Wes Moss gives readers on ClarkHoward.com two important tips when it comes to estate planning and early financial education for your kids and grandkids.
The nationally syndicated radio show, The Bert Show, recently got a lot of buzz in the financial community. This was after a 22-year-old caller (Kim) on the show explained that she depleted $90,000 college fund she received as an inheritance from her grandparents.
The 22-year old college junior has a year left of school and her funds have been depleted. She squandered her money, apparently on a European spring break trip, nice clothes and the like. Ironically, when she called into The Bert Show, instead of being painfully embarrassed and mortified, she was mad. She told the hosts that her parents should have taught her how to budget a little more carefully. She went on to say that they never sat her down to have a serious talk about it.
We’re all probably thinking the same thing about Kim right now–that she’s spoiled, entitled, and beyond irresponsible. But, practically speaking, I have to place some of the onus for this financial debacle on Kim’s grandparents. After all, if you’re going to give a 19-year old $90K, you should also give that 19-year old a plan to go with it. It’s not enough to assume that a person of that age is going to be mature enough or have the budgeting experience to manage such a large sum of money.
Needless to say, this story would’ve had a much happier ending if there was a detailed plan in place. A plan is unequivocally the most important element when making a wealth transfer. It is the only way to way to protect your money and ensure that it will be used in the way that you wish.
Read the full article here.