My fingers are hovering above the keyboard. I write a sentence then delete it. Type a paragraph and then make it disappear. I have thoughts swirling in my head but can’t seem to line them up in an orderly fashion.
I’m struggling with a philosophical question that has plagued me for well over a decade. Is it wise for parents to provide financial assistance to their adult children and if so is it okay for them to do so in an unequal fashion? Now I’m not talking about health issues that would result in one child needing more money for therapy or daily living. I’m talking about a family with two children who have similar capabilities and intelligence.
One child is a ‘go-getter.’ He worked hard in college and graduated with high honors. Before graduating he was offered a job at a company he worked for in college. His skills and knowledge from schoolwork and internships led to a high starting salary. As the years progressed his wages also rose. He took greater risks in his career by becoming an employee of smaller companies where he could learn aspects of running a business. He proved himself in the industry and ultimately formed his own company.
The other child did not take advantage of his opportunities. He failed out of college. Without a degree he started working at a much lower salary than his brother.
The good news is that the past is the past. It has been many years since the second child failed out of school. He has been working in the industry for quite some time now and earns close to six figures and well over $200,000 as a family.
The ‘go getter’ brother earns a solid income, but he is also wise with his money. He began investing in his 401(k) a year out of college, he drives old cars, he doesn’t spend money recklessly and he saves for both short and long term goals.
As a result he has been able to buy a primary house and a beach home. He paid for both houses with money that he and his spouse earned from their day jobs. (I should note that he purchased these homes at quite a young age and was making less per year than the second sibling currently earns.) He still has mortgages on both properties.
The second brother could not afford a house at this point in time, but his parents have offered to buy him one. The house would be his free and clear, but the parents would still make all decisions regarding the home and the contents that reside within it. In other words the brother will not have to pay to fix a broken refrigerator, figure out what type of couch to buy or determine when mattresses get replaced, but it will be paid in full and he would not pay a mortgage, property tax or homeowners insurance in order to use it.
So my question is this: Do you think the parents should give the house free and clear to the second brother?
I have actually changed my thoughts on this subject more times then I can count. On one hand I realize that the go getter’s life will not change on account of his brother receiving a house. He paid the mortgage last month and and will continue paying it next month. His brother’s windfall will bear no financial impact upon him.
However I wonder if a sense of resentment will not build over time for all that his sibling has been given. After all, imagine that you are paying a monthly mortgage payment, homeowners insurance, maintenance fees, property tax, etc, while your brother gets to enjoy his home free and clear. Without a $3000 mortgage payment think of all the money your sibling can save towards other things or spend how he chooses.
On the other hand you earned all that you own. There is a deep sense of pride in choosing which house you want to live in, picking out the furniture and yes even paying the mortgage. Certainly there is a greater sense of accomplishment. After all, no one handed you the keys to your home, you ran the numbers, arranged financing and managed to pay the bills and even reduce the mortgage term down to ten years.
So what do you think? Do you think it’s okay for parents to provide more financially for one sibling than they do for another? In this scenario do you think you would feel resentment towards your brother, ambivalence or perhaps pity for a sibling who willingly takes his parent’s handouts? Keep in mind that the second child is not in dire need of money. In fact he is now earning more than the first child was when he bought his first two homes.
Initially I was a bit turned off by the inequality of this idea, but as time passes I no longer have such strong feelings about it. I do not believe I would do the same as these parents, but my heart is warming to their reasons for doing it. If you have thoughts on the subject please leave a comment! I will write more on the subject but I don’t want to sway anyone’s thoughts more than I already have.
An Update: Parents Who Play Financial Favorites
These are complex topics that stir up a lot of emotions and heartache. Since the creation of this original post I’ve had a lot of time to ponder these questions. I’ve also corresponded with many readers struggling with sibling financial favoritism. Readers who want to know how to deal with financial unfairness from parents as well as parents who play financial favorites. If you want to learn more read my updated post: Financial Favoritism: Favoring One Child Financially.