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Family Needs

If you are the provider in your home, this bucket likely produces vague anxiety for you. Because we cannot know the future, and because each family is unique, you may have fears about this bucket. Although you can’t ever predict all of the needs that your family will have down the road, you can begin to plan for needs that your family will probably have in the future. My own family’s financial needs (five married children and twelve grandchildren) have ebbed and flowed over the years. My wife and I have always been grateful for the plans that we made ahead of time so that when college educations and weddings and a divorce came up, we were as prepared as we could be to meet those needs for and with our children.

What are the benefits and disadvantages of using a 529 plan to save for college?

There are a number of different ways that you can save for college, but probably the most important thing you can do, if possible, is to start early. That way, the magic of compounding can work for you.

A 529 plan is a good way to save for college. It has a number of benefits.

  1. You will receive a tax break from the federal government as well as possibly from your state. The money you contribute can grow tax-deferred (that means the interest you earn every year is not taxed), and when you withdraw the money, it is not taxable, if you use it to pay for college.

  2. You, as the donor, control the funds, not the child for whom you are investing. You can decide when you take withdrawals, and how much the withdrawals will be. You can also use these funds for yourself if the need arises, but you will have to pay a 10% tax penalty should you choose to do this.

  3. 529 programs are usually pretty flexible when it comes to moving your money around to different investments within the plan, or even rolling over your money to a different state’s plan. What is allowed varies from plan to plan and state to state, so be sure to check before you invest.

There are also some disadvantages to saving for college with a 529 plan.

  1. You are limited to the investments that are available in the particular plan that you choose. Some plans have more choices than others.

  2. 529 plans limit you to tuition for pre-approved colleges and universities. There are a lot of colleges that accept these plans, but it is possible you may be limited about where your nieces can attend school.

  3. Since college savings plans are investments, there is risk involved. There is no guarantee of a good return, and you may even lose money.

If you are going to save for college, it seems like a good idea to look into a 529 plan. However, we would advise consulting with an investment advisor who can look at your overall financial situation, and help you figure out what is best for your specifically.

Should I always treat my children equally in regard to finances?
  • When it comes to wealth transfer and estate planning, you have to look at each of your children individually and assess them.

  • If you love your children equally, you will treat them uniquely. They have different needs, different personalities, and different circumstances. If you simply treat them equally financially, you are saying to them that they are not unique – dishonoring who they are.

  • Treat each of your children according to their individual circumstances. Some examples of different circumstances are a handicapped child or grandchild, or a child who is a single parent.

  • Communicate with your children. Make your decisions about wealth transfer and estate planning, and then be open with your children.

What is the best school option for a Christian: public, private, or home school?
  • This is not a financial question; rather, it is a priority question with financial implications.

  • Each child is different and has different needs. The decision about where to send a child to school is
    individual for each family, and for each child in the family. Be sensitive to your child’s short-term needs, and the long-term consequences will tend to work themselves out.

  • If you choose private school, you may have to give something up, such as a newer car, a vacation, or eating out. But this is a priority decision you and your family have to make for each of your children.

How should we help our grandchildren financially?
  • Never get between parents and their children. Make sure that whatever your do for your grandchildren fits in the context of what their parents want.

  • Think about the consequences of your gift. Gifts can be very productive. God is a gracious God, and when you give a gift it is a reflection of what God does for us.

  • Use your gifts to reflect:

    • God’s grace

    • Your love for your grandchildren

    • Their responsibility as children

  • Make sure you communicate with your children to see if your gift fits in with their plans and goals for their children.

How much financial help should we give our adult children?

Eight principles:

  1. Don’t use your wealth to manipulate their behavior. Help them if you want to, but with no strings attached. Let them make their own decisions.

  2. Don’t commit your children to your lifestyle. They need to live within their means.

  3. Allow for self-reliance. Do not destroy their need to provide for their own family.

  4. Don’t interfere in a husband – wife relationship.

  5. Don’t come between parents and their children. If you are going to help your grandchildren, make sure their parents understand and agree with what you are going to do.

  6. Don’t get in God’s way. You might be able to bail your child out of a difficult financial situation, but that situation might be what God is using to do a work in their life.

  7. Don’t be manipulated by your children’s expectations. God gave you your financial resources, and you are responsible for them.

  8. Don’t forget it is your stewardship responsibility. You are accountable to God for how you use your resources.

Should I help my adult children purchase a home?
  • Do not commit your children to a home that will determine their lifestyle or vocational choice. You might be getting in God’s way.

  • Teach your children and help them realize that they need to save for a down payment for a home that they can afford.

  • Don’t get caught up your short-term desire to help your child, and forget what the long-term consequences could be to that child if you do help them purchase a home.

  • I have a suggestion for you if you want to help your child with the cost of their home: Let your child save the down payment and purchase a home that they can afford. Then, you can give them money periodically for prepayment of their mortgage. In doing it this way, you will not change their lifestyle.

My daughter has recently been divorced. How much do I help her financially?
  • Being a single mom is one of the hardest jobs that there is. Many times, the single mother has to do the job alone: physically, financially, and emotionally.

  • You will need to determine how much help your daughter needs, and for how long she needs the help, and then decide how much help you can give to her. Financial help is only one part of helping your daughter.

  • You never stop being a parent, even when your children are grown. The needs of your adult children can be bigger than the needs of teenage or even younger children. There are issues of death, divorce, job loss, illness, and other things for which they may need your help. As the parent, you can help because you have more life experience, and many times you also have more resources.

  • An issue you should determine is at what point have you stopped helping and started enabling? Try to have clear, open communication between the husband and wife, and then between the parents and the adult child. Realize that it is great for you to help your daughter, but at some point you will need to release her back to self-sufficiency.

Who is supposed to pay for the wedding?
  • There is no right or wrong answer to this question. The key to wedding decisions is planning and communication.

  • Whose wedding is it? Is it for the parents’ benefit or the benefit of the couple getting married?

  • We decided when our daughters were still in high school how much we would spend on their wedding. We told them what this amount was, and let them know that if they spent more, they would fund it, and if they spent less, they could keep the extra.

  • Try not to have a “coping gap” with your children. A coping gap is when there is a difference between expectations and reality. If you set proper expectations, then there will not be a coping gap or the resulting disappointment from them.

  • All parties involved with the wedding need to decide what they are willing and able to spend on the wedding, and communicate that amount clearly with everyone else involved.

If we have children or grandchildren with special needs, how should we help out?

There are many types of special needs. Some examples would be:

  • Physical handicap

  • Mental handicap

  • Job loss

  • Divorce

  • If you love your children equally, you should treat them uniquely.

  • If you are able to help one of your children who is in need, you should do so. This does not mean you have to do the same for all of your children.

  • If you can provide help for a need, if God has given you the resources, you should consider it a privilege to be able to help your family.

What should I know financially in regard to divorce, widowhood, and second marriage?

These are three very significant events in your life that can have significant financial consequences.

Four principles to follow:

  1. Take your time before making any important financial decisions. It is okay to wait even as long as a couple of years. Wait until you have your thinking reoriented.

  2. Seek good, Christian counsel. You need to get counsel from someone who understands the financial consequences of your situation as well as the psychological and emotional consequences.

  3. Seek support groups. These can be at your church or in other places, but it is important to have people around you who have been through the same thing you have.

  4. In the case of a second marriage, communicate. Make sure you communicate very thoroughly and openly. There are many complexities in this situation, and the more you can communicate, the easier the transition will be.

What are the financial facts regarding widowhood?

Some startling statistics:

  • 80% of American women will face widowhood. (www.investmentnews.com)

  • 32% of women age 55 or older are widows. (US Census Bureau, 2000)

  • About 700,000 women become widows every year, and the life expectancy of a widow is 14 years after her husband dies. (US Census Bureau, 1999)

  • 28% of widowed women live in poverty. (www.investmentnews.com)

Most women are not prepared financially for losing their husband.

There are many ways to prepare for widowhood. Husbands, you need to take into account the fact that your wife is most likely to outlive you. Your job is to try to help her be prepared financially, emotionally, and spiritually.

Communicating to Children About the College Fund

With college investing, a good principle to follow is that the earlier you start, the better off you will be when the time to pay for college arrives. However, if you have not started early, which a lot of people have not or could not do, you do have alternatives.

  1. You could borrow the money

  2. Your child could apply for scholarships

One thing I would encourage parents to do, though, regardless of how old your children are, is to communicate to them that a college education is not a right, it is a privilege.

Having been in the business world for over 40 years, I have come to understand that where a person goes to college is only really important for their first job. After your first job, things like work ethic, how you performed at your last job, and creativity matter a whole lot more than where you got your degree.

If you want to and can afford to send your child to an exclusive private college, there is nothing wrong with that. But you do not need to feel guilty if you cannot afford to pay for an expensive college education for every child. Just be sure to communicate well with your children, so that you both have the same expectations about how college will be funded.

Psalm 37:25
“I was young and now I am old, yet I have never seen the righteous forsaken or their children begging bread.” (NIV)

Crown Financial Ministries, “Scholarships and Grants”

Click Here to View the Full MasterYourMoney.com Blog

Private vs. Public vs. Home School
  • The first thing you need to remember as you make the schooling decision is that each of your children is different, so you need to think of them uniquely. Each child will have different needs and will respond to a school differently. Because of their God given uniqueness, you will have to make the schooling decision individually for each of your children.

  • The second thing to remember in making the schooling decision is that money spent on education will always cost you something in the short term. If you decide to pay for a private education, you may have to give up a vacation, a new car, or something else your family thinks that they need. Ask yourself if you are willing to spend this money for what you perceive to be a future benefit for this particular child.

  • The schooling decision is not really a financial decision. It is a spiritual decision, and a values decision, that has financial implications. I would encourage you to sit down with your spouse and prayerfully consider what you think is best for each of your children. Where to send your children to school is a big decision, and so don’t make the decision lightly.

Psalm 32:8
“I will instruct you and teach you in the way you should go; I will counsel you and watch over you.”  (NIV)

Kathryn Vercillo, “Homeschool vs. Public School vs. Private School”

Click Here to View the Full MasterYourMoney.com Blog

Preparing Children for College
  • When children leave for college, they will be confronted with financial decisions in a much bigger way than they ever have before. They will have debt made available to them in the form of credit card applications, and they will have greater peer pressure.

  • I believe that you begin preparing your children for college when they are about eight years old by giving them responsibility with some amount of money.

  • When your child gets to high school, I think it is a good idea to give them a credit card and teach them how to use it. Remember, though, if you give your child a credit that you teach them that they can use it for convenience only, and they must pay it off every month.

  • Another way to teach your child financial responsibility is by having conversations with them about how they will handle their finances. Have many of these conversations as your child grows up, so that your advice is part of their thinking process.

  • When our children turned eighteen, we had a formal conversation with each one of them where we “cut the apron strings.” We told our children that they were on their own from then on to make their own financial decisions. My wife and I let them know that we would always be there for them, but they were old enough to make their own decisions, and we trusted them to do that wisely.

Romans 12:1-2 (The Message)
“So here's what I want you to do, God helping you: Take your everyday, ordinary life—your sleeping, eating, going-to-work, and walking-around life—and place it before God as an offering. Embracing what God does for you is the best thing you can do for Him. Don't become so well adjusted to your culture that you fit into it without even thinking. Instead, fix your attention on God. You'll be changed from the inside out. Readily recognize what He wants from you, and quickly respond to it. Unlike the culture around you, always dragging you down to its level of immaturity, God brings the best out of you, develops well-formed maturity in you.”

2 Corinthians 13:11 (NLT)
“Dear brothers and sisters, I close my letter with these last words: Be joyful. Grow to maturity. Encourage each other. Live in harmony and peace. Then the God of love and peace will be with you.”

Tanya Ruiz at Crosswalk, “Tips on College Success (For Parents)”

Click Here to View the Full MasterYourMoney.com Blog

Leaving Money to Irresponsible Children

If you love your children equally, you will treat them uniquely.

3 questions:

  1. If I leave money to a certain child, what is the worst thing that could happen?

  2. How serious is the worst thing that could happen?

  3. How likely is the worst thing that could happen to occur?

If you have an irresponsible child, the difficult decision is whether or not to leave God’s resources to that child. Your thinking will change when you begin to think of your money as God’s money. Then, the issue of estate planning becomes a stewardship issue.

There are a couple of different things you can do if you have an irresponsible child:

  1. Do not leave any money to that child. This is a very significant decision, and I do not usually recommend that you do this.

  2. Set up a trust managed by someone else. This can be a sibling or someone outside the family.

  3. Pray for supernatural wisdom. God will speak to your heart if you let Him.

Luke 16:11-12 (NIV)
“So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches? And if you have not been trustworthy with someone else’s property, who will give you property of your own?”

Colossians 3:23-24 (ESV)
“Whatever you do, work heartily, as for the Lord and not for men, knowing that from the Lord you will receive the inheritance as your reward. You are serving the Lord Christ.”

Focus on the Family, “The Legacy You Want to Give”

Click Here to View the Full MasterYourMoney.com Blog

Advice for Parenting Adult Children

The task of parenting, especially parenting adult children, is one that most people are not prepared for. I have two pieces of advice:

  1. Pray for each member of your family on a regular, ongoing basis. There is nothing better that you can do for your children than to intercede for them.

  2. Never give unasked for advice. Parents are tempted to give advice, since they have the wisdom that comes from experience, but this can be very harmful to your relationship with your adult child.

Colossians 3:21 (ESV)
“Fathers, do not provoke your children, lest they become discouraged.”

Patrick Morley, “How to Parent Adult Children”

Click Here to View the Full MasterYourMoney.com Blog


Family Needs

If you are the provider in your home, this bucket likely produces vague anxiety for you. Because we cannot know the future, and because each family is unique, you may have fears about this bucket. Although you can’t ever predict all of the needs that your family will have down the road, you can begin to plan for needs that your family will probably have in the future. My own family’s financial needs (five married children and twelve grandchildren) have ebbed and flowed over the years. My wife and I have always been grateful for the plans that we made ahead of time so that when college educations and weddings and a divorce came up, we were as prepared as we could be to meet those needs for and with our children.

 

Crosswalk tells how to stop the flow of money to your adult kids.

Saving for College.com gives options on how to pay for college.

Family Needs

If you are the provider in your home, this bucket likely produces vague anxiety for you. Because we cannot know the future, and because each family is unique, you may have fears about this bucket. Although you can’t ever predict all of the needs that your family will have down the road, you can begin to plan for needs that your family will probably have in the future. My own family’s financial needs (five married children and twelve grandchildren) have ebbed and flowed over the years. My wife and I have always been grateful for the plans that we made ahead of time so that when college educations and weddings and a divorce came up, we were as prepared as we could be to meet those needs for and with our children.

Deuteronomy 6:6-9
And these words, which I am commanding you today, shall be on your heart; and you shall teach them diligently to your sons and shall talk of them when you sit in your house and when you walk by the way and when you lie down and when you rise up. And you shall bind them as a sign on your hand and they shall be as frontals on your forehead. And you shall write them on the doorposts of your house and on your gates. (NASB)

Psalm 49:11-12
Their inner thought is, that their houses are forever, and their dwelling places to all generations; they have called their lands after their own names. But man in his pomp will not endure; he is like the beasts that perish. (NASB)

Proverbs 22:6
Train up a child in the way he should go, even when he is old he will not depart from it. (NASB)

Proverbs 29:17
Correct your son, and he will give you comfort; he will also delight your soul. (NASB)

Ecclesiastes 7:11-12

Wisdom along with an inheritance is good and an advantage to those who see the sun.
For wisdom is protection just as money is protection. But the advantage of knowledge is that wisdom preserves the lives of its possessors. (NASB)

Isaiah 30:1
“Woe to the rebellious children,” declares the Lord, “Who execute a plan, but not Mine, and make an alliance, but not of My Spirit, in order to add sin to sin.” (NASB)

Ephesians 6:4
And, fathers, do not provoke your children to anger; but bring them up in the discipline and instruction of the Lord. (NASB)

I Timothy 3:4-5
He must be one who manages his own household well, keeping his children under control with all dignity (but if a man does not know how to manage his own household, how will he take care of the church of God?) (NASB)

I Timothy 5:8
But if anyone does not provide for his own, and especially for those of his household, he has denied the faith, and is worse than an unbeliever. (NASB)



 

 
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