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ADec 20, 2011

Gifting Our Children the Breaks They Need

Andrew Hallam
Gifting Our Children the Breaks They Need

My brother was a professional soccer player. Today, he’s grooming his fifteen year old to earn a soccer scholarship. That’s the first goal, and my brother is doing just about everything he can to give his son’s career a push in the right direction. If he helps him enough, his son might be as good as his father, or better. “With me in his corner,” says my brother, “Niklus could end up playing professionally.” But the competition is tougher than it used to be, he explains. His kid needs every break he can get.

Sometimes, when my nephew lines up to take a corner kick or a penalty, my brother steps in and takes the shot in his place. In his late 30s, and still a stud in his own right, my brother can drill the ball past virtually any 15 year old goalie. Nobody bats an eye and some of the other fathers do the same thing for their kids. “The game’s harder than it used to be,” they explain. Officially, Niklus gets credit for each assist or goal that’s scored by his dad.

The trouble is that the boy, who showed great promise as a younger player, is starting to blow far too many wide open opportunities when he has to take his own kick at the ball. The more my brother helps him out, the worse it gets. He plays half of each game looking at his dad, often begging my brother to steal the ball for a perfect break-away pass. We’re a family of high-achievers, yet my nephew’s confidence is waning, not to mention drive. He’s starting to rely on his dad as a crutch.

Of course, none of this story is true. But you’d probably agree that such friendly fire could eventually scuttle even the soundest vessels. Despite great intentions, however, many of us sink the next generation in much the same way when it comes to money,.

Like the soccer fable, maybe the game really is tougher than it used to be. I won’t argue against that. But Thomas Stanley, author of The Millionaire Next Door, has studied America’s wealthy for decades. And he finds that adult children who receive monetary aid from their parents tend to financially under-achieve those in the same vocations who don’t get handouts. Like a father throwing a kid’s touchdown pass, taking a penalty shot or eyeing down a Little League pitcher, Stanley has found that gifting assets (such as Christmas cash, a down-payment on a home, or passing down the family car) usually has detrimental financial consequences for the receiver.

Naturally, many people expect their kids to be the exception; a helpful hand at just the right time can put their tottering teens or twenty somethings squarely on their feet, they assume.

The Chinese have a proverb. They pass it down in hushed tones. It serves as a spooky sceptre to anyone daring to stuff their children’s nets with fish: Wealth doesn’t pass three generations. The first generation acquires the wealth, the second generation maintains it, and the third generation squanders it. The parents of the first generation, of course, want to make life easier for their children. But the age-old axiom prevails for the majority.
Studies and history seem to suggest that we can educate our children and train them to survive—even thrive—but financial handouts, forgiven loans and material gifts from one Jones generation to the next get wrapped up as prettily as Pandora’s box.

By all means, teach your children to fish. But don’t land anything (a soccer ball or a trout) in junior’s proverbial net. Doing so may cost more than you think.