30 responses so far ↓

• 1 dogatemyfinances // Jan 12, 2009 at 9:17 am

  I took a $6,400 loan from a family member a couple years ago. I couldn’t afford a security deposit on a new place and a my bills when I lost my job.

  That family member is the “richest” in our family, I suppose, but that loan was always meant for a month or two. We’re not rich.

  I think maybe it’s a cultural thing. I know my family would help in an emergency even if they didn’t really have the money. That’s why I didn’t even ask my parents.

• 2 fitwallet // Jan 12, 2009 at 9:20 am

  I’ve seen quite a few folks link to Meg’s post. It sure is honest–most people don’t want to admit they’re “trust fund babies.”

  My parents don’t have that kind of crazy cash, and I know the recent economic downturn has affected their retirement savings. But I’ve certainly profited from their help throughout my young adult life. They helped me buy my first home and put me through college–that’s a lot right there! If I experienced a significant financial emergency, I know I could get a loan from them. I hate taking money from family–for me, there’s a sense of failure or weakness that comes along with it. But I freely admit that I am privileged to have parents who could help in a worst-case scenario.

• 3 Beef Up Your Piggy // Jan 12, 2009 at 10:48 am

  Wow LAL. This is the first blog post in a few weeks that has me thinking. Thank You! I do think this is a good start to having a definitely of rich or poor. But also, financial freedom is big on my list. Just because you have family support (as this blogger you talk about does) and money, does not mean you are financially free. You should be financially free, even if that doesn’t equate to tons of money. I have been “on my own” in terms of money since I graduated college. My parents were generous enough to take on the college burden and pay for that. So I assume that if the dire situation happened, they too would be able to assist me. But I have never even thought of them in this way. I think I would be exhausting my finances and options for loans, etc first like millions of others have to do. I think they have done plenty and more than enough to this point. I would feel badly taking money from them whenn they are no longer working and will need it for years to come (God willing). But great post. thanks!

• 4 Revanche // Jan 12, 2009 at 12:45 pm

  I quite agree. None of my peers understand the anxiety associated with a pending layoff, and I was getting really frustrated with their “oh, it’ll be FINE” attitude this weekend. It wasn’t until this morning that I realized that it’s because every single one of them has a safety net: in any emergency, if they wanted to ask, their parents, aunts and uncles would all be able to help them or even float them for a time.

• 5 Miss M // Jan 12, 2009 at 3:54 pm

  My parents/family are middle class and could help me out in a lot of situations, but buying a property isn’t one of them. They’d help out with bills for a month or two but that would be the limit of their ability. I think having family money allows you to take more risks since you have a back up plan. For example I couldn’t start a business right now cause if it didn’t succeed how would I pay the bills? Mr M was raised wealthy and I see the influence in his various schemes and dreams, often they involve money and risk that we can’t afford.

• 6 LAL // Jan 12, 2009 at 5:24 pm

  There is nothing wrong with getting help from your family if they can afford it.

  But dog, sometimes your family literally has no money. The case being how my mom and I lived on credit cards for a bit because there was no money to borrow.

  Talking about it tomorrow, but my aunts and uncles were broke, my grandfather worked but gambled away everything, which is why my mom was so poor growing up. She even ended up in jail because they were hauled in a gambling raid (a story for another day).

  So there is a point where you are too poor to get any help because there is no money.

• 7 Fabulously Broke // Jan 12, 2009 at 5:54 pm

  In that case, I think if I were to ask my parents for money, I’d be “poor”. But if I asked my siblings for money for an emergency, I’d be middle class…

  My parents just haven’t saved enough or have enough money for anything. I don’t ask for anything because they can’t afford it.

  Fabulously Broke in the City
  Just a girl trying to find a balance between being a Shopaholic and a Saver…

• 8 FruWiki Meg // Jan 12, 2009 at 6:12 pm

  I’ve been really lucky in that I’ve always known that my mom would help me out if something happened. She lives on a very limited income, but I know I’d always have room and board at her house if needed, and she always has a way of finding something to give to others who are in need.

  I wouldn’t consider my mom middle-class per se, but I can’t remember ever feeling poor growing up, either. Meanwhile, I’ve known so many people who haven’t had such a supportive or able family — and yes, it’s made it a lot harder for them to become financially stable. So, I can definitely understand how having a support system is so important.

• 9 Trevor // Jan 12, 2009 at 7:05 pm

  I think there is a connection with the wealthy family members when it comes to the rich. But that doesn’t mean they can always rely on them for financial support. I know that my family does fairly well, and I wouldn’t be able to run to them for something like that. It’s just not the way it works for us.

• 10 Zen City Chick // Jan 12, 2009 at 7:38 pm

  I can agree there’s somewhat of a link…..but…..
  I kinda think it has less to do with funds, but more about the kind of family you have. I have one aunt who can barely make her rent each month but if I came to her in need would likely go take out a loan to help me out.

• 11 fengshui // Jan 12, 2009 at 9:35 pm

  “How many people would be able to turn to their parents/grandparents if they lost their jobs and ask for money if they were unemployed? Would their parents be able to help them? If the answer is yes, then you are definitely middle class/upper class.”

  I could not count on my family for money, but my parents would let me live with them and support me until I got back on my feet. I have “moved up” past my parents. Neither of my parents, nor any aunts or uncles, or grandparents have a college degree. So, with me getting a doctorate, I’ve definately tried to live my life differently than them, and want to succeed financially.

  My husband on the other hand, has wealthy parents. They would be able to help us financially, if we needed help, but I would rather not ever have to ask them for help, unless we were about to lose our home/ starving, etc.

  I hope that I would never have to ask for help. I’ve done what I’ve needed to in the past to get myself out of jams. If a financial crisis occured for us, I can always pick up extra shifts in the urgent care on the weekends for extra money. I can earn an extra $20k or more a year by picking up extra shifts on the weekends in urgent care. I chose not to because I enjoy my time off. But, it is nice knowing that I have that to fall back on, in addition to my “regular” salary.

• 12 fengshui // Jan 12, 2009 at 9:50 pm

  Meg writes in her blog:

  “People want to help their own families. It’s human nature. It’s the reason why babies survive after their 10th straight hour of crying. And it’s also the reason why children of the wealthy are often spoiled”…..

  And then continues to write:

  “But the fact is that one of the realities of being wealthy is trying to figure out how to most effectively and efficiently share your wealth (preferably while sharing as little with Uncle Sam as possible).”

  Funny….. not all people think this way. I’ve ranted in the past about my wealthy inlaws and how incredibly frugal they are. The do not, in any way, shape or form, “spread the wealth”. My hubby is driving a clunker, and 50% of the time, it won’t go into gear. The transmission is going to go, any time now. So, my MIL offers to let my DH buy her 2002 Ford Escape for $7k. Ummmm. ????? Ok. She can’t just give it to him, or even let him use it until we can save for another car. Nope. And their company had >$5 million in profits this year. At the company Christmas party a few weeks ago, my FIL proposed a toast, to the “most successful year yet” for the family company. My DH works his tail off for him, sometimes >60 hours a week (mostly in the summer). No christmas bonus. No raise this year. I don’t get it. I stay out of it because it is none of my business. I presume that they are just saving it. It is their money and they have every right to do with it as they chose.

  Hmmm.

• 13 momthing1 // Jan 12, 2009 at 11:23 pm

  As far as gifting money, I think there is a huge difference between people who are wealthy with inherited money and people who are wealthy with their own money.

  For example, if an adult was themself the recipient of family wealth, don’t they have an obligation to pass excess down to the next generation? I think they do. The person who originally accumulated the wealth intended that very thing. It is family money. Also, the recipient learns to manage funds and invest wisely with those smaller annual gifts, so hopefully will do well with the eventual large bequest.

  However, a person who is self-made doesn’t have the same obligation.

  My opinion.

• 15 fengshui // Jan 13, 2009 at 11:53 am

  “However, a person who is self-made doesn’t have the same obligation”

  But why wait until you pass away to hand some wealth down? Then doesn’t the goverment hack it away with estate taxes?

• 16 momthing1 // Jan 13, 2009 at 12:49 pm

  “But why wait until you pass away to hand some wealth down? Then doesn’t the goverment hack it away with estate taxes?”

  I think that is up to the individual. Perhaps they don’t intend to hand it down to family members.

  There are a number of strategies to minimize estate taxes, gifting to family members is one strategy.

• 17 LivingAlmostLarge // Jan 13, 2009 at 8:34 pm

  Mom, I agree there is a difference between people who inherit wealth and those who don’t MIGHT have an obligation to pass it.

  I’m curious, if Meg’s parents are as successful as her grandparents, the ones with the wealth. And if that’s due to the fact that they knew they were inheriting wealth?

• 18 fengshui // Jan 13, 2009 at 9:17 pm

  ““But why wait until you pass away to hand some wealth down? Then doesn’t the goverment hack it away with estate taxes?”

  I think that is up to the individual. Perhaps they don’t intend to hand it down to family members.

  There are a number of strategies to minimize estate taxes, gifting to family members is one strategy”

  I was basing my statement on what Meg was saying about how it is “human nature” to spoil your children and keep $ in the family. So, if it is human nature to keep $ in the family for those who have wealth, then why would someone purposely disinherit their family by leaving their wealth to an institution or something else? That seems to go against everything that Meg was talking about. ???

• 19 momthing1 // Jan 14, 2009 at 2:07 am

  “I’m curious, if Meg’s parents are as successful as her grandparents, the ones with the wealth. And if that’s due to the fact that they knew they were inheriting wealth?”

  I don’t know of course, but I think it stands to reason. It is certainly much easier to invest when you have a large amount of capital which you don’t need to live on. If you start with nothing and earn 8% a year, that is nice. If you start with 450k and earn 8% a year, that is infinitely nicer.

  When my kids were little we played Monopoly once where one person started with several thousand and everyone else started with nothing. No matter how many times you play, the person who starts with money always wins. (This wasn’t my own bright idea, this was an idea I read to demonstrate to young children why people in poverty tend to stay in poverty, an aside to a social studies unit we did.) Monopoly is not real life of course, but I think the principal holds.

• 20 LAL // Jan 14, 2009 at 10:41 am

  I see what you are saying mom1. But while you can be “successful” and maybe they have money are they using it to live like the Kennedys? Everyone knows they are running out of money after generations because they don’t know how to earn it like Joseph Kennedy.

  Definitely you can run through an inheritance easily is part of the problem.

  Or if you are used to a certain quality of life then have to use your inheritance to live that life, instead of being able to live on what you earn, then what will you heirs get?

• 21 fengshui // Jan 14, 2009 at 1:38 pm

  “I read to demonstrate to young children why people in poverty tend to stay in poverty, an aside to a social studies unit we did.) Monopoly is not real life of course, but I think the principal holds.”

  Mom1, thanks for pointing this out. This is very true, and many people slam the theory. I have always speculated that I would not be as successful as I am, if it weren’t for all of the financial aid I recieved to go to college. My family was very poor when I was growing up, I was never privilaged.

• 22 LAL // Jan 14, 2009 at 2:48 pm

  I hate to say this but it also can be a building process. That each generation is slightly better off that the last. Like my family. Perhaps we can build towards wealth like meg’s. I guess we were just hoping for a better life, but my mom and her siblings certainly didn’t think of being millionaires. Just middle class and they are. And now they are giving their kids the opportunity to have more.

• 23 fengshui // Jan 14, 2009 at 4:32 pm

  “I hate to say this but it also can be a building process. That each generation is slightly better off that the last.”

  We can only hope, and this is the IDEAL situation for american families. But in times like these, this seems to be proving difficult to accomplish. And like Mom1 said, those born into poverty, statistically tend to remain in poverty…. unfortunately.

• 24 momthing1 // Jan 14, 2009 at 11:33 pm

  <>

  I agree. I also think that another advantage of inherited wealth is the opportunity to learn at a young age to manage money, to save and invest. Lots of people don’t get those lessons early on and have to figure them out on their own, if they ever do.

• 25 Meg // Jan 19, 2009 at 12:55 am

  Thanks for this interesting post LAL – sorry it’s taken me so long to comment.

  “I’m curious, if Meg’s parents are as successful as her grandparents, the ones with the wealth. And if that’s due to the fact that they knew they were inheriting wealth?”

  My grandparents had four kids, and none of them are as “successful” financially – nor will they ever be. My grandfather earned his wealth as an entrepreneur, and none of his kids will inherit the business nor have they started their own, at least on that scale.

  Of course all four of them also receive the annual gifts (as do their spouses) and they’ll all receive a few million when my grandparents pass, depending on the estate taxes when that happens.

  I’m sure that reality has affected the decisions they’ve made as parents and in their careers. I’ll write a post on it now.

• 27 LAL // Jan 19, 2009 at 4:31 pm

  Thanks! I think it’s an interesting insight Meg.

• 29 Tom // Jan 24, 2009 at 7:19 pm

  I think have a strong family network is definitely a huge key to success.
  Wealthy people certainly are lucky in that they can (generally) fall back on their family.
  The wealthy people I know also give jobs to their kids and all sorts of financial support.
  Coming from a poor family, I’d be in big trouble if I hit a financial snag – I really have very few people to turn to … which is why I have to keep my goals in focus all the time.

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