What a Nice Gift! | Series 5.4

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Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us, stress us out, and distract our focus

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from simply enjoying life.

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Welcome once again to the EnjoyMore30s Family

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Finance podcast. Here we're aiming to help you take those

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steps forward, gain that confidence, and therefore remove

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that financial anxiety so you can focus solely on making your

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life more enjoyable, because that's really why we're all here

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just to make life more enjoyable. And this series we've

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focused specifically on the kids. So this series Your Kids

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Money Mindset series, we're focusing on you, your kids, and

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try to help when it comes to them. And you know, we all love

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giving to our kids. So today we're going to talk about giving

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to our kids, and how you can do that best.

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So as always, if you like what you're hearing, please make sure

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to subscribe or follow us on Apple podcast, or really

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wherever you listen. Clicking that star, leaving the review,

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it really really helps us reach the literally millions of other

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young families out there that are just like you. Last week, we

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discussed what is probably going to be the most important episode

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of this entire series, which touched on how you are

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essentially fully responsible for what future money mindset

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your children may have, whether that's good, bad or otherwise.

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So school is really not going to teach them anything at all, at

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least from what I have seen. Either they're gonna form their

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own money based opinions on what friends tell them, on what music

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videos they like, or you can proactively influence that. But

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either way, some money mindset is going to be formed. So if you

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haven't checked out that episode yet, definitely do that soon.

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Today's episode, though, is titled, What a Nice Gift, where

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we're going to cover all things when it comes to gifting from

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how much you can gift, to what happens if you go over that

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limit, to interesting ways to consider making the most of that

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gifting of money that you want to do for your kids. So really,

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the goal for today's episode, if you walk away with this is I

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want you to think about what you may want to do in the form of

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gifts to make a lasting positive impression that children will

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benefit from, of course, but also remember and help in

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positively shaping their money mindset for the rest of their

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lives. Now, I'm guessing that you are the same as me, where

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you still remember the best gifts that you ever gave anybody

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in your life, that look that you see on somebody else's face,

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that you know the the emotion, it just sticks with you when you

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get the gift that's just right, you almost get more than they do

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just from the reaction. It feels just so fantastic that you were

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able to give them something that could mean that much to them. As

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an example, one time for Bob's wife, Savia, Bob and Savia are

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the founders of the firm, who, Savia's father was an inventor

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by trade. And he has long since passed. But he had all of these

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original blueprints. So I got a copy of one and blew it up and

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made it a framed copy of it that you could hang up in her office.

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And just the look that she had, the feeling that she had, you

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know, this was her father, this is what her father dedicated

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just 10s of years to what they still work on today was just so

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so awesome.

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Another time in a completely different direction. When my

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sister passed away the local church without us knowing or

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asking, they reached out to the funeral home, and they made

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prayer blankets for all of my family members in memory of my

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of my sister. So you know, it's not something I was expecting at

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all. But if if my house was on fire, that would be one of the

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things I would want to grab now. So the point of all this is you

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can do so much with a gift, and with a little bit of thought.

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And those are the feelings that we want to be giving our

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children obviously.

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So you know, the first question is, you know, how much can you

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actually gift? Currently in 2021 you're allowed to gift up to

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$15,000 per person to any other person. So I can gift $15,000 to

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each of my children. My wife could also gift $15,000 to each

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of our children. So we could cumulatively gift $30,000 if

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that's what we were wanting to. I could give $15,000 to you if I

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really wanted to. Now if you're listening to this podcast,

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you're likely younger with younger kids. And I'd imagine

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you're originally saying by this "Joe, you know, I'm not handing

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over $15,000 to my kids right now. Maybe way, way, way down

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the line depending on how things go. How much you helped me, Joe,

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but not today." And you know that that's totally fair. I'm

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not handing over any money to my kids in the form of a $15,000

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check either. How I do plan on helping them though with

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college, I would love to help them get on the right path when

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it comes to saving to their futures. So, you know, for

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college if you do decide to use a 529 plan to any degree, and if

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you remember, this is the school specific savings vehicle, which

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was covered in much, much more detail in 5.2 of the series, you

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can lump sum up to five years worth of the gifting limit all

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in one year. So for me, personally, I could give my kid

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$75,000 into a 529 plan all in one shot. Now, if you're going

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to use funds to pay for college anyway, you know, why not have

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them grow tax free. The strategy that I that I like even better

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though, to discuss here, when it comes to gifting, because a 529

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plan what we're giving to them for college, that we're doing

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that obviously to try to help them but there's not much

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learning that's built into that.

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If you do have kids that are old enough, though, to have their

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first job, here's where you have the opportunity to tie learning

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in with gifting. So you can match or think about matching

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their earnings or their savings that they're making at work into

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another account, a Roth IRA or another investment.

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Simultaneously now, you're teaching them many different

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things. So let's say every $100 you make, I'll put in $50 into

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an account for you. Or every $100 that you save of what you

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make, I'll put in $50 into an account for you $100, and

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they'll match at 100%, whatever it might be. Now you're teaching

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them about working hard, one, about saving for the future,

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two, compound interest, three, when you explain what I'm about

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to go through and even getting them used to the idea of

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matching. Matching is what they're going to encounter if

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they have a work plan, a 401k or anything like that. Get them

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used to the idea, you know, "see Johnny, you just made 100% on

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your contribution. You put in $100 into this account, I put in

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another $100. You just made 100%. And now that $2,500 let's

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say that now we've built up in this aggressive Roth mutual

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fund, maybe worth let's say, $100,000, by the time you look

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to retire." So you know, these are lessons that many people

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don't learn until much later, or sometimes not at all. So it's

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super, super important, super impactful, where you can now

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start using these gifts, not to just help them accomplish

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something but to help teach them something, help them learn

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something that could last with them for the rest of their

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lives.

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And don't forget how this may come into play for your parents

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as well. As we've talked about before, I understand if you and

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your parents don't exactly talk about money, because many don't.

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As we talked about at length in series three, Your Parents Money

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Mindset, it's this taboo subject. But if they are in a

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good position right now financially, maybe they have

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extra fixed income, or your advisor has shown them that they

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are well over what they need with projections to not run out

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of money. Then these are things that they can participate in as

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well if they want to. Grandparents like helping their

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grandchildren out in different ways. I've had multiple clients

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walk through my office with investments that grandma or

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grandpa set up for them and they really, really valued that

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contribution and that connection. This is grandma's

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money. This is grandpa's money that he set aside specifically

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for me. That resonates. They want to duplicate that. They

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want to replicate that down the road. And again, I'm obviously

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not trying to have you hit up mom or dad for money by any

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means. They worked hard for their money and first and

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foremost, I'd like for them to spend it on themselves. But many

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of them are just going to have more than they may need. Many

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may want to have something to leave to kids. If asked do you

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want to leave a bunch of money in your pockets for your kids to

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get when you die? Or would you rather see them enjoy it while

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you're still living? And I've yet to hear anybody I've dealt

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with say "I would rather than get a bunch of money when I

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die." Now maybe that's just my experience, but so far have not

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heard that as an answer.

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Now while there is technically a limit to this, it is somewhat

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less relevant for many people. The current lifetime exclusion

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for 2021 is $11.7 million. Meaning if you do go over that

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$15,000 annual limit, you will have to file a gift tax return

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and your $11.7 million dollar exemption will lower by the

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excess. So as you see for middle class families, maybe not

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exactly a real concern from a practical standpoint, let's say

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more times than not. Whether you have an $11.7 million exemption

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or a $11.680 million exemption, you're probably still going to

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make out okay in that regard.

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So from today's episode, I'm really hoping that you're

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walking away with that goal that was set early on in the episode;

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leaving with the desire to think about what gifting goals you may

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have for your kids, but more importantly, what lessons you

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can help in teaching them through that gifting. So what

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money concepts do you want to teach them, because gifting can

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likely help. And remember to talk to your kids about these

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items. Get them interested in making positive money steps when

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they're young and that mindset will carry them exponentially

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farther in all likelihood than just those kind of few dollars

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that you spent in the process.

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Thanks very much for tuning in today and join us for next

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week's episode called Your Kid Almost Certainly Doesn't Need

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Savings Through a Life Insurance Policy, where we are going to

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cover what has often become known as the Gerber policies.

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You may have had one of these given to you by your parents,

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and really dig into why in my opinion, you don't want to be

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saving for your young child through life insurance.

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Overall, as I always say, if you're able to implement what we

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covered today, then that's just fantastic. You have less to

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worry about than before, you can focus more on enjoying life.

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That's why I'm putting all this content out there. So start

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thinking about this gifting from today's episode, how you may

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want to use it to create lessons for your kids to learn.

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If you are wanting help with any of these things though, or have

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questions that you need help in clarifying, check out the Ask

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Joe section on the show's website www.EnjoyMore30s.com.

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That's EnjoyMore30s.com and until next week, thanks for

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joining me today and I look forward to connecting with you

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again soon.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax, or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS Securities, Inc., and TFS Advisory Services an SEC

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registered Investment Advisor member FINRA/SIPC.