy under two conditions. First, the children must be financially disciplined. Second, the money given by the parent must be small percentage of their net worth.
Nona asking for a loan for her 4th property demonstrates her financial abilities.
Leanna parents are getting great ROI on both the money invested in her education and the annual gifts to her.
Unfortunately, I have seen situations where the children are not financially disciplined. The parents must continue to provide money to keep the kid’s head above water. It can become a never ending cycle of gifts. Additionally, it can put a strain on their relationship.
I recently published my own post on gifting money to children.
Gifting money to children makes perfect sense under the right conditions.
lol @ nht who:
1) maintains that the advantage of someone with a Leanna-type background over someone whose parents made $32,500 is minimal
and
2) thinks that a “successful” individual whose parents funded their entire early adulthood is just as “self-made” as someone whose parents didn’t (and if you think otherwise you need to “get over yourself” and stop patting yourself on the back)
yet will still
3) brag about their kid being a normal person and joining the workforce after college instead of burning cash on an international trip like it’s something special.
Sorry you didn’t have rich parents to give you stuff when you were younger. Neither did I but it didn’t make me bitter.
But to recap:
1) just being born in this country is a huge advantage that dwarfs pretty much everything else.
This is a sufficiently large advantage that folks are willing to risk death to get here.
The poorest 20% of this country has higher consumption per person than the average consumption of all the citizens in many OCED countries.
2) the differences in all that “funding of early adulthood” you bemoan is minor. A private mid grade university vs a public mid grade university. Impact to salary is minimal.
A fancy wedding vs a simple wedding.
Picking a major and career based on desire rather than ROI. That’s a nice one but if you FIRE by 35 you can put up with a high ROI career till you are FI and can go do what you like.
It’s sure nice to have some of these luxuries but at the end of the day it’s not anything that keeps someone from success or automagically makes someone successful.
It’s all still dwarfed by just being here in this country.
While my family was on the lower end of the financial spectrum it wasn’t as poor as my cousin’s because my parents had education.
My cousin and his wife worked restaurants and cleaned hotel rooms. And yet their daughter went to Princeton. Daughter of a dish washer and cleaning lady goes to one of the top private universities with all the rich and famous kids.
This is why folks are willing to risk death to get their kids here and why all the advantages of a “Leanna-type background” you are so jealous of is just noise in comparison.
As I said in another post the rags to riches story isn’t just possible here but common.
It’s really not until you get into mid to upper end of the VHNW category that the money advantage eclipses the pure advantage of just being in the US.
And many VHNW families go from shirtsleeves to shirtsleeves in three generation so the advantage is transient. Even UHNW families can fail to hold wealth.
3) While I grew up in a poorer neighborhood, my kids are in a HCOL area with great schools and affluent school mates. It’s real easy for these kids to think money grows on trees.
So yes, as I said, it’s a wonderful acknowledgment that your adult child has learned delayed gratification and some level of frugality. They passed the marshmallow test as an adult.
Not eating the marshmallow because you didn’t have any doesn’t mean you passed the test…it just means you never took the test.
That you don’t get that isn’t a poor reflection on Leanna or me but a poor reflection on you.
I’m not bitter, nor am I jealous. I simply pointed out the lack of awareness of somebody who was handed almost everything in life to make statements like, “I was able to save $100,000 by the age of 25 and so should more recent college graduates if they work hard and diligently save.” And then you made this conversation all about me (more accurately, your assumptions about me). Have a nice day.
This whole article made me prickly like cactus, and I will wholeheartedly admit that I discount people’s stories of greatness when I know their parents provided above and beyond into adulthood. Maybe I’m a bit jealous, or simply know that it’s easy to be smart when you have funds to fail with.
I grew up with a single mom in an affluent town, and worked since I was 14.5 to support the extras like drivers school, a car, insurance, and clothes that I really wanted but my mom would not buy.
She let me live at home “rent free” when I went to college. I took out student loans and worked during school. I did not seem to find the joy the other kids had in college. I wasn’t attending parties or going on trips. I was under a huge amount of pressure and stress.
Fast forward 22 years, and I own 5 rental properties and have mortgages on them all. I still have student loans that I defer from time to time to pay for a surprise rental expense or non paying tenant. Sometimes I carry balances higher than I should on my credit cards because I simply need the float for whatever reason. All in all, I’ll be ok, and should get to retire. My mom passed away when I was in my second year of college and I needed to assume her mortgage. I left school to do so, and didn’t finish my degree until I was 30.
I never sold my mom’s house as I made a committed to hold onto something my mom struggled to keep during her illness.
Am I fortunate? YES! Do I work, stress, and sometimes get annoyed with those who appear to have it eay? Yes!
My circumstances gave me grit, and my accomplishments are intrinsically felt. So are my failures.
Being self made is pretty easy to define. Did you sacrifice? If your investment didn’t work out, would you be homeless*
Sorry for the rant, but these stories of sacrifice while parents give 15k a year gifts make me want to vomit.
Yet according to some — like nht, whoever he/she is — the difference in advantages between you and someone who gets $15k a year from mommy and daddy is negligible.
“Affluence—not willpower—seems to be what’s behind some kids’ capacity to delay gratification.”
The marshmallow test was debunked (see The Atlantic, June 1, 2018).
I am comfortable now, but there’s a certain confidence, toughness and pride, albeit misplaced, in knowing that I’ve survived on canned potatoes and tap water. Notching down the belt a bit to save on transportation. Rationing a pack of Oreos to make it through the week. I don’t fear hard work. I paid back $160k in grad student loans. It seems a lot of people now a days cannot and do not appreciate that. My kids will be one of those people. They will never understand hunger and financial fear. That is the true difference between the rich and the poor.
While there are some folks with the “born on third base, thinks they hit a triple” they are no more delusional about being “self made” than some of the judgmental folks who have been less than charitable here.
The fact is that anyone born in this country has been born with advantage.
That some had a little more or a little less help is immaterial in comparison to much of the rest of the world.
If you had two loving parents and any sort of middle class lifestyle you already started in the top 1%. Which is anyone with more than $32500 income.
So the smug “I’m not privileged because made it all on my own without help from my parents while living in an affluent country, with 3 meals a day, free K-12 education, clean water, good sanitation, decent healthcare, student loans” and not say starving in a war zone as an orphan, also were born on third base and thinks they hit a triple.
In other words, might as well take full advantage of financial gifts from parents since we’re all already rich?
Parents might as well give their kids everything as well. Yet, people will still judge.
Something like that. If ya got it, might as well use it. You don’t get bonus points for not taking advantage of every edge you have.
Isn’t it also the ultimate in stealth wealth? The lack of school loans? The paid off house or condo? Especially if they share the place with roommates while in college or early career and get some rental income. Just gotta be a little coy about who owns the place… maybe pay the 10% vig for a management property and hide behind a LLC. Just say you have the lease in your name and sub-let and collect the rent…
Then save save save for FIRE…at least to the point where the RE is recreational employment if not actually retired early…
32,500 a year is not enough money to put you in the 1% and pass on privilege to your children. Nor does it guarantee that you were raised with two loving parents.
You clearly have not experienced the poorest parts of America where people really are living on 32,000 a year. It’s not the slums of India, but it’s a sign of your privilege that you think it’s enough to put you in the 1% and those folks have nothing to feel bad about.
I think NHT is referring to the top 1% in the world, which 32k plus advantages of this country may put us in? Essentially we all mostly have it easy compared to many in 2nd and 3rd world countries.
Exactly.
I do know how it feels to be in that bottom tier because immigrant parents often don’t make a lot of money but even so, folks will cross a desert risking death to get here.
Why? Because the rags to riches story isn’t just possible in the US but fairly common.
All that said, there are folks trapped in the cycle of poverty and need help getting out. It’s not so much income but other kinds of support. Education is the silver bullet for breaking the cycle but they need help getting that education.
As I do not have wealthy parents (it’s likely they both pass with negative networths), financial independence through my parents isn’t an option. Nor was graduating without student loan debt, which at 35 I still have to pay back for the next several years, at least. So burn out is a distinct possibility…if only there would be the added benefit of brownie points for succeeding in my own :p
Those who can achieve financial independence through their parents should understand and recognize how lucky they are. Am I bitter and angry, towards some people, but I try not to focus on that. When I get those feelings, I let them out (Ike right now) rather than bottling them up and letting them fester. I also like to remind myself of some friends who are lucky enough to have found themselves financially independent from parents but set that money aside (sure it’s a fallback so they don’t have to stress about success) and focus on making themselves financially independent. I have no anger, bitterness, or jealousy toward them.
I used to be somewhat jealous of people who had family that had the means to help them out. Now I am ok with it now that I realized how accessible a lot of it is, you just have to work a little harder and wait a little longer.
The only time it bothers me is when someone with that 500K house at 25 tries to claim they did it all on their own when you see them working their median salary job.
Money is freedom…and freedom is a two edged sword.
Some folks confuse giving your kids a powerful weapon as being intrinsically bad as opposed to giving your kids a powerful weapon without any training being the issue.
Why not both money and training? Because wealth is often a taboo subject for parents like sex?
I guess the difficulty is that middle tier of $1-5M is not enough to be truly wealthy to have the expectation for the money to last very long.
We all die and unless you give all your money to charity most readers of financial independence sites will have a couple million to leave behind.
Why not give your kids an advantage? What better a gift can you give than the gift of freedom?
I live in a town where I am surrounded by parents who have given their kids everything. They go to $100,000 a year colleges and choose to take classes in furniture making and dance instead of focusing on something where they can make a living. They then go on to (surprise!!) 100,000 a year graduate schools to graduate into a $15 a year part time job and count that as being on her own while her parents pay for her rent , etc. They’ve been counting their parents money all along and there is just something off about them. I don’t know if it’s their pretend ambition or what. They don’t hustle. They don’t care. They’re boring. I can’t put my finger on it. I literally watched one of them in her mid 20’s tell a man she was trying to seduce that “this will all be mine one day” as she stood in the living room of her parents 3 million dollar home. She is one of the better ones.
As rich parents, you can do whatever you want with your funds. But I suggest you don’t use it to raise horrible kids.
My parents are well off Boomers and did help me with my $3000/yr college tuition, for which I am grateful. I only asked them for money one time after that, and I felt so sick about doing it, I paid it back within 2 months.
Several times since then, my dad has threatened to withhold inheritance if I didn’t do this or that. I’m 100% self-sufficient and finally told him I didn’t want one penny of it. Clearly, money was ruining our relationship.
My parents might be a peculiar bunch, but I would highly advise against taking loans from anyone whose relationship you value.
It never dawned on me, an only child, to ask my parents for more than they had already provided. They paid for my college education and I felt that was generous. About a week after I graduated (1979) my Dad took me to his bank and had me take out a $500 loan to put a deposit down on an apartment and buy a suit for work so I would begin to build my credit. He sold me his Toyota Celica so I would have a car and charged me $200 per month for 24 months to pay for it. I was happy for this “help” to get me started in the real world.
Years later my Dad retired and started a small Kitchen and Bath renovation business. He needed startup funds to buy materials and I gave him back my college tuition with no strings. He said I would get it back someday in my inheritance and I was fine with that. It felt kind of good to be able to say I paid for my own college tuition, even if it was many years after the fact.
My wife and I became FI together. It has certainly been a true partnership and both of us have contributed equally. We too have an only child. I have a dream to create generational wealth so that my branch of the family tree remains strong and viable for years to come. Ideally, one day I will tell my daughter that I have set it up such that she can draw on the interest/dividends of the portfolio as she needs it once I’m gone, but I want her to tightly manage the portfolio as much as I have so that subsequent generations (her kids/their kids) can do the same and continue to keep the family with a safety net for generations to come.
I know this is very idealistic and the odds of someone dropping the ball and taking advantage are high but it is still a dream of mine, nonetheless. We have a very level-headed, independent daughter so while there are no guarantees about those who follow her and how they will act, I do feel good about her sensibilities and being a good caretaker of anything she ultimately receives.
Best wishes for achieving your admirable family financial goal for the future generations. Just start thinking along the same line.
This was inspiring. Thanks for sharing your story.
I at first I thought Sam was authoring a personal finance article for The Onion. Then I realized it was just an homage to The Onion.
Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. : Chinese Proverb
My parents starting asking *me* for money when I moved out of the house at 18. I’ve never had any help. I’ve been the one leeched if anything. Honestly, I feel bad for all of you who got anything from your parents. I have a sense of freedom and pride that only comes from absolute independence and it gave me enough grit to have everything I’ll ever need. You’re missing a sense of reality that you’ll probably never even grasp.
Nothing wrong with feeling a sense of pride and accomplishment for doing everything on your own but nothing to be envied about not having loving, supporting parents either.
Is it amazing anymore how self deluded people are?
“I’m financially independent, but we POLITELY asked for funds for our 4th rental property” (and we pay no income tax).
I’m frugal because I saved 15,000 a year when my parents gave me 15,000 a year, paid quarter million for my university etc.
Watch it, Jason. Unless you were born with one leg in the slums of Nairobi, your life has been just as advantaged as theirs and you are even more unaware of the privilege you enjoyed.
I read about this on Refinery29 awhile back.
refinery29.com/en-us/money-diary-new-york-city-marketing-intern-income
From a Vox article on the Refinery29 Money Diary entry:
“People didn’t just get mad at this intern simply because she has a significant allowance and a free ride to college — they were mad because neither the author herself nor the editors did enough work to acknowledge these advantages.”
I was raised to believe that you should not mention the financial advantages you have been given in life. It frequently engenders resentment from people who did not receive the same advantages and it diminishes your own accomplishments since people think you could not have achieved anything without the financial advantages you initially received.
On the other hand, some people seem to want a world where being wealthy is not an advantage. What is the point of achieving wealth if you cannot spend it on better housing, better education, better quality of life, etc. for you and your family?
I think those two sentiments can be reconciled but today’s culture doesn’t really value privacy or discretion.
Thanks for the share.
The Refinery 29 money diaries are always a bit weird. I am not sure why this one set off so much ire as it sounds like a lot of the diaries on the site. The diaries are also always dishonest. People seem to front load their spending to avoid reporting for a week. As in went to yoga, report it as free for the week because I used a class card I had bought at the beginning of the month for $130. It’s like saying you didn’t spend any money because you put a charge on your credit card. That class cost $25 bucks whether you physically spent the money or not.
I just read the Money Diaries book (free from library) and didn’t learn a single thing about finance from it. I also came away feeling like most of those money diaries are fake/ghost written/ for the site. I wonder if they made up this one to generate a point about privilege.
I don’t think anyone here is resentful that others have an advantage. I believe them to be irritated by the lack of honesty about what it took to achieve savings. You can’t go on a site and say you saved 100k from your 35,000 a year salary and everyone else should too when you really saved it from your parents gift.
Sam saved his money because of his mindset and making prudent choices. Not going to expensive private schools early on. Saying you went to a expensive private school on your parents dime does not qualify you as frugal and coming on a site to brag that you are is delusional.
I am glad you’re spending your money on a better quality life. Lots of people who make or inherit vast sums spend it no better than lottery winners. Good on you.
LOL!
I suppose my parents have the ability to help their adult children financially, but we are all way too proud to ask them for help. The way we were raised, I know my siblings and I would feel like total failures if we needed to ask for money, and I don’t see any of us doing it, ever. I’m not saying that to pass judgment on those who do get money from their parents – it sounds like a pretty sweet situation to get gifted $15k per year! In the end, I’m most grateful that both of my parents are still alive and I can call them for advice any time I need it, which is worth more than any amount of money to me (and because of their good advice, I have made and saved enough money from my own career that I’m now at a point where $15k per year in gifted money wouldn’t have much of an impact, though it’d still be nice!).