Speaker 1 (00:02.754)
Welcome to the Physician Family Financial Advisors Podcast, where physician moms and dads turn today's worries about taxes, investing, and extra money into a comfortable feeling of financial security. I'm Ben Utley.
And I'm Nate Renneke. Today's question comes from a physician family in California, Misha and Jackie. They asked, should doctors give their kids money? So Ben, giving children money, whether it's a big gift when when a family retires or maybe a big gift when their their child graduates college or even just a large inheritance, seems to be something that. When when physicians start to plan.
for their finances, it's like a foregone conclusion. They think that that should happen, almost as if it's as big of a goal as retiring or sending their kids to college. Where do you think that comes from?
I'm not sure where comes from. Maybe it comes from, it might be cultural, you know, in that some families did receive money from their parents. It might be that it comes from a place where, you know, I don't want my kids to have it as hard as I did. Probably comes from just a feeling of love toward your children and wanting them to have, you know, the best that they can have. And sometimes that thought translates into material wealth, you know, money or the things that money can buy.
believe that a big part of it is the love for their children. And I think that is the biggest hurdle when discussing why you want to give this money. Sometimes it's for a really well thought out reason and I can support them setting aside a lot of resources to get that done. But do you believe that it is a good strategy to show?
Speaker 2 (01:53.44)
your children, you love them by giving them money.
No, I don't. There's a lot of things behind that, but I don't think that it's a great strategy. you know, give is kind of a big word. mean, giving can be seen as an act of kindness. It can be seen as an act of charity. Give can also mean literally just to transfer, you know. Sometimes it has donative intent.
I think that if we look at it in the sense of transfer, should we transfer money to our children, whether they're young children transferring it into their hands or young children transferring it into an account they could have later when they're adults, or how the kids get the money from us. We have to be mindful about what we're doing and what the outcome will be, because there's always the thought that, I should give my kids some money. That would feel good. They might enjoy it. But the outcome...
of that transfer or that gift, I've seen mixed results in my own life as a parent of kids that are college age.
That I'm glad you said that mixed results It's not always a terrible thing right and I'm actually you know, I I Have two young children. I don't know what the right answer is for them But I'm inclined to believe that if it's not always a terrible thing that it really has nothing to do with the gift at all Mm-hmm, right. It's it's a whole lot more about The 18 years of raising them than it is this one act of giving them
Speaker 2 (03:28.226)
cash, which is a lot more work than just giving them cash, the raising them part. But I assume if you raised them well, giving them money wouldn't be a terrible thing.
Right, right. Yeah, I guess when I talk with clients about this idea, usually they have something in mind. They have an amount in mind or a thing that they want to give their children, a house or maybe it's a family cabin or something like that. But very seldom do they have the intended outcome in mind. When I ask, well, it so that you can feel good about giving? Is it so that you can foster family values?
You know, so you can see surprise and delight in your child's eyes. Is it so that you can allow them to do something that they wouldn't be able to do otherwise? Is it to relieve them of the burden that you felt being in a situation where you had less money starting out, particularly in your career or in your training? And what is it that you you want from this gift? How how do you expect to feel? What do you hope that the impact will be in their lives? And also, I think it's important to ask,
what do you expect this child to do with the money? I know that as an adult, young adult, I was given some money from my parents and since then I've learned that they weren't particularly thrilled with what I did with it, you know? They thought that I should have handled it differently than I did. And so I think that we, when we give a gift, we have this feeling in our heart that we're doing something that's the right thing for the right reasons, but
We also are telling ourselves a story about how the gift will go and how the money will be used and who the person is that will actually receive this gift such that, you know, let's say we give our, set up a UTMA account for our children when they're two or three years old and we're setting this aside for when they're older. Well, that assumes the child is going to be responsible and neurotypical. It does not typically include any of the issues that sometimes happen when people mature and brains mature.
Speaker 1 (05:37.378)
where you know sometimes you have a bad outcome with your kiddos and money makes that worse and then there's that money sitting in the line of fire that is fuel for a bad outcome. So I think it's important as you think about what to do with this money like think about all of the outcomes rather than just that chosen fantastical outcome that you see in your mind's eye.
Right. Okay. I want to go back to one of the things you said and one of the many outcomes that could happen from giving your children money, which is the hope that they won't have it as hard as maybe the physician did, the said position did, you know, do you think that that is a, I get this feeling when I, when I'm
When I hear people ask that, get this feeling that that is an experience that they have had, but it's hard to imagine that experience being the same for this child considering their family is physicians. So, you know, I see this all the time where the way that families want to treat their children is either the exact opposite or the exact same of how they were treated when they grew up. But
Do you think that this is a false idea that they will somehow struggle just as much when they're older or is that, know, is it a decent goal to give them money so that they can avoid that struggle?
Well, I have a wide variety of thoughts about this, about struggle and removing struggle from a child's life. I'm not sure I can speak to that with all outcomes, but here's what I do know. There's a book called The Millionaire Next Door, which some of our listeners may have heard of. I've read it. In that book, it describes a phenomenon where a family comes here from another country. They immigrate. Typically, they'll start a small business.
Speaker 1 (07:40.806)
maybe a restaurant, maybe a dry cleaner, maybe a retail goods establishment. And they see how hard it was for them to get started and the struggle that they had and they don't want their children to struggle that way. So they turn their kids into doctors and lawyers and such, know, to quote Willie Nelson. So in doing so, they want to set their children up for what they perceive to be an easier road, you know, a known way to have a financial outcome that's desirable.
Okay. So that, does happen. We see that a lot of second generation immigrant families, who, who are making it in medicine. Okay. And then that family, which typically our client thinks, Hey, I should make the struggle easier for my child by, giving them money, giving them opportunity, giving them, giving them all these things so that they don't have to work as hard as even I did. And particularly not as hard as their grandparents did. And that third generation.
usually squanders the money. It does not turn out as expected. This is actually covered in chapter five of the book, The Millionaire Next Door. I probably read that book over a decade ago, and I've seen this pattern repeat itself so many times in the families that I serve that one time I went back and memorized it was chapter five, and I know that it's chapter five ever since then. you know, the authors in there, they're not making stuff up. Basically, they're researchers.
and they package their research in narrative form such that it's really accessible and you can see these patterns in their work. whether it's a good idea or not, I'm not going to judge that, but I'm going to say that it does not, you know, if you're that physician family and you're giving children money, you're not likely to get the same outcome with your gift that your parents got with giving you your gift.
Would it be okay if I kind of riff on struggle?
Speaker 2 (09:38.742)
Yeah, that's one of the, well, kind of what I wanted to get to as well. That's exactly where my mind went to with this topic. Struggle is almost good in some aspects. It's like, where do you draw the line? Like, how much struggle?
How much struggle is enough? That's a good question. In my studies of philosophy, what I learned is that struggle is essential to human life. Struggle is the path through which purpose and meaning are accomplished. When you remove the struggle from someone's life, and this is, I'm not talking about the person who's...
who's so far down that they're literally fighting for their lives. But when you remove the element of struggle from a neurotypical person's life, you remove some of the meaning and purpose. And this may bring in things like depression or a lack of feeling that I matter, or it can remove a sense of control, which sometimes is a root of happiness. So I think that to take away someone else's struggle
The thought is there that this is a good thing because there are times when you would have liked to have somebody else remove your struggle. But the fact of the matter is that the struggle that you went through to get here formed your character. It formed who you are. It became an element of your soul and your being. And taking that struggle away would have made you something different than what you are today. And, you know, we can look at Maslow's Hierarchy of Needs.
And we can realize that when you remove one struggle, we automatically put another struggle in there by instilling another need in ourselves. We are needful machines. We're always needing, we're always wanting, and because of that, we're always struggling. And to take that struggle away is just to remove our humanity.
Speaker 2 (11:29.63)
Mm-hmm Yeah, I Whenever people play the lottery game with me, you know, like what would you do if you won the lottery? I always think it's a fun. It's a fun exercise And then I think that would be sort of be terrible It would be fun for a little bit I guess and then what's next? Yeah, and I think the finding for how much that kind of just
Like
Speaker 2 (11:58.722)
decision on how much struggle is a difficult one. And it's one that people form through their vision of how much they struggled. You could argue that everybody in this country struggles far less than, you know, some people outside of this country. And maybe they should struggle more and you could argue either way. But for the families that we're speaking with today, it is essential that their children have some struggle because
The reality is that as far as money goes, it's possible that they could avoid that. They could avoid struggle with money.
When I think about like what we do for our kids, it reminds me of a time when my kiddo was little, like there must have been, I don't know, five or six, were to that age where they're starting to climb trees. my daughter approached a tree and she said, daddy, put me up on this tree. And I said, well, if I put you up in that tree, you might fall out. She's like, I know, but I want to be up in the tree. And so I thought about it long and hard and I decided, you know, said, if you were meant to be in that tree, you'll find a way to get into that tree on your own.
And I said, and by finding a way into the tree on your own, you'll also find a way down out of the tree if you decide that you're uncomfortable. And I said, if I put you in that tree on your own, you won't know how to get down. And so that has been an analogy that I've kind of leaned on throughout the entirety of my parenting. And even today, you know, I have a child who's applying to college.
You know, there's so many essays, it's unbelievable the number of essays. I think my kid's written like 3000 words across 10 essays. And it's really tempting for me to sit down or write one of those essays for her. Now she's so independent, that would never happen. But in my mind, I'm like, just let me bang this out, let's get it over with. And as I think about that, I think about the tree. You know, if I write the essay and it comes across as mature and confident and wise and all that stuff, and then she gets admitted to that school.
Speaker 1 (13:55.64)
then she's going to be up on the tree. And she may be in a realm that she's not ready to compete in or thrive in, in which case she might fail. And when she fails, she'll fall from the tree. Whereas if it's an essay that she's written on her own and she's fought to get through it, then she'll make her way into the appropriate tree, maybe not that tree, but the one that she should be in. And having gotten herself into that, she'll know that she could get herself out of it or thrive in that environment.
That's a great analogy. It makes me think of when I was a kid, my mother would write me a late slip every morning. She didn't allow me to get in trouble for that kind of thing. I had to learn the hard way because I would be late every day. And when I got to college, one of my first exams, I slept through. Slept through the exam and failed the class.
Just completely.
Speaker 2 (14:53.43)
Wow. And I wish I would have learned that lesson in high school.
Well, I think you've laid your finger on what's really at stake here. I we, and I'm saying we as, know, people in our socioeconomic standing, upper middle-class Americans, and which includes the clients that we serve, we have this deeply rooted, practically invisible yet always there fear of failure.
And it keeps us from life. It keeps us from trying new things. It keeps us from expanding and branching out. And, you know, we have structured play for our kids these days rather than open play. We have structured environments where there's not failure. In fact, there's a trophy for graduating from the first grade or the fifth grade or whatever it happens to be. You know, failure is anathema to what we are and what we've become.
But failure is the thing that makes us human. It's the thing that makes life worth living. It makes life interesting. And I think if we take that away from our children, we're robbing them of their birthright. By the same token, when I talk to our clients and I ask them, you know, what do you want for your child? How do you want your kid to grow up? What do you want them to become? I want them to grow up and be independent. I want them to stand on their own two feet. I want them to be able to contribute to the world. I want them to be an active member of society. I want them to have a life of meaning and purpose.
All right. So we look at Horatio Alger, we look at Oprah Winfrey, we look at anyone who struggled to achieve the place where they are. Nowhere in there did they get a whole bunch of money, right? Nowhere in there did someone just put them in the tree and make them successful. They all climbed their way up and in the, doing so they became who they were really meant to be. And I think that we as parents need to be careful as we do these things that we're not removing.
Speaker 1 (16:57.024)
opportunities for safe failure for our children. When I say failure, I'm not talking about a deal-ender like end of life or something that's irrecoverable. I'm talking about the good kind of failure that you could fail at it and, you don't get this today, but you get to try again. You know, when we remove failure from our children's lives, we just rob them an opportunity to become the magical thing that they were intended to become in life. And to a certain extent, I think that giving them money, and when I say giving them money, I mean in excess of their needs.
Right? Fulfilling their wants, fulfilling their wishes, or just giving them outright cash. I think that we're, coming very close to removing the potential for failure. And in fact, we may be setting them up for our own brand of failure.
Kind of the environment that some of these children are in with physician families. It's sort of, sometimes you'll find a high octane environment where it's just, you you need straight A's, no failing allowed. Not only is it, they're not being coddled, it's probably the opposite. And from what I can tell in the few examples that I've seen,
with this that it's just as bad because when they get out into the real world they aren't allowed to fail and then therefore they don't take any risk because they can't afford to because people at home would judge them for
And the end result is they wind up feeling trapped and I see that with some of the physicians that I serve there This is this is the path that they were set on they're more or less set in this tree and they can't get out They can't get down, you know, it's failures not an option for them and and they're miserable, know And they want out of medicine. So I know that we talked about like what not to do So let me let me talk for a minute about what I think is a good idea To do okay so
Speaker 2 (18:45.463)
Right.
Speaker 1 (18:49.902)
I think when you think about giving your kids money, that that is probably the least valuable thing that you can give a child. The most valuable thing that you can give a child is attention, right? And then after that, giving them opportunities and opportunities that they might not seize and opportunities that they might fail at, right? I think giving them values.
you know, instilling in them the values that you hold dear, you know, these, whatever that happens to be a positive value for you, giving them those values and the way you give it to them is by demonstrating the values that you have by living that and walking that in your life and talking about it, talking about the difficult decisions that you've had to make as a result of a value or virtue that you hold dear. I think we give them those things. I think rather than giving them money, we give them
the ability to make money. We teach them about work. We teach them about how to secure employment. Rather than give them the money, we teach them about how to take care of the money that they get. We teach them about saving. We can teach them about investing, compound interest, you you name it, the very basic things about personal finance. I think we give them a sense of an open heart and abundance rather than seeing money as a scarce thing because in a physician family, money is not scarce.
Right. It may be that there's not enough to make all the dreams come true, but you know earning at least twice, sometimes ten times what an average family earns, it's not a scarcity thing. And I think, you know, ultimately we need to prepare these children to be stewards of the money that we have should they inherit it. And if they're not prepared to inherit that money, then we should see about getting rid of it because it can crush a child.
Mm-hmm You talk about what what we should do as parents With money in general. I how do you connect the dots here between the idea that we really shouldn't? Have this big goal to give them a big pile of cash, but we're over here saving a big pile of cash for college
Speaker 1 (20:58.518)
Right. gosh. Well, so with college, you're not giving them money. You're giving them an education, which I believe is a need in our modern economy. I kind of break things down into needs, wants and wishes. Needs are the things we have to have to survive. Wants are the things that we have to have to feel superior to others. And I'll let your mind go where you want with wishes. But our job as parents, we, when we,
we father or we mother those children, is to teach them needs and wants, and to give them all of the needs that they have, however you define that, until such time as they're able to provide for their own needs. In the meantime, teach them how to fulfill their needs in this world.
Yeah, and another angle of that is education is an opportunity and you can give them that opportunity. It's just an expensive one. It's also a really expensive mistake to make. if you teaching them in our clients' cases, a $400,000 lesson in the form of student loans, it's pretty expensive lesson.
I think it's hard for, well, I can't speak for everyone, but I can say for myself, it's hard to see an opportunity, which they're rare. And education is a gigantic opportunity. It's that one time in life when everyone literally has their hand out, here, take this scholarship, here, take this money, here, take this mentorship, here, take this trip overseas, develop yourself. The world is just shoveling opportunities and resources at children at that age.
For me, the hardest thing is to see that opportunity go to waste and still love, fully embrace and accept that child for who they are. That's really, that's been tough for me and
Speaker 1 (22:52.522)
I don't know how this is falling for our listeners, but I have to imagine that it is difficult for some of them as well, because when our children are born, we start saving for college, right? Just the moment they have a social security number, and then we begin to build this narrative in our heads about where they're gonna go, what they're gonna do, who they're gonna meet, the degrees they're gonna get, the careers or professions that they'll have following that. And then we get a real human being who grows up and does things different than what are in our fantasy. And so...
I think the challenge is to accept that person for who they are and realize that this thing that we have in our heads is a construct. It's something that was probably never going to come true. And when you think about it, like the number of children who are born and the number who go to college, the number who wind up in careers and professions such as medicine, it's a vanishingly small...
Percentage of the population at at wager there's not more than a million physicians in the United States We know there's 300 million voters and I there's probably another couple hundred million that don't vote. So Really? We're talking about like maybe one in five hundred Those are slim odds and not as not as slim as having your kid become an NBA All-Star, but still pretty slim
The money, is, I always go back to this whenever I get tempted to solve the problem with money. The money is the, it can't be the answer in that scenario because more than one in 500 families, let's say, make enough to send their children to college, yet not all of them become doctors. So it's harder than that. It's a bandaid on the issue to throw money at a problem, just like anything else in life.
Throwing money at a problem, you know, most real problems in life, you can't throw money at it, like really meaningful problems, I guess, and it's the same with your child.
Speaker 1 (24:47.148)
Right. Right. So what do you throw at it? Attention, kindness, acceptance, love, real caring. You really have to focus in order to change another person's life.
Which is why families without money, their children can become doctors. Because they gave them that, you know, rather than money.
That's true. They gave them what they had to give and what they had to give is pretty much what we all have to give. Well, I think that we've covered this topic, It's been fun. So I'm going to wrap us up. This question came from a physician family down in California. You have an opportunity here to ask a question yourself.
You can email your question to us. The email address is podcast at physicianfamily.com. Again, podcast at physicianfamily.com. You can visit our podcast. That would be physicianfamilypodcast.com where you can also ask a question. And finally, we have a physician family answer line. Our phone number is 503-308-8733. Again, 503-308-
Call us, leave a question, we'd love to hear from you.
Speaker 2 (26:04.99)
Thank you for listening to the Physician Family Financial Advisors Podcast. If you have a question you would like answered on our website, visit physicianfamily.com to record your question. While you're there, sign up for our newsletter and gain access to tools you can use to turn worries about taxes and into a financial security. That's physicianfamily.com.
Is there an answer for our next show?
Speaker 1 (26:22.574)
investing in extra money to a lifelong feeling.
