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Teenagers and money - help please !!

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Old 09-29-2004, 11:32 AM   #1
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Teenagers and money - help please !!

OK this is an unusual question about money.
My kids are only aged 7 to 10 but my wife and I are worried about her parents' attitudes to money.

They have set up a trust fund for our kids (their grandchildren) which is one thing but on top of this they plan to give them big handouts when they become teenagers.

We have said we think this would spoil and demotivate them and we strongly believe kids should earn their own way in life (with maybe just a little occasional help if they're doing their best).

Does anyone know what age kids become legally in charge of their own money? Please could someone advise me about how these trusts work in this case and how we can safeguard them against what in the US they call "affluenza". Thank you, Paul.

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Old 09-29-2004, 12:36 PM   #2
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Re: Teenagers and money - help please !!

I'm not a financial planner so I can't go there to give you advice. I can tell you what I think. I went nuts when my sister bought her daughter a new car - her first car too! I didn't want my sons to see that and expect that from me. I always told them that they'd have to buy their own car just like me and their dad did. My husband used to ride his bike to work - even in the snow! (Kind of like that story 'I walked five miles to school - uphill both ways!) Anyway, the point I'm trying to make here and to my sons is that you need to get the experience it will take to be able to afford a car. You will also be a better person for it because you will realize how hard you worked to get it and take better care of the car (or whatever). So if the parents insist on giving your children money when they are teenagers, I do think there may be legal issues with that you should look into, you should be able to control the accounts that the money is in. You are still the parents and regardless of what they want to do, you have final say - don't let them sway you and say ' ahh, you don't appreciate this gift.' Yes, in the right context you would tell them. It needs to be controlled.

Also, when they do have the money and try the old line "It's my money, I can buy what I want!!" - don't let them. Some things that kids may want are stupid or just plain dangerous - like a motor scooter.
If you open the door even a little bit - the devil will fling it open. Keep it closed with prayer.

Last edited by sawbuck44; 09-29-2004 at 12:40 PM.

Old 09-29-2004, 12:42 PM   #3
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Re: Teenagers and money - help please !!

I think it depends on the stipulations your wife's parents put on the trust fund. They can make it any age they want. I have a friend who could get theres at 18 another at 21 and another at 25. I amsure if they wanted to they could even make it 30. I myself would want to do the same as you. My Dh and I both bought our own cars. I believe kids today are extremely spoiled and everything is handed to them. It's easy for me to say and I don't know how I will be when it comes to my children my first is only 7 weeks old but I hope I will not give in and give her everything she wants.

Good luck
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Old 09-29-2004, 12:48 PM   #4
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Re: Teenagers and money - help please !!

HMMMM, Coming from a family that did not buy me a car, I had to pay my parents payments for my first POS! I have to say, it is good that kids learn the value of a dollar, but only with maturity and experience will that really happen. I took me growing up and paying my own bills and livingon my own to understand and be glad I had my own place cars etc.... But if you have someone in your family willing to help them out so much yoiu should be greatful. Are your kids spoiled?? Are you and you spouse well off so thatthey have evry little thing their heart desires? That is the thing in their own house their immediate family, the example you set is going to impact them a lot more than their grandparents giving them some cash 10 years from now. If they gave them all the $ and none of it was in a trust I would try to encourage my child to invest some.... But really, They are going to do what they are going to do. especially when they are over 18 which is when most trusts are usually available, that 21, or 25. They are going to do what they want with it, and it is better that you do not try to 'control them as teeneagers' especially before they even get there, because if you do, they will push you away. Teach them the value of working hard NOW, that way when this cash flow happens, they will know what they should do with it to benefit themselves. And then what they do with it from there is on them you taught them what they needed to know now they have to make their own choices and decisions (10 years from now). LOL Anyways that is my input, although most probably won't agree with me. I was never handed a thing, but I didn't learn the value until taking care of my own family, even when I was early 20's I still just partied and did what I wanted to do, despite where $ came from.

Old 09-29-2004, 12:58 PM   #5
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Re: Teenagers and money - help please !!

There are valuable lessons to be learned when it comes to money & teenagers. Just handing money to your teen is denying them this lesson in life. You will be denying them the pride they feel and the maturity in budgeting themselves.

When each of our girls turned 13 we gave them a monthly budget of $100. This money was to be used for anything outside of the food, shelter & necessities in life that we were obligated to provide for them as parents.The big gray area was each school year we gave them a head start of providing the basic wardrobe & from there if they wanted another pair of jeans they used their budget money. If they ran dry when it casme time to go to the movies with friends they couldn't go. It was a great way for them to learn a valuable lesson about finances & at the same time took the pressure off of us as parents to be hounded all the time for something else they wanted or had to have. It allows them to set their priorities and if they fail they take the consequences.

Thought this might help out in a way when it comes to addressing finances with your teens. Remember...they are your children & whatever your wishes are in terms of money, let it be your decision & nobody elses...Goody

Old 09-30-2004, 01:08 PM   #6
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Re: Teenagers and money - help please !!

Trust Funds Can Be Set Up So The Children Get So Much A Month Or Get A Lump Some When They Reach A Certain Age.. The Maker Of The Trust Fund Sets This Up When They Create It... If You Are Concerned About The Trust Fund You And Your Wife Should Sit With Her Parents And Talk About Maybe Making Requirements For The Children To Meet Before They Get Their Funds..

As Maybe They Need To Get A Certain Grade Point Average Or Maintain A Certain Grade And Teen Age Job Before They Recieve Their Monthly Allowance From The Fund.. And If They Dont It Goes Back In To The Fund For A Later Date Or Make Her Choose A Charity To Give It Too If She Fails To Reach The Reqirements..

As Far As Allowance Are Concerned I Dont Know Hwo Much A Child Should Get It Depends On Your Lively Hood And Their Way Of Life I Would Say..

For My Self - My Parents Made Sure I Worked And Went To School It Was My Reponsibitlity To Pay For The "in Style" Things That I Wanted... My Car Was My Resp. As Well.

If You And Your Wife Are Very Worried About Your Inlaws Contributions To Your Children Ask Them That They Need To Earn Their Way But They Can Contriubute By Putting Their Money That They Would Give Your Children Ina 529 For College Or Something As Simular.

Hope This Advice Helps...
As State Above.. You Are The Parents.. You Will Do The Right Think.

Old 09-30-2004, 03:32 PM   #7
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Re: Teenagers and money - help please !!

I had a neighbor who had a large amount of money when he was killed in a workplace accident. Since he had no children, his money was divided equally between his two nephews and niece, in the amount of $100,000 each. The way he set up the trust was that they could access their money on their own at the age of 18. However, whoever was set up as their guardian could access their money for them at the age of 16. By the time the oldest two were 19, their money was gone. It was used to buy cars etc, basically, wasted by teenagers having fun. The youngest's money was gone before she ever turned 18.

I just don't think that today's teenagers/young adults have very good money management skills. I say that because I watch my two younger sisters, (23 & 21), blow their money on whatever they feel like at the time and end up asking our parents for money to help them pay their bills every month. I am 27 (husband is 30) we own our own home and are putting money away for our future, etc, and are still able to do a lot of fun things like vacations etc.

If I am in the situation where I have to set up a trust fund for my kids I will not let them access the money until at least the age of 25 (with a provision that some money can be accessed for college only. I don't see any reason why anyone needs large amounts of money before that age.

I guess it all goes back to teaching kids how to manage money (and credit, but that is a completely different story). If you are good about money and teach you kids that then I guess it doesn't really matter when they can access the money because they will know what to do with it when they get it.

Old 10-05-2004, 05:28 PM   #8
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Re: Teenagers and money - help please !!

I'm going to be the lone dissenter...

It really depends on the child and his/her financial savvy. My parents handed me the keys to a car (used) when I turned 16. I was a top 10 student (as in top ten of 356 students in my class) and went through a defensive driving course. I was in a car accident 6 months later, and felt pretty bad about it. They fixed it and gave me privileges to drive only to and from school/work for awhile. Despite that, they still made me a co-signer on a family checking account, with the caveat that if I wrote a check, I had to enter it on the register and balance it at the end of the month. I saw what was in that account, how it was spent, and really had to think hard about buying anything. My grandparents died in my early 20's and left me money, which I used to get a professional degree, knowing that it would be "a gift that kept on giving". Even though I make more than the average household, I'm still a compulsive saver.

It would benefit the children to be trained to view money in the long run. For example, spending $100,000 over 20 years is only $5,000 a year. $5,000 a year is just over $400 a month or $100 a week. But, if you invest it wisely, it easily doubles every 7 years, which in the same 20 year period would become about $750,000. This was explained to me in several different ways when I was between the ages of 9 and 15. I've never really had the nerve to indulge since.

I think it is never too early to teach children the power of investment and how to make every dollar earn more than its face value. Children are smart and catch on quickly. You might be amazed how good they become at managing their "estates". It may be worth the time to take them to a financial advisor sooner rather than later, especially if you are not confident in conveying this information.


Old 10-12-2004, 04:01 AM   #9
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Re: Teenagers and money - help please !!

Many thanks for giving me these tips - anyone with any more views ??

Old 10-28-2004, 05:03 AM   #10
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Re: Teenagers and money - help please !!

I agree with Aunt-bon. My son will also be inheriting a large trust fund but it will be set up so that he will only be able to draw on it every 5 years. This will ensure that he will need to work and be a responsible adult. I would express my concerns to the person setting up the funds or contact an attorney to see what your legal options are. Best of luck to you !
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Old 10-28-2004, 05:18 AM   #11
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Re: Teenagers and money - help please !!

Well when I was growing up my parent's met me "half way". They did buy me my first car, but is wasn't brand new, and had to meet my parent's requirements. But I had also worked since age 15 and the deal was I had to continue working part-time and keep my grades up in school. I paid for my own insurance, gas and maintenance.
If I wanted something big or expensive, they would make me earn and save half of the cost, and they would pay the other half. I had to show them I was responsible, knew the value of things and the feeling of earning my own money. I was taught to save a portion of my paycheck and it worked out pretty good.

Old 11-06-2004, 10:26 AM   #12
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Re: Teenagers and money - help please !!


Old 12-21-2004, 01:05 AM   #13
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Re: Teenagers and money - help please !!


Old 12-21-2004, 01:01 PM   #14
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Re: Teenagers and money - help please !!

How wonderful that their grandparents are gifting them! Trusts are usually so individual, I suggest you work with the gp to provide some reasonable guidelines. Personally, I think they are very lucky kids.

Instilling good money sense is not as hard as it seems; setting some rules and being consistent. Talking about it is good! I think kids need to have a certain amount of money they spend with no limitations, self regulating spending can be a helpful exercise. You have a few more years to accomplish that!

As far as them receiving $$ when they are teenagers, I would check with your state laws to see what age gives them control of the money. My state is 18.
Otherwise, you as parents will have control of the money they receive. Another good time to help the kids learn how to spend/save/invest.

Good for them. Having money doesn't have to be bad!

Old 12-22-2004, 11:34 AM   #15
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Re: Teenagers and money - help please !!

There is a lot of good advice on this thread! I think it's great that your kids will be getting a trust fund...I'd love to be able to say the same for mine! But at the same time, I understand your concern. Just the fact that you are concerned tells me that your children are probably already being raised responsibly in terms of money...if you were an extravagant spender, this wouldn't even be bothering you.
I think that the idea of setting goals for access to the money is a good suggestion...such as grades while they're still young, high school graduation, college graduation, etc. No 7 or 10 year old needs a huge amount of money to spend. What are they going to want to buy? TOYS. Why waste such a generous gift? I agree that it should be invested...if your parents really want to do them a favor they should invest the money for them so that when they are of an age to be able to use the money wisely, it will be even more! I also think the idea of setting up the fund so that it can only be drawn from every 5 years (or whatever amount of time) is a great goes along with the other mention of the kids having a $100 monthly budget to buy for themselves; this is great to teach budgeting skills and the value of a dollar. Maybe while they are so young they could get a smaller monthly budget and invest the rest, and once they are older they could get a higher budget as needed. Once they are working, it could be changed for a larger lump sum to be drawn every 5 years.
I hope you find a solution that works for is great to have this for your kids, but you have the right attitude about it!

Last edited by Momx2in04; 12-22-2004 at 11:35 AM.

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