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Pay It Forward

Jonathan Clements  |  October 3, 2020

MINDFUL. INTENTIONAL. Purposeful. These are the buzzwords of our time—and they make me slightly queasy, with their whiff of self-centered, self-satisfied self-indulgence.

Yet it seems those are my goals.

On Monday, a moving van will arrive to take my worldly possessions to a house in Philadelphia that, I hope, will be my last. All this has made me ponder what I want from the years that remain. Three items top my wish list:

Do good work. My ambitions today are far more circumscribed than they were in my 20s. A few decades jousting with the world will do that to you. Still, I remain anxious to serve others as best I can—and HumbleDollar is my chosen vehicle.

Find some balance. A friend recently called me a workaholic. It’s a label I resist, because it’s my choice to log long hours at my laptop—and I do so because I love my work. Still, I readily concede my life is somewhat unbalanced, and I want to find a way to work less and spend more time exploring the world, whether it’s through books, encounters with others, on bicycle or via airplane.

Help my family. As longtime readers know, teaching my kids about money—and helping them financially—has been an enduring passion. In November, the list of family members I hope to help will grow by one, with the arrival of my first grandchild.

This is a key reason for my move to Philadelphia. My new home will be 10 blocks from my daughter and son-in-law. I want to help out as best I can with my grandson. (Yes, the sonogram says it’s a boy.)

For many, the world is a harsh place made yet harsher by the pandemic’s economic fallout. The government has an important role to play in taking the edge off that harshness. As someone who has benefited from an economic system that creates both winners and losers, I don’t begrudge the taxes I pay to support that government safety net.

Still, I don’t want my financial security to depend on a large, faceless bureaucracy—I can’t imagine many do—which is why I’m heavily focused on the safety net that family can offer. Got a spouse, parents, children and others who you consider close family? You are, I would argue, among each other’s greatest assets and liabilities.

How far would you go in helping other family members financially—and how much help would they provide you? This, I realize, is a topic where many folks have strong opinions. Some believe they shouldn’t provide too much financial assistance to their children or other family members, because they fear such help will dent ambition and create an unhealthy dependence. Similarly, others shy away from family loans, because they worry the money borrowed won’t get repaid and will leave all involved with bruised feelings.

Much, I suspect, should hinge on a clear-eyed assessment of your fellow family members’ money habits. My children, siblings and mother are all remarkably sensible about financial matters, and I wouldn’t hesitate to lend money to any of them. Indeed, I lent money to my daughter so she could buy her current home, and my mother has twice made me short-term loans to help with a house purchase.

Not inclined to make family loans, help your children fund Roth IRAs, subsize their 401(k) contributions or provide other direct financial support? Even so, I’d encourage you to ponder the concept captured by the title of this article: Pay it forward.

I won’t bequeath enough to my children for them to live in the lap of luxury, with no need to ever work again, and—even if I had that sort of wealth—I don’t think it would be desirable. But I’m endeavoring to give my kids something I consider even more valuable: a sense of financial security.

While I’m alive, they know I’d bail them out if financial misfortune befell them—and, upon my death, they should inherit enough to provide them with a healthy financial backstop. In other words, as harsh as the world can be, my kids should never suffer the full financial impact of that harshness.

I readily concede there’s an unfairness to this: Only those who enjoy some financial success have the opportunity to bequeath a sense of financial security to future generations. But I make no apologies. I’ve come to realize that financial happiness lies not in a bigger house or a faster car, but in knowing all will be okay, even if we’re hit with rough financial times. That’s my gift to my children. With the money they inherit from me, I hope they pay it forward to the generation that follows.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Seems So EasyMy Regrets and Playing Dumb

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Ocher
Ocher
8 months ago

Jon, I loved this piece. For me it was thoughtful and timely. As one on the cusp of retirement (3 months to go), I feel confident about the future and want to help my family and others benefit from my good fortune and privilege. Two of my three adult children have good money sense; I’m gently working on the third. My wife and I will be spending a couple of weeks exploring post-retirement communities and options in another state later this month.
I’ve been a regular reader for about a year. While I learn a great deal from the more technical articles written by your guests, the more philosophical columns like this one, help me consider the big picture. Thank you for Humble Dollar. I hope that your move to Philly goes smoothly next week and that nothing that really matters to you breaks.

John Yeigh
John Yeigh
8 months ago

EXACTLY! This week I spent three days helping fix our daughter’s house, three days hiking New England mountains at peak color with my wife and then two days of activities at a remote cabin with our son plus also providing him with some helpful items. A fantastic week, yet finances mattered not.

R Quinn
R Quinn
8 months ago

Right on! You have expressed my feelings exactly. My goals for what money I have accumulated in 70 plus years is first security for my wife as my survivor and then to leave my four children a little boost for their own future. There has also been loans and other modest help along the way and each month I make a 529 contribution for eleven grandchildren. Have I been fortunate to be able to do this? Yes and I truly acknowledge and appreciate it all. When it comes to “privileged” though I reject that label except to the extent I never suffered the obstacles and unfair treatment some people do. On the other hand, I never made choices or took actions or behavior that would derail my future. And, I have been privileged to have a spouse that is more than half the reason it could all happen.

Ocher
Ocher
8 months ago
Reply to  R Quinn

Richard (love your posts too), I use the term “privilege” to denote that I was fortunate to have been born into a family whose parents instilled in me the virtue of hard work and persistence. I did not enter the labor market as a young adult during a recession and I have benefited from having collaborative colleagues and wise supervisors. I have worked in the same industry for 40+ years and as I retire I am not worried about my future or about my ability to provide a boost to our three adult children after I’m gone. I too am privileged to have a great spouse.

ScubaSkier
ScubaSkier
8 months ago

It is nice to have a family that will help out financially. Back in the 80’s my Father lent me $10,000 so I could assume a mortgage at a very good rate without getting a second mortgage. It was a very formal agreement with a promissory note and market interest rate. He approved of the new job I was taking. I repaid it in full with interest but 2 years later when I moved back to Colorado and needed (wanted) the $10,000 again to pay off a high interest mortgage on a vacation home, he refused because of what I was going to use it for. When he died, he left everything to my Mother. In the 90’s, I had quit my job and was building a new house. I really could have used some financial help but my Mother refused even though she had more than she could ever spend. When she died about 7 years ago, my sister and I received a nice inheritance. I didn’t need it then.

My advise to any parent (person) that will be leaving a large inheritance or has more than they need or will need, give some of it to your heirs when you are still alive and they can say “Thank You” and you are alive to hear it

Chris
Chris
8 months ago
Reply to  ScubaSkier

It seems rather entitled that you would expect this support. From your post, it seems like your financial decisions were not based on financial independence. For example, a vacation home with high interest.

Rick Connor
Rick Connor
8 months ago

Absolutely!. Great article. I especially love the idea that family members are each others assets ( and sometimes liabilities). The pandemic seems to have reminded people about the value of family and friends. Let’s hope it stays with us.

Jack McHugh
Jack McHugh
8 months ago

“These are the buzzwords of our time—and they make me slightly queasy, with their whiff of self-centered, self-satisfied self-indulgence.”

Thank you for that, you said it perfectly.

Including the caveat (that they are not entirely illegitimate), which given your valuable preface needs to be choked from between clenched teeth – “do good work, help the fam, don’t get whacky-imbalanced.”
And hold the self-righteous smugness.

ETA, This too is a useful formulation: “Financial happiness lies not in a bigger house or a faster car, but in knowing all will be okay, even if we’re hit with rough financial times.”

David Baese
David Baese
8 months ago

Jonathan
My financial advice to you is that as soon as your grandson is born you pay him a royalty to post his picture on Humble Dollar. Then report the royalty as earned income, withhold for taxes and Social Security, and contribute the rest to an index fund Roth IRA. He won’t know who I am but seventy years from now he’ll be telling his grandchildren what a financial genius his grandfather was.
Dave

Roboticus Aquarius
Roboticus Aquarius
8 months ago

We’ve actually helped family more than we’ve been helped, but it hasn’t been all one way. We especially had some help when our oldest was first diagnosed with autism. The therapy bills over the years have been gruesome; and I’d say still we had it relatively good.

The value of strength of any kind is the ability it yields to help the people around you. Kudos to you and blessings on your grandson!

Newsboy
Newsboy
8 months ago

Jon – this was just a great post today. The late Thomas J Stanley (God bless him and keep him always) frequently opined on the important difference between providing “EOC” (economic outpatient care) handouts to one’s offspring (which tends to stifle both initiative and thrift) versus making strategic investments in their future (529 contributions for grandkids, matching Roth contributions early in their professional careers, family experiences over buying material things, etc). You and Richard Quinn (among other HumbleDollar contributors), by virtue of your being further ahead the actuarial timeline, have helped validate some of Dr. Stanley’s “Millionaire Next Door” wisdom and bring it to the masses. You have given many of us a frequent reminder for how to strategically invest in our families future in the proper fashion. Thank you…

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