February 05, 2007,
W.P. asks from Houston, TX on January 22, 2007
Mini-poll on Borrowing Money from Child
I would like to request your short feedback on whether it is OK to borrow money from your child. It is not about $10 at the filling station that you repay as soon as you get home, but about say $100 that you don't repay in a week or longer, and then possibly in increments (where the child has to save up all over to get the full amount back). It is not about how much 'interest' to add, it is about whether a parent has a right to make the child loan some money. In my case, my 9-year-old feels obliged to loan, and his mother thinks nothing wrong of it - then he gets anxious when he is not getting paid back on time, and it diminishes the rewards of saving (he tends to spend so that he has nothing to be loaned away). I am against borrowing, but my ex-wife says a parent can 'manage' the child's assets. Granted, I make sure he does not buy candy for $100, but I still think it's wrong to borrow, especially if you already get maximum child support and take weeks or months to pay it back...
Please don't take it as a me vs. her, but as a general question. Thanks.
T.D. answers from Houston on January 22, 2007
I'm totally against it!!!
There have been times where my mom has borrowed money from me promising to pay it back and I never see a dime of that money and I'm 31yr old. But borrowing from a child, im sorry thats down right sad and I wouldnt tolerate it.
It's a parents job to supply food, clothes, etc for their child...you shouldnt have to borrow money from your child to do what is your responsiblity.
Another thing a child isnt even old enough to get into any type of written agreement with and adult, so to avoid all this I think proper money management on the parents part is the way to go!
1 mom found this helpful
D.Y. answers from Houston on January 23, 2007
That's a really unusual situation. I don't think that it's right to borrow money from a child, not sometimes, not often, just never. A parent should be a good example to their children and that's includes having financial stability. Your child is probably just being nice and just can't say no. Good luck.
1 mom found this helpful
K.D. answers from Houston on January 22, 2007
My parents "borrowed" over $300 from me when I was your sons age. Money I made from cleaning kennels and stalls. Even as a child I knew my parrents were in a tough financial situation so there just wasnt a good answer, but I would advise aganst it if possible, its his money he earned it and he should have ownership and responsiblity for it.
Borrowing that amount of money is not managing your childs finances its setting them up for bad financial habits as adults. Shes setting a poor example for him on alot of levels.
Best of luck for you and your son.
1 mom found this helpful
R.M. answers from Houston on January 22, 2007
Well my thought would be only if could be paid back in a timely manner. If this makes your child anxious, have him ask for a written agreement and have him share with his Mother why. Also depends on what is being purchased; clothes, food, wants not needs? for her? for him?
I would go to this site and ask here...Send your questions to: Smart Money, P.O. Box 2095, Elfers, FL 34680. E-mail to: ____@____.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.
I get this eletter and he has great advice. Hope this may help.
A.P. answers from Houston on January 22, 2007
I would have a few questions that don't really need to be answered but just for thinking purposes.
1) Who gives the child the money in the first place?
2) Is the money in a bank account or is this cash?
3) Does the child "earn" the money?
4) What is the goal or purpose behind giving the child money?
My ex-husband and I are very friendly, but money is something that we never saw eye to eye on. Therefore my "allowance" for the kids is completely separate from the "allowance" or other reward money that they have at their dads house.
For my kids (boys 11 and 9) I have set up a rather elaborate money saving plan. The reason I have done this is mostly because my oldest son has a large sum of money that he will be getting when he turns 18, due to a lawsuit against a daycare that I have shared previously on these boards. My goals are to teach the boys to save alot of money and forget its there, and then manage their budget to live on the remainder.
Here is what I do. They get 5$ per week or $20 per month each. They never see the real cash. $6 or 30% is automatically put into savings accounts that I have set up for them individually. The remaining $14 is put on to Pre-paid credit cards. (I have all of this set up automatically online with automated funds transfers.)
I hold their credit cards at my house in their wallets with any cash gifts from family and friends they get during the holidays, birthdays etc. They recieve monthly statements for their savings accounts and we track their savings and credit cards in Quicken (accounting software for personal use basically a fancy check register).
The boys are not allowed to spend the money in their savings accounts. They must budget and manage their credit card and cash to be sure that they have enough for birthday and christmas gifts and their own personal wants.
I would suggest that you protect your son's money. If you are giving him money to save and spend then set up some rules. What are your goals for his money? What are you trying to teach him?
You and your ex-wife are setting some life long precidences with his money habits and spending. Loaning people money (or taking out a loan yourself) is a serious risk financially and should be treated with great caution at any stage in life. He needs to learn that in my opinion.
Not to be rude, but your ex-wife is an adult and should manage her money better so that she doesn't need to take money from her son.
C.E. answers from New York on January 22, 2007
I personally don't want to judge anyone, specially not a single mother. I would imagine for one to borrow money from a child, there would have to be an absolute important reason.
I was a child once, and my mother went thru some hard times, etc. I didn't get money, but I knew there were some things I sacrificed in order to have everything we had at home.
Life nowadays, is much different from when I was growing up, and I totally understand us wanting to teach our children about money, etc.
But above all, respect for our mother and her decisions... should come first! That is my opinion.
You are looking at the perspective of his anxiety from all his savings.. why not set up a savings in a bank where you can show him the statement every month.. and that would help him save.. but if he chooses to lend his mother that money, let him! There is also a sense of pride in knowing you can help your mom... that is worth more than money.
That is what family is all about.. eventually perhaps he can even learn from all this.. even if he learns that mom does not pay him back.. because you know what.. if mom is buying me clothes, and everything I want.. they it's ok if mom takes some of those savings..
Now.. if you know that his mother is using this for some stupid reason, like doing her hair, etc.. then I do believe you might help your son by giving him some advice as to perhaps investing on CDs in the bank.. or something like that.. but never tell him "Don't lend your mom money..." I think that would be wrong.
My parent's weren't the perfect parents at all.. and if they deprived me of everything a child should have.. then that is how some feel.. but in my eyes..
as imigrants in this country.. they did all they could to give me all I "needed" and was essential to my being me.. like providing food, a home, and lots of love... and you know what
at the end.. I learned more from not saving, not having everything others had.. I learned that when I grew older and life was better for them... they were there for me all the way.. from buying me my first car with some hard earned money.. and seeing them struggle to pay rent, yet still having a smile in their faces no matter what.
So it is not always as we see it now.. If that mother is doing everything possible to have a great home for that child, then lets' not get in there..
If you feel so bad about your child lending her that money, my best bet is to have a talk with her.. and tell her what you see is happening with your child.. tell her that perhaps when she needs this money, that she should go to "you". And that perhaps you both should be more responsible with his savings as it is something he strives to have.. so perhaps you can open a joint custody account for your child. This would help a lot.
So in the future, before she asks to borrow this money.. she is going to remember that she is not only taking his money.. but she is taking his savings.. it will make her think twice as to wheather this money she needs is a necesity.. and if it is.. then she will remember what you said and will call you.. as you care so much for your son.. that you will lend her a helping hand..
I hope you know that whatever your reaction is towards this.. it is something your child will learn.. he will learn to respect his mother thru you.. Help in that. Is it so important for a child to keep that respect.
Wishing you the best,
L.P. answers from Houston on February 05, 2007
I agree with the majority of the responses below, and do not think it is a good idea to borrow money from children. Not only does it set a bad example for them, it may also decrease their feelings of security. If their parent is having to borrow money from them, how will their be enough money for food, shelter , etc. The child may start to feel responsible for providing money for these things and become stressed when they are not able to do so.