Wednesday, 05 February 2014 15:42

Handling Adult Children and Budget Busters

Written by  Dave Ramsey
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Q. Do you have any advice for teaching responsibility and generosity to adult children and grandkids when it comes to money?

A. I think there are three key factors when it comes to teaching children of any age about these concepts—humility, gratitude and contentment. In my mind, humility is where gratitude comes from, and gratitude leads to contentment.

 

I’m generous to my adult children, but they have no sense of entitlement. That’s due to their personal humility. They don’t feel that I owe them anything, and they already know that anyone who cops an entitlement attitude gets cut off. You’re no longer qualified for my generosity when you lose your gratitude.

 

You’ve got to spend time talking to kids about these things. Otherwise, you run the risk of them counting on the income. Here’s an example. We coach some family businesses at my company, and the best family businesses are the ones that teach non-employee family members who receive money from the business—dividends from the profits—never to live on those dividends. I’ve seen lots of cases where someone will start living on the business they don’t work in, and they immediately start feeling entitled to the money.

 

The same principle applies in your situation. If someone starts saying, “Well, since mom and dad are paying for our daycare, we can use that money we would have spent to buy a car.” That means they’ve started counting on mom and dad’s generosity to live, and that’s a form of entitlement mentality.

 

None of our kids receive any kind of financial help from us at all, unless they’re already carrying their weight in their own lives. That’s not being cold. It’s teaching responsibility and self-reliance. Now it would be different if one of them developed a serious medical issue or something like that. But the whole idea that mommy and daddy have lots of money, and I can just get some from them? That doesn’t fly in our family.

 

You have to teach them character and giving in order for them to be valid recipients. Plus, it’s all about the kids’ attitude. But you’ve got to talk about it often and communicate the value system out loud. The gifting and generosity are contingent upon the humility that leads to gratitude that leads to contentment.

 

 

Q. My wife and I are working the Baby Steps, and we have our budget in place. Sometimes the budget gets busted because of home improvements and various other things. I think we should take money from our emergency fund when this happens, but she says it should come out of our restaurant and fun money. What do you think?

 

 

A. I hate to break this to you, but overspending is not an emergency. If you budget a set amount in one category and you go over that amount, you’ve got to have something you reduce or cut out completely to stay within your budget for the month.

 

You’d be surprised at what some people call an “emergency.” But here’s the deal: If something happens on a pretty regular basis, it’s a predictable event. That means you need to budget a larger amount for home improvements or whatever the problem area may be.

 

Overall, on a month-to-month basis, if you find you have $200 budgeted for car repairs and the repair turns out to be $250, I’d rather you cut back on eating out to make up the difference. That’s the way my wife and I did it back in the day. We never touched the emergency fund for anything except big, unexpected, scary stuff.

 

 

Last modified on Monday, 10 February 2014 15:44
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