Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)
Dear Pay Dirt,
My wife and I are parents to two kids, ages 11 and 13. We’ve always tried to be transparent with the kids about our money. While we make a good upper-middle-class income, we’re by no means rich. We’ve lived within our budget and that has meant making choices about where we spend our money. We don’t take trips to Disney twice a year or have a vacation house, like some of their friends do.
My father passed away somewhat unexpectedly last year and left us a significant inheritance (about $1.5 million). We’ve been using this money for renovations around the house and other perks. We’re planning to start taking more trips. The kids know we inherited money from their grandfather, but don’t know how much. In the spirit of transparency, my wife thinks we should tell them how much we received. I don’t want to tell them the specific amount, but would rather say something like “It was enough to help you both out with college, let us travel more, and do other things we weren’t able to before.”
My worry is that knowing the amount (even generally) will negatively affect their relationship to money. When they ask for things, I can’t go to my default of “We can’t afford that.” If they want something and I tell them to save up for it, I fear they will be resentful knowing that I could just buy it for them. How do you raise kids to understand the value of money when they know how much we have?
—Suddenly a Rich Dad
I think it’s generally good to be transparent with children about money, and it’s part of your job to educate them about how and why you make the financial decisions you do. What gives children a negative relationship to money is uncertainty, not information.
I suspect what really makes you uncomfortable about telling them is that they will inevitably question your spending decisions. And I hate to break it to you, but you can expect that anyway, by the time they’re teenagers. It would happen regardless of whether you inherited money.
Personally, I’d view it as an opportunity. It’s easier for children to internalize the real-world consequences of having money, or not, if they know how it operates in their immediate world. Each decision you make is an opportunity to educate them about the difference between long-term and short-term considerations. If the most convenient aspect of not telling them is that you can still go to your default explanation of “We can’t afford that” when they ask for something, understand that your children can probably see through that when it’s not true anyway. Kids are more sensitive to these things than you think.
This is also an opportunity to teach them how to be conscientious of ways in which having wealth gives them advantages other people don’t have, and to teach them to be good stewards of it. I know that some of these conversations are uncomfortable—this column wouldn’t exist if people were comfortable talking about money—but what your kids learn from you about it now will shape their relationship to money as adults. I wouldn’t bypass the opportunity if I were you.
Dear Pay Dirt,
My brother and I had babies seven months apart. My mother put $30,000 in a college account for my brother’s son, her first grandchild, shortly after he was born. She promised the same for our child. We opened a 529 college savings account and my husband suggested to my mother that she deposit $15,000 this year and then $15,000 next year, to help her avoid taxes. Which she agreed to do.
However, I ended up getting pregnant again very quickly and having a second baby this year. My brother’s wife is pregnant again, and now my other brother’s wife is also pregnant. In light of these new developments, my mother has reneged on her initial offer of an additional $15,000 for my daughter, but is offering $15,000 for our new baby’s college funds.
I understand her predicament, and my mother is not a rich woman by any means, just a hardworking nurse that was smart about her money. While I have never taken money from her—I left home at 16, worked throughout college, and have been entirely on my own financially—she has supported my brother quite a bit through the years. He lived with her until 26, working on and off, while he took the long route through college, before finally leaving the nest. Then she paid for expensive fertility treatments for his family as they tried to conceive—treatments that cost tens of thousands of dollars.
While I have never wanted handouts from her, I can’t help but be bothered by the fact that our attempt at saving her money in taxes has cost my oldest $15,000 in college savings. There is the additional factor that my brother has a son (with a second son on the way), and I have had daughters. In her culture, the firstborn grandson is traditionally favored much more than the other children, and boys in general are more celebrated. While I’m grateful to my mom for her generosity—she does not owe us this money, and I know we are lucky to have it—I can’t help but feel irritated at the disparity, and the fact that our attempt to do something good has cost my daughter education funding. I don’t want this to come between me and my brother, as we are close. I’d love some perspective to help me feel less annoyed.
—No Good Deed Going Unpunished
Dear No Good Deed,
I think you’re looking at this the wrong way. Your attempt at saving money didn’t cost you money in college savings; the needs of your siblings and their children did—and they shouldn’t be faulted for that. Your mother did not know, when your brother had her first grandchild, that there would be more on the way, or how and when they would be spaced apart. She had no way of knowing that.
I also think you may be attributing more of your situation to gender bias than is warranted. Is there any evidence that if your brother’s firstborn was a daughter, the situation would be any different?
The reality is that when parents make promises to support their grandchildren in this way, before any grandchildren are born, they can only estimate what the outlay is going to be and how it’s going to occur. Your brother benefited from his timing, but there’s no evidence that your mother is being unfair. She doesn’t owe any of you help with your children’s college finances. Her contributions are a gift, not fulfillment of an IOU.
And this absolutely should not come between you and your brother because, to put it bluntly, your brother did nothing wrong. If it hurts your relationship, you can only blame yourself. It’s understandable that you’re disappointed that your children will not see the same benefit your brother’s eldest will, but it doesn’t seem like anyone is trying to shortchange you.
There are always going to be certain disparities in how parents treat their children individually, most of them unintentional. It does no good to keep score, and in all likelihood, you and your siblings treat your parents differently, too. I don’t think you want your mom keeping score on that front either, so I think the best course of action is to be grateful for her generosity and write off your brother’s additional windfall as a consequence of timing—because it is.
Dear Pay Dirt,
After a particularly nasty battle with COVID, my mother-in-law has finally decided to get her will/financial plans in order. While this sounds great, it’s actually become a huge issue, mainly because she has also finally acknowledged some significant substance abuse problems within her family. Basically, my father-in-law is an alcoholic and three of her children have major drug problems. My MIL is concerned that if she dies first, my FIL will sell their house to have access to cash to continue funding all the addictions, including his own, and end up homeless.
Her solution: She wants to set up a trust that says her son (my husband) will inherit her part of the house and, while my FIL can live there until he dies, he cannot sell the house. She has not told my FIL any of this and obviously doesn’t plan to (she also wanted my husband to keep it all a secret from me, which he clearly didn’t).
Am I wrong to think this is an absolutely crazy idea? It just seems like she’s passing all responsibility onto my husband, while completely undercutting her own. My husband is pretty vague on all the details but wants to go along with it just to keep the peace. How can I convince him this is a horrible plan?
—I Feel Like Cassandra Over Here
Your mother-in-law is putting all of you in a terrible position, and doing it selfishly, because if your husband were to decide to go along with this, she won’t be around to clean up the mess. She’s also trying to control your father-in-law’s behavior, and that of her adult children, and putting the responsibility for managing all of that on your husband. This is a recipe for disaster all the way around: It gives your father-in-law no agency in the situation and forces your husband’s siblings to negotiate with your husband for any portion of their possible inheritance, which will cause resentment, even if your mother-in-law thinks she has reason to believe they will waste the money.
You may also want to point out the flaw in your mother-in-law’s logic here: If your father-in-law and your husband’s siblings would (if no trust were in place) sell the house and blow the money, it’s not as if her appointing your husband gatekeeper is going to magically ensure that they will have stable, healthy lives when she’s gone. If she’s concerned about this problem, she needs to try to get them help, now, while she’s still alive. I think it’s fine to stipulate that if your husband gets her part of the house that your father-in-law is allowed to live there until he’s no longer able, but even then, your father-in-law should be made aware of these plans. It should not be dropped on him as a surprise.
Dear Pay Dirt,
My husband and I are having serious disagreements regarding student loans. He paid off his small loans quickly. I had significant balances, and I would still be in school for years after that point, although I worked full time while I finished up.
Over the years he was able to secure raises and promotions. Now he makes about $165K (IT), while I make about $50K (nonprofit business development). We live in a very inexpensive city, and our mortgage is only $1,450 a month, with seven years left. My loans have never gone into default, but when my children were small, I took a forbearance while I was home with them, and then began working from home as soon as possible afterward. I have paid extra monthly on the two private loans with the highest interest rate.
Here is where things get creepy. I thought that things would be a little easier with work-life balance when we stopped commuting. He never attempted to care for the kids before 6 or 7 p.m., and then would be mad if I had to work after their bedtime to catch up.
At first, I was shocked that he’d be so cavalier with my time, but I thought about it and realized he’d been financially controlling since the beginning, concealing information, attempting to keep stimulus money from me, and refusing to have enough taken out of his paycheck to cover his tax burden. This caused an argument every year, but he never would follow through with HR to make it right.
I thought he didn’t understand that filing together was actually worse for me than when I had filed as single, because at least I would get to write off $2,500 of my student loan interest. All tax credits from marriage, education, and the children are eaten up by his unpaid state and federal taxes. And I realized that I was eligible for federal student loan forgiveness because of my work. I could have been paying hundreds of dollars less each month (before the pause), and would have paid tens of thousands less before it is discharged.
I only got mad when I realized that because of my filing status, an income-based repayment would be triple what it should be, because they imagine he would help me. I will be filing jointly this year, but I am bitter, because his idea of helping me with my loans was always lecturing me about spending.
He knows he’s been taking advantage of me because when I told him I would refile my taxes retroactively if allowed, he flipped out and threatened divorce. Obviously they will not allow me to do this, but he was incredibly rude when we discussed it. Is financial counseling worth it with someone so entitled? I feel like he married me to get a sex maid, babysitter, and a tax break.
—It’s All Becoming Clear Now
Dear Becoming Clear,
You have a problem that’s more immediate than the issue of your taxes: Your husband is taking advantage of you and being dishonest about his own financial situation. He’s also taking tax advantages for himself, when you clearly need them more, which is incredibly selfish. I don’t believe you have to share assets in a marriage to make it work—my husband and I have separate finances, for a variety of reasons, and it works for us—but you still have to have transparency and respect. Your husband is denying you both.
Your desire to remedy the problem retroactively is perfectly reasonable in that respect, and if he’s going straight to divorce when you suggest it, there are some serious fractures in your marriage that are not actually about the money. I think you should see a marriage counselor, not a financial counselor, and if you currently use the same accountant, you should find your own. You need to understand what your own options are, both now and in the future, if you can’t resolve the issues here that are fundamentally about trust.
I think you are right in your assessment that your husband has an entitlement problem: He thinks he’s entitled to any tax advantages you might get, entitled to your work time, entitled to keep meaningful information from you. The question is whether you can tolerate that entitlement bleeding into all aspects of your life, which it sounds like it’s already doing. Some marriages work better when there are disparities with regard to home and professional life, and division of labor in decision-making. But even if that was true for you, we’re not talking about that kind of situation. What your husband’s doing is just manipulative, and it sounds as if you want an equal partnership, which is not what you’re getting. So you should figure out what the best course of action is for you, financially. I hope your husband comes around, but if he doesn’t, you need to know what your options are.
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I am on my third marriage, first for my wife. We have a 4-year-old son together, my 9-year-old daughter, and my 13-year-old son who lives with my ex. Since our son is in preschool now, my wife has been talking more and more about wanting another baby. We would have to move to a bigger house, we would have to go to a single income, the huge age gap between the kids, etc. It is not realistic at all. We have tried going to counseling, but it only made things worse. My wife blurted out it wasn’t fair that I got three kids while she only had one. It was like being slapped in the face. She has apologized, but I keep watching her with my daughter, and all I can think about is what she said. I never expected this of her. I find myself resenting her and doubting her. I really don’t know to get past this.