On a happier note, sometimes this works out as intended. The money goes to the child, will be out of the parents' estate and parents can pay for college on top of this. Kids get a head start on savings and free-to-them educations. During kiddie tax years a fund like VTI generates little in the way of taxable income.
Provided one gets lucky with how the kids grow up, the giving to kids strategy can be beneficial. But there is a risk.
I am not convinced that "teaching" one's kids about saving and investing really matters. How the parents live is probably an important lesson. If the kids see that their family is not among the big spenders- no expensive cars, flashy jewelry, foreign travel, etc., then they see a way of living that does not require high costs.
Our kids were never spenders but they could never get interested in investing or taxes until they had incomes of their own.
I am sure there are parents who model irresponsible behavior and some kids follow that path. From my social circles the few kids I know who got into trouble did so in spite of their parents' best efforts. I feel sorry for those kids and their parents.
Since I gave no idea how common this is, I would not draw a conclusion that one should never make gifts to the kids. Just recognize that there are risks.
Provided one gets lucky with how the kids grow up, the giving to kids strategy can be beneficial. But there is a risk.
I am not convinced that "teaching" one's kids about saving and investing really matters. How the parents live is probably an important lesson. If the kids see that their family is not among the big spenders- no expensive cars, flashy jewelry, foreign travel, etc., then they see a way of living that does not require high costs.
Our kids were never spenders but they could never get interested in investing or taxes until they had incomes of their own.
I am sure there are parents who model irresponsible behavior and some kids follow that path. From my social circles the few kids I know who got into trouble did so in spite of their parents' best efforts. I feel sorry for those kids and their parents.
Since I gave no idea how common this is, I would not draw a conclusion that one should never make gifts to the kids. Just recognize that there are risks.
Statistics: Posted by afan — Sun Sep 14, 2025 11:53 am — Replies 47 — Views 3153