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Kids, education and generational wealth

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  • Kids, education and generational wealth

    Two recent posts triggered my thought process on this topic

    From the POF article on two 36 year old physicians
    We go back and forth about paying for a masters of philosophy after majoring in history — if our kids want to ensure unemployability, they can do so on their dime. We struggle with what is the right option if our kids want to pursue something we think is not going to lead to a financially stable career.
    From the recent post of VentAlarm
    Generational wealth. I don’t want to leave my kids enough money to just sit back, but I would love to be able to buy our kids a first home, or fund a startup or something else that would be a huge blessing and give them a leg up. Can you imagine if you were 28 and you didn’t have a mortgage payment?
    Culturally I have always been brought up to be educated in something that is well paying, can be run independently and also been seen as prestigious. That is why you seen Indians wanting their children to go into medicine, engineering +/- IT and law. So I followed one of the paths and am happy I did that.

    And then I see the stress children go in this country in schools, college and professional schools. Have highest perfect GPA. Top SAT scores. No getting a B in college that can impact you chance of getting into med school. Ace the MCAT. Pile on all the extracurriculars so that you can get in. And once in, study hard to just get the top Step I and II scores ( now changing) and get a high paying lifestyle friendly residency. And if you did not, or even did, you have all the issues of burnout in residency and as an attending. But you have already spent so much and taken loans that you don't have a choice but to carry on. No wonder we see so many cases of depression, anxiety and even suicides.

    But what if we as high savers can change it for our children. Let them choose a career that is not as stressful. Pay for their education that may or not lead to a high paying career. But ones that are required by this society. Help them with their first home purchase. maybe even put aside some for their retirement. Let them become a teacher or an art curator that they enjoy but makes average American wage. or even become a physician but settle for low paying specialties without worrying about money or burnout. Their long career might be better for society than working all the time, trying to achieve FI and check out with RE too soon. They might be happier well balanced people and not be on antidepressants all the time.

    Not many can do it but the high savers who probably cannot even spend 25% of their savings before they depart can help make that change for their kids. I realize there is another group that believes in "pulling up by your bootstraps" and taking loans and paying it back and learning the value of money and being with very little money.

    So what do the high savers on this board want to do to help their children. Or not help them.
    Last edited by Kamban; 12-11-2021, 12:12 PM.

  • #2
    Pretty much any activity is allowed/affordable.
    Fancy pants travel.
    Will throw some money into UTMA when gift tax limits allow (after superfunding 529).
    Anticipate no school debt.
    Probably big inheritance via trust.
    I'm not in the bootstraps category.

    Comment


    • #3
      All sounds good. In theory. But if they (kids) decide to go that route, then what about the following generation (grandkids), or the one after that?

      Regression to the mean, back to square one?

      Not sure that those who achieve FI and RE are necessarily unbalanced people on antidepressants all the time. Many reasons to strive for financial success.

      Comment


      • #4
        1st gen Asian American - 'ABC'
        -paid private secondary school
        -paying 4 year college
        -will assist with graduate school (child will take all Federal loans available and be responsible for that). we will assist in R+B at least
        -will have moneys available to down payment if wishes to be near us in San Diego (or we relocate to say HI with her)

        --they are as setup for success as possible with being broke at the start of their career.

        -we have encouraged them to find their way while understanding the COL is real in today's world and need to be cognizant of their spending/wants : earnings.

        --they don't know the level of potential inheritance which we will plan largely to support any future grandchildren's education first then leftover want they do when we pass. Trying to find creative ways to minimize tax drag at generational wealth with SECURE and will probably leverage our UC pension naming alternate survivor as daughter to stretch that pension over two generations.

        Comment


        • #5
          • happier well balanced people
          • teacher or an art curator that they enjoy - maybe. The only expectation is put just as much effort. Be the best you can be.
          I would not support a career choice for enjoyment, I would support a career that matches their ability, talents and interests. The problem is every parent wants their children to do “better”. Better is not easier.but shouldn’t be defined as money. For all I know, it could be extremely hard to be top talent art curator. Set the career goal appropriately high. That is what happy well adjusted people do. I would consider 50/50 for supplementing them.

          Money wise, my plan was the inherited IRA would set them up with a retirement plan and hope they stayed with the lifetime RMD’s. Tough sell on RMD’s from a taxable thanks to SECURE.

          My kids are launched. Hindsight is easier.

          Comment


          • #6
            Originally posted by Kamban View Post
            We go back and forth about paying for a masters of philosophy after majoring in history — if our kids want to ensure unemployability, they can do so on their dime. We struggle with what is the right option if our kids want to pursue something we think is not going to lead to a financially stable career
            I will be doing what my parents did, as I think due to what they did I should as well, since that obviously helped me launch. They left me to take care of post-undergrad on my own but they took care of the entire undergrad bill and left the choice of schools to me. I don't think they knew any better but they were all about getting into top private four year colleges. So they did that for my brother and I.

            The above quote, which is not Kamban, is perhaps many times true but there are so many exceptions. Hopefully people don't cite the above as a reason to not fund a kid's education and use their choice of a major as a reason why they didn't launch. Perhaps the parent in the end didn't instill the right values and/or skills in their kids and that is the main reason?

            Case in point, I majored in history in undergrad and have a PhD in a social science field. I started my career making $50k but that quickly got to $90k or so before I was 30 and has been there for over a decade now. Never been unemployed. Another case in point, my brother majored in social studies. Then he went to law school. I don't know what he makes but I'm sure it's over $200k. Many lawyers have backgrounds in political science/history/humanities/social science. They do just fine. So you're not "ensuring unemployability."

            All that said, I will have a natural tendency to try to encourage my kids to pick a major that will lead to a decent-paying field and I will have a discussion with them about college costs as a way to try to influence them. But in the end if they want to major in English at a four year private school, I know myself enough to know I'm going to support them through that.

            Comment


            • #7
              Tim I agree. I won’t support a career or degree for fun. I will support anything if their intention and goal is to be the best, and they work hard to the best of their abilities.
              they gotta learn grit, be a good person, and the hard work of making a buck. I feel if you can maintain this upbringing, they’ll succeed in life regardless of degree.
              You don’t need fancy school or whatever. I see so many people in the workforce that didn’t come from fancy schools, how did they get there? They worked hard.

              so yes, I’ll support them. It’s part of my culture as well. It’s my job to teach them to work hard and set them up for success. This will lay the groundwork for the next generation.

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              • #8
                The irony of using philosophy majors as an example of a low paying major is that most studies show that philosophy majors end up with a higher average salary than the majority of other majors and also one of the highest acceptance rates into medical school (over 50%, which is much higher than the bio and chemistry majors).

                Comment


                • #9
                  This is something that I go back and forth on. Our children will definitely be left with a good chunk of change one day but it's tough to know how to raise them. I think there are invaluable life lessons learned when you grow up struggling or having to go without. Our children won't be in that position but how do you create that artificially? I don't know the answer but having us show them the value of education (not necessarily just in school) and hoping that them seeing their parents as hardworking, kind, giving, but also with a low BS tolerance level will produce good people.

                  Comment


                  • #10
                    Originally posted by Dusn View Post
                    The irony of using philosophy majors as an example of a low paying major is that most studies show that philosophy majors end up with a higher average salary than the majority of other majors and also one of the highest acceptance rates into medical school (over 50%, which is much higher than the bio and chemistry majors).
                    I would think that last part is largely due to selection bias though. Like if you are a philosophy major you don’t waste your time applying to med school unless you know your application package is really good, as opposed to every Tom ************************ and Harry (or Sarah, Jane, and Mary) biology and chemistry major with average applications who don’t realize they’re not getting in until after the fact.

                    Edited to add I should have written Tom Richard and Harry. The asterisks got added in, I had written the name. Didn’t realize the common old school nickname for Richard was banned lol

                    Comment


                    • #11
                      Children learn best by example. If they see you giving yourself everything that you want because you have the means to do so they're going to expect everything that they want later in life. We purposely live below our means for a couple of reasons. One is to guarantee financial security and reach financial Independence at a younger age and give ourselves flexibility but another big reason is to live a life more similar to the average. In no way would we be struggling but we also do not give ourself every perk and pleasure. Hopefully this will translate to my kids not expecting this later in life and even if they are not high earners will be able to achieve a similar lifestyle.

                      As for covering college costs we think that we will likely cover the cost of a in-state 4 year degree.

                      Comment


                      • #12
                        Originally posted by Dusn View Post
                        The irony of using philosophy majors as an example of a low paying major is that most studies show that philosophy majors end up with a higher average salary than the majority of other majors and also one of the highest acceptance rates into medical school (over 50%, which is much higher than the bio and chemistry majors).
                        A BROAD undergraduate degree is different that the advanced degree. A "lazy" liberal arts degree chooses the easy path for electives. Lazy philosophy majors don't get into med school or law school. Undergrad does not need to be limited to a vocational career path. The question "What are you going to do with it?" needs to be asked and answered. If the answer is "I want to teach elementary school or work in the daycare field. I love kids." That will not work for a private Ivy League type undergrad investment nor an advanced degree.
                        I think the point Kamban was making is that the constant pressure on kids from high school through college is extreme. The parents can't control it, but they can teach the kids how to deal with it and how to make decisions. Preconceived notions of success are not helpful. One more extracurricular, one more A, one more "achievement" does not define success. You can't do it for them, but some financial support allows better options to be available. If they are making good decisions, great. That is not lazy.

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                        • #13
                          Originally posted by Dusn View Post
                          The irony of using philosophy majors as an example of a low paying major is that most studies show that philosophy majors end up with a higher average salary than the majority of other majors and also one of the highest acceptance rates into medical school (over 50%, which is much higher than the bio and chemistry majors).
                          This is not surprising at all. Everyone I know with a PhD in philosophy is extremely smart. It's not a large sample, but those people could have done anything they wanted.

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                          • #14
                            Originally posted by Kamban View Post
                            Two recent posts recently triggered my thought process on this topic



                            From the recent post of VentAlarm
                            And then I see the stress children go in this country ...
                            Is education-related stress really worse here than it is in India? I would have assumed the reverse based on the stories I've heard. But I guess the stories that you are most likely to hear are the craziest ones.

                            Comment


                            • #15
                              Originally posted by Dusn View Post
                              The irony of using philosophy majors as an example of a low paying major is that most studies show that philosophy majors end up with a higher average salary than the majority of other majors and also one of the highest acceptance rates into medical school (over 50%, which is much higher than the bio and chemistry majors).
                              Whenever I come across somebody who does not seem to have a plan their major usually is communications. I'm not really quite sure what you do with that major. But I think it's generic and easy and available almost anywhere.

                              I think philosophy is actually hard for most people and probably only those who are truly interested would go into it.

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