Okay, moving on to our friend Ratty's question. Hey, Ratty, he says, "Okay, I should set this up. This is a little spicy, so get ready." He says, "I've read that seven out of 10 home buyers under 30 are getting help from family with the down payment." The question is, "Does the Money Guy still discourage parents helping children financially? When does it make sense to help kids?"
Man, that one is spicy. I thought it was interesting because he put it as, "Does the Money Guy show still discourage parents helping children financially?" I don't think you discourage it. Let me start with the analogy. When you're on an airplane, here's what the pilot does not say, "Hey, don't put an oxygen mask on your kid. Let them fend for themselves." That's not what the pilot says, right? That's not the instruction that's given. They say, "Hey, before you put the oxygen mask on your child, make sure you have it securely fastened, and then you can help your child."
Well, finances is no different. This is where, in my opinion, you have to know your kids, right? Because I have a lot of friends whose parents did seed them the money for their down payment, and I have kids where that was an unfortunate thing because those kids never appreciated it, and they didn't take good care. And like, when I say spoiled, I don't really mean it, but I mean it. They're spoiled. And then I have other friends whose parents did that, and it was an amazing opportunity for them that they were able to capitalize on an opportunity that was available to them.
So I think for you as the parent, what you have to recognize is, "All right, how have I raised my kids, and where are they in their maturity of understanding what money is?" Just because you can help your kids doesn't mean that you should. But just because you can also doesn't mean that you shouldn't. It's where you're going, Bo. There's a difference in economic outpatient care and subsidizing your child's lifestyle, and providing an opportunity that's amazing because of some of the hard groundwork that you've put in place.
Yeah, I think it's how do you differentiate between entitlement versus opportunity. And it's really, I mean, I think now this is the part that maybe is a little spicy too, is I think you just have to have open, honest conversations to make sure or maybe you should know if your kids are actually practicing the walk that hopefully you've instilled money skills. Because I think it's great if you have the opportunity to help with some of these bigger life things. Just like I know you and your spouse had to come up and pay for your own wedding. But I'm saving now for my oldest that she will be able to get the basic wedding without... I think that's a positive thing. Just like a house down payment, as long as I'm seeing other behaviors that show me my child has actually got the skill set to be good with money.
What you worry about is the economic outpatient care that the Millionaire Next Door talks about. There's all kinds of research that shows if you make life too easy for your children and backstop them on everything, even into adulthood, that there's a chance that they don't develop their own skill set, their own financial muscle to be able to navigate the world well. And that's the big thing that you've got to make sure that you're not stunning their growth to develop it. Now, if it's a pick-me-up that helps, that's good. I'd be... that's... We work with clients on this type of stuff all the time, so I'm not against it if it's handled appropriately. You want an analogy that you're going to hate? Well, I'll give it to you. For more information, check out our
free resources.
Okay, so you and I used to work out together, many, many, many, many, many, many, many years ago, right? The only time in my life I could do like 12 pull-ups. I'll tell you now, I probably could do one pull-up. All right, so like when you're bench-pressing, right, and you've got somebody spotting you, and you kind of get to failure, here's what the spotter doesn't do. They don't reach down, grab the bar, and just yank it off of your chest. They kind of put their hands underneath it and they kind of help you finish the rep yourself.
So I encourage a lot of my clients who are asking about, "How do I approach and navigate this?" There's nothing wrong with helping your child, but you get to choose what that help looks like, what that spot looks like. And a lot of times I'll tell my buddies who are saying, "Hey, my mom and dad want to help me. What should I do?" I'm like, "Hey, okay, right now, mortgage interest rates are 7%. Why don't you borrow money from your dad at 4%? They're going to be making great money on their cash. It's only a loan. You're going to be getting a better interest rate. What if there's some way to do that or down payment or whatever? Just because you're helping them doesn't mean that you have to help them by just giving them whatever that thing is. Maybe you could just give them favorable terms. Maybe you could just give them a lower-interest loan or help them with a down payment, but they actually pay it back to you. You, as the parent, get to structure that, so it's not even like you're really giving them the money. You're just providing an opportunity that's a little bit more attractive than what the marketplace might provide. I do that with a lot of clients. I like that. It's like pre in the 401(k), different than the matching funds when you're trying to get your kids to start saving for the future. That's it. I like that. A little resistance training. Resistance training, baby. That's it.
