Parents Wrestle With Children and Money

Posted by on Feb 8, 2018 in Financial planning | 0 comments

Clashing values spur financial infidelity


To find the truth, “Follow the money” directed the shadowy voice of senior FBI agent

Mark Felt, aka, Deep Throat, to Washington Post Reporter Bob Woodward in a DC

parking garage after the 1972 Watergate hotel break-which ultimately led to its namesake

scandal and the resignation of Richard M. Nixon. Likewise, follow family spending and

I’ll find agendas, hidden – even clandestine. Financing children is the greatest source of

hidden agendas and friction. Nowhere is this greater than with second marriages and

mixed families.

Financial infidelity exists in many flavors. It is dishonesty about money with your

spouse, children, family, and friends. It hints at deeper psychological issues of insecurity,

power, control, and of course, guilt. Money is merely a means of expressing what brews

beneath – within one’s soul. Brenda, for example, equated money with love. She had a

very successful professional career and earned far more than her husband Gary who was

frugal and had little to do with family finances. Throughout her life, she secretly gave

thousands of dollars to help 2 of her 4 grown children have better lives. Surviving Gary,

she accelerated by giving larger sums to her financially favored children – even naming

them in her estate largely at the exclusion of the other two. When she outlived her money

she found that she had also outlived their loyalty: Those who benefited most no longer

came to visit her. When her spending records revealed the truth of how she became

bankrupt it fractured the family. Giving money had the opposite intended effect. Instead

of building a loving family, it caused deep resentment: Those not offered help resented

this fact and those that benefited resented Brenda for spending their inheritance on her

own support and care.

Robbing retirement funds is the most common self-deception: With a smirk, you might

say to yourself that you’ll pay it back, but you know you won’t. While saving for college

parents often neglect retirement saving or worse, take from their retirement plans.

Financially arid retirement saving years can never be made up and can make parents

financially dependent on children or society when Social Security income just isn’t

enough. Saving $10,000 per year for 13 years for college removes $540,839 in

tomorrow’s money from retirement savings assuming an 8% average return rate and 20

years to save for retirement.

How many parents retiring today could afford to forfeit a cool half million? Since the

average 401k savings is less than half of this sum when today’s parents start taking Social

Security, the answer is no one but the top 5%, those who’ve accumulated enormous

wealth. If you’re among the 95%, you may also compromise your physical, spiritual and

mental health because from flipped priorities. We know a fundamental principle in

Taoism and law is personal responsibility. We must take care of ourselves first. If you

can’t save enough for retirement, forget about funding college – unless you believe the in

fairy godmother and that your children will be your second Social Security.

Matrimony and money mixed up makes a cold bed: Bill and Mary are affluent baby

boomers who started having heated arguments over money before their honeymoon was

over. Both had independent incomes, but they had not made a prenuptial agreement

addressing how they would finance family expenses – including helping the five children

of their two former marriages. Bill wanted to continue a lavish lifestyle with golfing,

boating and travel while Mary wanted to live more simply. Months later when the time

came for Mary to get approval for increasing funding to help pay for her two sons’

college expenses, Bill said “no way!” He said: “What’s good for my children is good for

yours.” All the while Bill kept up his spending. Suspecting his children were being

financially favored, Mary found his checking statements showed tens of thousands of

dollars secretly going to Bill’s adult daughters each year. Afraid to confront him, she too

initiated child charity – dropping thousands more into their widening and already large

financial fissure. Their clandestine activities and mutual dishonesty cooled their marriage

and questioned their level of trust. Further, their way of handling family finances

polarized and split the family into two camps, his and hers. Bill tells his daughters to keep

quiet and Mary complains to her sons about Bill’s financial infidelity. None of the

children feel comfortable with the other half and they all see a strained second marriage.

Finance is the new F-word for American families. People are afraid to bring it up even

when it can mean life and death issues concerning their families. If Americans could put

discussions on the table openly about values and needs, law firm phones wouldn’t be

ringing off the hook. When children understand their parent’s values, there is a far greater

probability that they will carry them out during life and after the last parent dies. When

parents understand their children’s needs they can help children reach the best solutions

at the right time without the guilt, favoritism, or power plays often associated with family


A wise approach: After a lively meeting with his financial planner, a widowed and

affluent attorney 12 years prior to his planned retirement had a family gathering where he

met with all of his 3 children and their spouses in the same room and time to give them a

choice: “I’ve done well financially and you are working very hard caring for your

families and keeping a career. I offer each family a choice of taking a monthly fixed sum

(an annuity) for the next 10 years, or wait for an inheritance as your share.” A fervent

discussion ensued, but when the dust settled, they all elected the annuity. The attorney

was relieved to know he was helping his family when they most needed it – in their child

rearing stage – and not waiting till they were all past age 50 and less likely to need the

extra cash. The children welcomed some relief from financial stress of providing for the

conflicting pulls of their children and financing the future too. Because their dad had led

the way, the children are now more open to using the F-word positively and found that

this and their common lots brought them even closer.

Was it worth it? Gary, Brenda, Bill and Mary have paid a dear price for not having a

financial roadmap outlining vital areas of their lives. Key is how they would manage

before and after matrimony their own and their family finances. For instance, what needs

to change? Who will manage the monies? What is the process for coming to an

agreement? What are the limitations? What are the individual values? How will these

differences influence saving and spending? And, of course, when is it okay to use the Fword.

Knowing this going in can save heartache and heartburn for the entire family. A

dollar down on financial planning is worth more than a ton of regret. It means a ton of

love that transcends generations. Whether children and money or elsewhere, I for one

think life’s too short to live in the dark shadows of financial infidelity.



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