The Long Arithmetic: Issue 16

I can tell you what my rental properties earned last year without looking it up. I can't tell you what I gave my children. I've never added it up.

Three readers have asked me a version of the same question since June. The most recent, last week, put it plainly: how much should I be supporting my kids, what is too little and what is too much.

I don't have a number for them, and I've just told you I don't have one for myself. I think the number is the wrong thing to be stuck on.

There are two money questions about your children. Only one of them gets treated as the hard one.

The first is how much to leave them when you die. That question gets attention. You hire an attorney. You sit in a meeting. There is a document with a date on it. Somebody bills you for thinking about it, which is irritating, and which also guarantees you think about it.

The second question is how much to give them while you are alive. Nobody schedules that one. It arrives as an email in March about the car insurance. Then again in June. Then again in October, when a job does not start when it was supposed to. No document. No meeting. Nobody bills you.

That second question has been running for years in most houses like ours. Mine included.

 The decision nobody ever made

Money you put into a deal announces itself. There's paperwork, a call, a wire confirmation, and a tax form that shows up late and irritates you. All of it exists to make you stop and look at least once.

Money you give your child announces nothing. It arrives in pieces, and every piece makes sense on its own.

Say the car insurance renews and your grown child is still on your policy. That's a few thousand dollars for the year, and you pay it, because taking them off would cost them more than it saves you. Nothing about that is wrong.

What never happens is the sentence. Nobody says out loud: we are giving our kid roughly this much a year, and we have been doing it for roughly this long.

I know a real estate investor who can tell you what every one of his properties returns, instantly, no notes. Ask him what he gives his children in a year and the number isn't there. He's not careless. Nothing has ever made him work it out. I'm in the same position, which is how I recognize it.

A choice made in small pieces has nothing that forces the long arithmetic. A deal has a closing date. A child doesn't.

The same question shows up with anyone you support regularly. A sibling. A parent. A friend who hit a bad streak. The relationship changes, but the mechanism doesn't.

I expected the numbers to say something reassuring. They said something worse.

Pew Research Center asked 3,017 parents of children aged 18 to 34 about this in late 2023. About 59% had helped a child financially that year, and higher-income parents did it most: 65%, against 52% at the lower end.

Then the part worth considering. Of the parents who gave money, 36% said it hurt their own finances at least a little. Split by income, that is 49% at the lower end, 37% in the middle, and 22% at the top. So roughly 4 in 5 higher-earning parents said helping didn't really hurt them.

That reads like good news. It's the opposite. When something doesn't hurt, nothing tells you to look at it. The amount drifts wherever it drifts and stays there. The better you can afford it, the less likely you are to see it.

One honest limit. Pew's "higher income" is set against the middle of their own survey group, a much wider net than the people reading this. So use the direction, not the figure.

Key points:

The same survey asked parents and children whether the parents had prepared them for independence.

86% of parents said they had done a great deal or a fair amount. 66% of the children agreed. The most confident parents were the higher-income ones, 53% of whom said a great deal.

A separate question asked parents whether their children's successes and failures reflect on their parenting. 71% said yes, and Pew notes this was especially true of higher-income parents.

I want to be careful here. Those are three separate questions, asked of different groups: whether helping hurt your finances, whether you prepared your children, and whether their outcomes reflect on you. Nothing in the data connects them, and stacking them into an accusation would be dishonest. They do sit next to each other awkwardly.

The parents most sure they prepared their children are also the ones who feel the ongoing cost least, and the ones most likely to read a child's outcome as a verdict on themselves.

And the honest counterweight, which points the other way. Children of higher-income parents were the most likely of any group to say their parents prepared them well: 85%, against 73% in the middle and 53% at the lower end. The gap is smallest at the top, and if anything the data leans toward wealthier parents being better at this, with their children agreeing.

 What the money is actually for

The question worth asking is what the money is doing. There are three honest answers, and from the outside they look the same.

It might be buying time. Your child is building something real and the money is runway. That's a legitimate thing to fund.

It might be buying a floor. Your child is basically fine, and the money removes a consequence that would otherwise land. Sometimes that's exactly right. A floor under someone having a bad year is a different thing from a floor under someone who has stopped looking for the stairs.

Or it might be buying your own comfort. The money settles your worry rather than their problem. That's the one nobody writes down, and the one I'd rule out first, because it's the only one where the spending has nothing to do with the child's situation.

Here's a test to work out which one you're doing. It takes about five minutes.

The number is whatever actually left your accounts for your grown children in the last 12 months, one-offs included. Then one question about it: if your support stopped on the first of next month, what would change in your child's life, and how long would it take to show up?

If nothing much changed for months, the money is probably buying your comfort, and we can stop calling it support. If something changed within a week, it's buying a floor, and the question becomes whether that floor has an end date or is permanent and never discussed.

Another real estate investor I know, responding to an earlier issue about inheritance, put it very eloquently: raising someone prepared to carry it is the harder inheritance. I think that's right, and that we pass it on, or fail to, in exactly these small pieces, years before anybody signs a document.

The number you leave your children is a decision you make once. In a room, with help, on a date you'll remember.

The number you give them while you are alive is a decision you are making every day, mostly without noticing. By the time it finishes running, it's very likely the larger of the two.

How much is too much has no answer that survives contact with an actual child. So I'd ask it differently. This is the question to ask: what would have to become true in my child's life for this to stop, and have I ever said that out loud, to them or to myself?

If you run the 12-month number this week, I'd like to hear what surprised you. I'm running mine. Reply to this email. I read every one, and I answer them myself.

Most people who read this were sent it by someone they trust. If you're that person for somebody, forward it to them. No agenda attached to it.

Refer 3 friends and get a free strategy call with Alina on the topic of your choice.

Disclaimer: This is not financial advice. This material is for educational purposes only and not financial, legal, or investment advice. Private investments may be risky. Do your own research and consult licensed professionals before acting on anything specific to your situation.

Until Monday.

Alina