What is the greatest present that you can give your children when they get married?
In certain communities, the answer is, “an apartment.” Many parents take on second or third mortgages, sell their own homes, or bury themselves in debt to make sure that an apartment comes along with the trousseau. While they may not be looking forward to paying off huge debts at an age when most people are retired, they will probably sigh and tell you that these days, you can’t find a decent match for your child unless it includes an apartment as well.
But in fact, there are three reasons why buying an apartment can be detrimental for you and your children:
You can’t afford it
You may jeopardize your retirement. You have worked all your life to support your family, providing your children with an education and everything they need to grow into fine, responsible citizens. As you grow older, your children should move on to support themselves and the savings that you have put aside can be used for your golden years.
You need to be fair to your children –don’t give to one unless you can give the same amount to all. Buying an extra apartment can be costly. If you have more than one child, huge resentment can arise between them if only one of them got the free apartment.
Not everyone is doing it
Although the rumor mills may say “everyone buys the bride an apartment,” it is just not true. I have been a financial advisor both in New York and in Israel and I have seen what goes on firsthand. Some folks help, and some don’t. This is very much a matter of individual choice.
If your future in-laws pressure you, just say no. Tell them your financial planner advised against it. You do not need to be forced into putting yourself into heavy debt to pay for an additional apartment that you really can‘t afford.
Would you sell your daughter for camels?
If the parents of your child’s intended absolutely refuse to marry their child to yours unless you pay up, are you really interested in this match anyway? We live in the modern world where people marry based on mutual goals, dreams, and love. If the other side’s main priority is how much money you have (and are willing to spend on the wedding/apartment), rather than your child’s sterling personal qualities, the future may not shine so bright.
Rather than putting yourself into debt or spending your retirement savings, encourage the young couple to build their home and future together on their own two feet. Their teamwork building their own home (both physical and spiritual) will create more of an everlasting edifice than even the most luxurious apartment from you.
If you want to know more about when it’s wrong to gift to your children, read Gifting Money to Children – Right or Wrong.
About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning firm located in Jerusalem. He specializes in working with clients in New York, Florida, and Israel and is a licensed financial professional both in the U.S. and Israel. Securities are offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Doug’s newest book The Expatriates’ Guide to Handling Money and Taxes is available at www.expatguidetomoney.com. He hosts a weekly finance show, Goldstein on Gelt, on internet radio. Listen live or download podcasts. Toll-free from U.S. 1-888-327-6179, Jerusalem: (02) 624-2788. Follow on Twitter: @DougGoldstein or contact at firstname.lastname@example.org.
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