Why Money Experts Say It Might Be Smarter To Spend Your Kids’ Inheritance While You’re Still Alive
Pavel Danilyuk | Pexels Congratulations, you did it! You weathered economic uncertainty; endured a career full of long hours and difficult bosses; raised your kids (while being the ever-responsible providers); faced ill-timed financial emergencies; and made innumerable sacrifices to create cushions of wealth, and now you have it—the golden nest egg of life savings.
And now you plan to gift that financial nest egg to the next generation, yes? After all, it is the honorable and best thing to do, right? Actually, no. As finance experts, we do not believe that handing down an inheritance to your children is best for them. And we definitely don't believe that handing your life savings over to your kids is best for you.
Before you answer on autopilot, "But what about the children?!!" think about yourself for a minute, and think about your marriage, if you're in one. After your retirement is financially secured, we believe you should skip the nest-egg-building, fly the coop, and spend your kids' inheritance while you're still alive.
Here are 4 smart reasons to spend your kids’ inheritance while you’re still alive:
1. Life is way too short to delay having fun
You've heard the sayings: Life is short; you never see a luggage rack on a hearse, or this generation's favorite: #YOLO (You Only Live Once).
Life is so brief, and you've already spent so much of it working hard. You deserve a chance to enjoy that vacation you wistfully imagine, go play that golf course you've always dreamed about, or splurge and buy a whole new wardrobe in Paris.
That's what The Boss would tell you to do. Maybe not the boss from that job you've slogged through your whole career, but rather "The Boss" ... Bruce Springsteen, in his hit song "Glory Days" reminds us: "Time slips away and leaves you with nothing, mister, but boring stories of glory days."
Don't spend your last act in life retelling old stories from your youth. Have fun now. Make new memories today. It's time to finally let your life be a little bit about you.
So, invest in your marriage, or, if you're single, invest in yourself. Do the fun stuff you couldn't afford when the kids were younger or when you were working, working, working. Go run with the bulls, lie on the beach, walk The Great Wall, donate to charity, dig wells in Africa, or see if toilets really do flush in the opposite direction "Down Under." Carpe diem, as they say.
2. Your kids will blow every penny anyway
Kateryna Hliznitsova / Unsplash+
Think your kids will tend to your life savings for as long or as diligently as you did gathering it? Nope. Don't count on it. The reality is: your kids will spend your money in short order.
And this we know from experience. Unfortunately, we've seen client after client plow through the entire amount of an inheritance they received within mere months. And it doesn't even matter if our client is 21-years-old or 55, the money often flies out of their hands as quickly as it comes in.
In fact, the average child spends their inheritance in 17 months. Did it take you longer than a year and a half to accumulate it? And headlines delight in another "privileged" child's demise — heirs who burn through their millions and then wind up destitute. So hey, save your kids the embarrassing downward spiral and spend your inheritance now.
3. Your kids won't remember the things you bought
Want to enrich your children's lives? Give them the gift of memories. Sure, they're tricky to wrap, but great memories certainly aren't soon forgotten. Memories of fun, love, and positive family experiences are truly a priceless treasure.
Don't believe us? If you reflect on your own parents, do you remember their money? Their possessions? Or do you remember the times you spent together? The memories you made? Or maybe even the ones you regret not making?
Researcher Dr. Thomas Gilovich, a psychology professor at Cornell University, who has been studying the link between money and happiness for over twenty years, says, "...over time, people's satisfaction with the things they bought went down, whereas their satisfaction with experiences they spent money on went up. But while the happiness from material purchases diminishes over time, experiences become an ingrained part of our identity. We are the total of our experiences."
4. You can't buy health, but you can make choices that protect it
Marea Wellness / Unsplash
Don't work so hard saving up money for the kids (and grandkids) that you neglect investing in your health. As we age, our health care expenses increase, especially if we've failed to take care of our health before retirement.
You can't buy flat abs, strong bones, or plaque-free arteries, so invest time and money in your health now. Stop and ponder: What money might I spend now to improve my health? Then, write yourself a prescription to do that—today.
You can also save your kids money and possible anguish, from a potential medical emergency or future failing health issues, by drawing up the appropriate will documents and directives for your care. Ultimately, the whole family benefits when you use your hard-earned money to invest in improving your health.
Still can't do it? Then, hush! Not convinced yet that spending your retirement now is the way to go? We're not completely surprised.
You're obviously a person with tremendous resolve and tenacity, or you wouldn't have this life savings accrued in the first place. So we understand your desire to "make life easier for your kids" through the gift of an inheritance. But if that's the case, you need to keep a lid on it!
Don't tell your children you're setting aside money for them to use once you're gone. An anticipated inheritance is a great excuse for your kids to avoid saving for themselves. Who needs a 401k or to pay down credit card bills if they think they'll just straighten that away once you hand them the keys to the kingdom? Your well-intentional help ends up hurting in that case.
Most multimillionaires today leave a greater percentage to charity than to their family for fear that "easy money" harms more than it does their kids any good. Ga-zillionaire and genius of Berkshire Hathaway, Warren Buffett, says leaving children a lot of money is "harmful."
Whether you've accepted our "permission" (and plea) to spend your kids' inheritance on yourself or not, know that your children have already gained much more from you than just money. Be proud of your legacy of hard work and consider taking a night off (or the next few years) to "live a little." You've earned it!
The Money Couple helps others achieve financial freedom while putting family first. They offer services and resources to bring couples closer together, not only in their marriages, but in their finances as well.
