Should you give Your Child a $20,000 Eighteenth Birthday Present?

“We wanted to do this and on the advice of our financial planner, when our child was born we set up a “strictly no touching” savings account with the funds to be given to him when he turns 18.”

What’s wrong with this sentiment?

Nothing? You say?

There are very few parents in this world who want to see their kids go without. In fact, I know there are some who go without things themselves, in order to make sure their kids have the best start in life. Being a parent is like that.

And every parent in every generation wants to give their children more than they themselves received at the same age.

But I don’t quite understand how some parents can religiously contribute to their kids’ savings accounts and never touch the money – yet are unable to save anything for themselves.

I was called to see a young couple who were having trouble making ends meet and were in fear of the bank re-possessing their home. They hadn’t been married very long, had a two year old child and were expecting another baby within a week or two.

Money-wise, with only one income, things were really tight. Apart from their mortgage which was consuming a large portion of their income, they had no other loans.

But with the husbands work hours being cut back, winter ills and the associated costs of the imminent new baby, they’d been so busy juggling things that they’d not only gotten behind with their bills; they’d also missed some mortgage payments.

Both parents looked pale and seemed fragile. Further questioning confirmed my suspicions – they didn’t eat every day. They did say that their little child ate well every day.

Together we started to add up some figures. Boy! There wasn’t much money coming in and I could certainly see why they juggled their funds all the time. Then I asked about the Family Allowance from the government: were they receiving it?

Oh yes, they assured me, they were getting it and were putting it into a bank account each fortnight; a bank account for their son, that they wouldn’t touch. And they were very proud of the fact that he now had a little over $7,000 in savings.

Oh dear! These people were in serious danger of becoming homeless and their toddler was financially secure enough to leave home and set himself up in a rental property. I think he was fast becoming the wealthiest three year old I’d ever met.

This is not an isolated story. Nowadays we seem to have lots of pre-schoolers with bank accounts containing hundreds and sometimes thousands of dollars – yet their parents are struggling to keep the roof over their head, and food on the table.

And in many cases not only do their parents have no savings of their own but they are using their credit cards each week as an extension of their salary. In many cases, they do this just to ‘get by’. Just imagine the stress this causes!

How do we explain to these young people that Family Allowance is money provided by the government to assist with feeding, clothing and educating their children? How can we get them to see that growing up in a safe home with happy parents is more important than a fistful of dollars when their kids leave school?

And how do we get them to learn that they’re teaching a lesson of saving for others, but not yourself.

The gift of saving is perhaps the greatest lesson you can give your child. The lessons you teach them will possibly last longer than the money you save in an account for them. While the end result may be wonderful, it’s the journey that they’ll always remember.

Is it fair to present them with an end result if they haven’t taken part in the journey?


© Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

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