Learn how to determine how much is too much to give to your family by asking three simple questions.
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Hey, humans! I’m Michael Liersch. This is the About Money podcast, presented by Wells Fargo. I’m a behavioral scientist with a PhD in cognitive psychology who loves openly discussing money to help humans better understand their money behaviors. By understanding our money behaviors, we all have the opportunity to make better money decisions.
In this season, we’re going to talk about how we can all sync up our life and our money. We call it LifeSync®. You might be asking yourself, why does LifeSync matter? Well, when we align what we want to accomplish in life with our money, it can clarify whether money is truly working hard for us to get us to where we want to go. But that requires us to be intentional about what we want in our life, the jobs we want money to do for us, and compare it with how our money’s organized both now and in the future. To that end, we’re going to keep each episode under 10 minutes so that you can take immediate action to LifeSync. So let’s get into it.
In this episode, we’re going to answer the question: How much is too much to give to others? And I will tell you, there really is no easy answer to this one; however, for our clients, it’s one of the most common questions that I can tell you I’m asked and that I hear from all our advisors that they’re asked. It’s a question of real high intensity, especially because it has no concrete answers, certainly not one that’s generalizable. So don’t expect me to tell you, well, here’s the exact number that’s too much to give to another person. I’m going to give you a decision-making framework and have you think about three primary factors that will help you answer the question: How much is too much to give to others?
So here’s the first, you know, idea that you should really lean into and probably the most important one in terms of this question, which is do you have enough for yourself? And so, if we go back to the number one job you want to accomplish, you know, what is that? Is it about your lifestyle? Is it about your family? What is that number one job? I really want you to think deeply about it because, ultimately, the number one job, whatever you’ve put down there, at its core, it really needs to reflect this idea that you’ve solved for your own financial life first.
We often think about other people first before we think about ourself. So you really need to think about what is the money you need to live that life before giving it to others. And this goes for education. You know, that’s a gift — paying for someone’s education. It may be the number one job you want to accomplish is providing an education for your children. But remember, if you can’t either sustain those payments or you’ve given all your money to that idea and then you have no money left, especially when you can no longer work, and those very people that you were trying to empower are depending on you, you know, that’s really tough. Have you talked about that with them? Is that really the gift they want, or would they prefer you to take care of yourself and then they can find other sources, you know, whether it’s student loans or whether it’s working through college? So that’s the number one idea here. Do you have enough for yourself?
The second idea here is really what comes up especially when people have solved for their own lives. They say, yeah, yeah, Michael. That’s not what I’m asking. I have enough. So I’m not concerned about over-giving, you know, at the expense of my own lifestyle. What they say is they want to give someone enough to do a lot of great things, you know, to, you know, have a lot of opportunities but not so much that they can do nothing. And so, in this second part of this question, How much is too much to give to others, I want you to think about when you’re giving that money, you know, that value to other people, are you enabling them to do more with their life or less with their life? And have you had that conversation with them? Because that part of the how much is too much to give to others question, you know, really gets to this perspective of, you know, a lot of people talking about it as entitlement. And we hear this a lot from givers. They’re afraid that they’re going to give so much that they are going to make the recipients feel entitled to the money and almost expecting it like a paycheck. And so, really think about is that your intention or is your intention really to empower someone to live their best life.
The third and final decision-making framework I’ll give you is when you’re giving a gift to someone else, you really need to tell the human being that you’re giving it to why you’re giving the gift, the purpose, the intention, what your expectations are, even if there are no expectations. So, for example, if it’s a gift at a holiday or for those of you who are familiar, you know, some people have the ability to give what’s called an annual exclusion gift. You know, even when you give a gift after your life, you can write something called a letter of wishes. These are all ways that you can highlight why you’re giving the gift. So at the holidays, you might write a card for that individual if you put money — I remember my grandmother used to put a dollar in a card and say why she was giving the gift and how much it meant to give all her grandchildren a dollar. She had many grandchildren. And that was really meaningful to me. I know that across all the family, that dollar added up. And I made sure to spend that dollar with a high degree of intent. So really tell them why, why are you giving it, what they could do with it. And again, if it’s open-ended, you should say that. You can do anything you want. But many times, people do have expectations. So, for example, if you’re giving a gift to somebody and you’re giving it to them so they can take a break, say, you know, go get a massage with this or hire someone to help you clean your home because I can see you’re exhausted or, you know, perhaps you could use this money to buy yourself a gift, treat yourself to something. So get as specific as you can if that’s the expectation so that person doesn’t have to wonder. And then you can really avoid this idea that you’ve over-given to someone because that’s typically in the face of uncertainty of the amount, why, and those expectations. That’s where it can often have that crossover point and also be disruptive to both the giver and the receiver.
That’s it for this episode of the About Money podcast. Please email us with the topics that you would like us to address at AboutMoney@wellsfargo.com. And if you really like the episode, share it with family, friends, and anyone who listens to podcasts. About Money is produced by Wells Fargo. You can learn more about ways to work with us at wellsfargo.com/aboutmoney. I’m Michael Liersch, asking you to talk about money today.
This information is provided for educational and illustrative purposes only.
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