MONEY & INVESTING
While this column usually focuses on the “money in” side of the economic equation, this week’s focus is on a particular aspect of “money out.”
Generosity is one form of money out; it is a foundational element of our country’s citizenry, just as much as is self-reliance and self-responsibility. It is very much a core value in Judaism, Christianity and other religions and is not to the exclusion of those self-described as “spiritual but not religious” nor atheists, as they often find their life’s journey manifesting in helping others. There are many paths leading to the door of generosity.
Most of our giving will go to our spouses, children, family, friends and charities... in some semblance of that order. This giving is not de facto; it still requires planning, deliberation, heartfelt consideration and monitoring.
However, regardless of how wellintentioned the generosity, the gift can often be to the detriment of the recipient. Generosity can often become a crutch for others and, in fact, unknowingly ease them into a lifestyle of dependency upon the giver (and other successive givers) and, ultimately, create an attitude of entitlement.
Generosity without any strings attached sounds a lot better than generosity with strings attached, unless the strings are meant to reward and encourage the recipient of the gift, to condition their behavior and to promote assumption of responsibility for their own financial well-being.
Here are some ideas: ¦ Children
If your goal is independent, educated and skilled children with completed character (not to the exclusion of other attributes), then consider forms of gifts that encourage and reward such behavior. Many parents have given financial reward for children in lower gradelevelsforallAsorforaCaverage upped to a B. Some parents stop this form of incentivizing at middle school; it can have application at the high school and college levels, too.
As some percentage of high school children will drink or take drugs, consider incentivizing substance-free living. Agree with your child to submit to random drug tests and financially incentivize when they have clean reports. Too harsh? To some, yes, but it can be a collaborative decision with your child and it will make sure that you are not unknowing about a big problem. In some industries and professions, random testing is a requirement. You can choose to make it an absolute standard too.
Consider the possibility of having your parental generosity in funding college costs be matched by your child’s industry. Instead of paying for all of your child’s college costs, have your child commit to a percentage contribution, through savings, a job concurrent with college or their incurrence of student loans. Require them to have some skin in the game. ¦ Family and friends
Many givers want to respond to this group. Unfortunately, blank-check generosity can become crippling, inhibiting resumption of an independent and vibrant life. Giving money without constraints is often so very much easier than getting involved with the underlying causes. And writing a check often translates into writing another check and another check. Pretty soon an economic dependent has been birthed.
Why not give the recipient of your generosity the incentive to solve their problems and become self-sufficient? For instance, you could devise a plan that generously gives but requires the recipient to adopt a financially sound lifestyle and scales-down support to zero over a period of time. However, if you have allowed an adult/young adult to become your dependent, then you really need to admit your part in creating the unhealthy relationship and take steps to transition the dependent away from your support. You might need some counseling just as much as the recipient.
As to a romantic or marital relationship, much of the aforementioned can apply. However, when there is a large inequality between partners, there can be an inclination for the one of lesser resources to take advantage of the one with greater resources. Consider choosing a mate who spends your money as if they had worked for it as hard as you have; it might be a solution to an age-old problem of not being used for your money. ¦ Charities
Someone needs to evaluate whether the charitable recipients are spending money wisely. A good cause is great if executed in a financially responsible manner and the recipients are held accountable for results. For instance, you might well be giving to a foundation that has an elaborate grant approval process but a non-existent process for accountability after the grant is made.
Consider incentivized giving. Maybe you are already doing it. Maybe it has no application. Maybe it is something about which you have thought, not yet articulated in your mind or put into action. Generosity has the potential to engender positive character in the recipients of your gifts as long as you are giving responsibly, all the while fostering self-reliance and financial responsibility. ¦
— Jeannette Rohn Showalter, CFA, can be reached at 444- 5633, ext. 1092, or email@example.com.