TheTimesTribune.com, Corbin, KY

Editorials

September 10, 2013

Why you shouldn’t give your child money before age 27

CORBIN — “And here I sit so patiently waiting to find out what price

You have to pay to get out of going through all these things twice”

-Bob Dylan


 

I see people make the same mistakes over and over. This is particularly true when watching people handle money for children.

A number of children inherit money or receive money from an injury or other type of settlement. These children will often have a larger net worth than their parents.

This imbalance of wealth can cause family pressures. I’ve seen children try to use their wealth to belittle their poorer parents. I’ve seen parents succumb to temptation and use the child’s money for themselves. In some cases, I have seen parents steal all of a child’s money. If the parents have any money left, the child options are to prosecute or sue their parents to get the money back.

Not a great way to promote family unity.

Most states, including Kentucky, have guardianship laws set up to protect a child’s money. These laws work when they are followed and enforced.

A flaw in many guardianship laws is that most allow children to take control of the money on their 18th birthday and spend it as they wish.

Few 18-year-olds are prepared to handle a large lump sum of money. Laws prevent people from buying alcohol until age 21. It is assumed that people who can’t legally buy a beer can somehow be responsible for handling thousands and sometimes millions of dollars.

There are some financial planning techniques to keep a child from getting all the money at age 18. Putting the money in an annuity or trust are simple ones. I urge parents and guardians to use these concepts. Some do, but many do not.  

I have seen case after case where guardians turn all the money over to the child on the 18th birthday. I hate it. It is like watching a train wreck over and over again and not being able to stop it.

Many 18-year-olds feel pressured to spend money on their friends. The child with the lump sum will be the most popular in the neighborhood until the money runs out.  

 They are good marks for car dealers, people who sell liquor and drug dealers. If you want your child to die from a heroin overdose, give them a big wad of money and no guidance on what to do with it.

I know there are some 18-year-olds who handle money well, but for over 31 years, I have watched many run through their money in no time.  

One of the worst cases I’ve ever been involved in was when I could not convince a parent to do anything. The money was put in a bank account and $100,000 was given to the young man on his 18th birthday. He used the money to develop a cocaine habit and when that money ran out, he shot a man while trying to rob a pool hall. One man is dead and another in prison the rest of his life because an 18-year-old got too much money at once.

I blame the parents and guardians for putting the 18-year-old in a disastrous position. Many young people who blow their money look back later and wish they had a second chance to do it right.

I read that a person’s financial profile is set at age 27. If someone is a spender before age 27, they might turn it around later. If they are a spender after age 27, they will be that way the rest of their lives.

Twenty-seven may not be the magic age of financial fate, but that is a time when many people are starting their careers and starting a family. They will make more mature decisions than they would at age 18.

The best idea is to give children a chance to have some money available when they are older and can make better decisions.

Don McNay is a columnist for the Richmond Register. Contact him at don@mcnay.com. This column was taken from the updated version of his book, “Son of a Son of a Gambler,” which was released July 30.

1
Text Only
Editorials
  • LIKE IT OR NOT: MLB's All Star effort was a bust

    With the 85th edition of Major League Baseball’s All-Star game in the books, I have to say I feel like the whole thing was a complete bust.

    July 18, 2014

  • THE WAY IT IS: Some local teams can make a run

    Well folks, our Little League All-Star action is beginning to wind down, and I’ve been fortunate enough to see two of the Tri-County’s resp

    July 17, 2014

  • LIKE IT OR NOT: It's been a very busy summer

    While a lot of people would expect the local sports scene to slow down in the Tri-County in the summer time, that’s not usually the case for us here at the Times-Tribune.

    July 16, 2014

  • John Ross.jpg May we all cherish those few WWII vets who still live

    I watch this old BBC program pretty often called “Are You Being Served?” It’s mostly out of syndication — what shows remain can be seen most often through PBS.

    July 10, 2014 1 Photo

  • 0502 Bobbie Poynter So long, farewell, auf wiedersehen, adieu

    I never have been very good at saying goodbye — family, friends, co-workers, neighbors, community — for years you’ve had my back and in turn, I believe I’ve had yours.

    July 7, 2014 1 Photo

  • Ronnie Ellis.jpg ‘Uh hummm!’ It’s been an interesting week

    One column can’t cover everything from a busy week of political events, but here are some quick takeaways from last week.

    July 7, 2014 1 Photo

  • Brad Hall.jpg Let’s multiply our numbers like fleas do

    Last Saturday, my wife, Carmen, and I spent the day at the Kings Island theme park near Cincinnati, Ohio.

    July 7, 2014 1 Photo

  • John Burkhart.jpg Not an earthly trace

    Just married (1897) and in his late 20’s, my grandfather was determined to make a living on a hillside farm covered in wilderness; much as his father had done before him in 1846  when he arrived from Germany.

    July 7, 2014 1 Photo

  • Brad Hall.jpg Col. Mustard with the candlestick in Heaven

    One of my favorite movies is the murder mystery comedy “Clue,” which is based on the popular board game of the same name.

    June 30, 2014 1 Photo

  • John Burkhart.jpg Now or Never

    A story is told of an old widower who decided it was time to find a new wife. He chose to look for this new bride through the obituaries column; identifying new widows.

    June 30, 2014 1 Photo

Front page
Featured Ads
Twitter Updates
Follow us on twitter
AP Video
Judge Ponders Overturning Colo. Gay Marriage Ban Airlines Halt Travel to Israel Amid Violence NYPD Chief Calls for 'use of Force' Retraining VA Nominee McDonald Goes Before Congress Bush: Don't Worry, Sugarland Isn't Breaking Up US Official: Most Migrant Children to Be Removed Police Probing Brooklyn Bridge Flag Switch CDC Head Concerned About a Post-antibiotic Era Raw: First Lady Says `Drink Up' More Water Courts Conflicted Over Healthcare Law Holder Urges Bipartisanship on Immigration Raw: Truck, Train Crash Leads to Fireball US Airlines Cancel Israel Flights Obama Signs Workforce Training Law Crash Victims' Remains Reach Ukraine-held City Diplomatic Push Intensifies to End War in Gaza Cat Fans Lap Up Feline Film Festival Michigan Plant's Goal: Flower and Die Veteran Creates Job During High Unemployment
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide