Could giving my daughter some extra cash hurt her independence?

Dear Pete,

My husband and I have been gifting our daughter and her husband $10,000 per year for the last several years around the holidays. It’s become a bit of a family tradition. We enjoy being able to provide them a little extra money and they enjoy receiving it. They use the money for vacations and for their SUV payments even though they don’t have much money saved. Unfortunately, our financial situation has changed and my husband no longer feels like we can afford to gift them the money. We hinted this to our daughter, and she’s quite upset. The idea of ruining their financial plans because of our misfortune bothers me, and I want to find a way to still pay them. Am I being foolish? My husband told me I should write you and ask.

B.T. Boston

Answer: Your husband is 100% right. You should write me and ask.

While we’re talking percentages, I might as well let you know there’s a zero percent chance my answer won't upset you. I’m not necessarily trying to upset you, but the reality is the $10,000 gifts are what is ruining your daughter’s finances. That’s right, the disappearance of the gift isn’t the problem.

Years ago, a large manufacturer called my office for some help, as they were on the verge of eliminating overtime. That might not sound bad, but it was. For well over a decade, their workforce had become wholly dependent on their overtime pay. The company knew the good fortune which had once shined upon the company and its people had swiftly turned into a giant problem.

The elephant in the room in that scenario, as well as yours, is the inefficient use of non-guaranteed yet regular additional income. When “extra” money significantly enhances lifestyle, and when “extra” money doesn’t increase stability, disasters happen.

I can tell that you sense your daughter and her husband have put themselves into quite the jam. It’s not your fault. If your daughter was using the money to save for her kids’ college education, fund an emergency fund or stabilize their future in any other way, you wouldn’t be nearly as conflicted as you are right now.

That’s a tough pill to swallow. You and your husband were able to accumulate quite a bit of money. You were generous – arguably too generous – and your generosity has met its unfortunate end. You sacrificed your stability for your daughter to create some additional stability of her own, and now your less stable lifestyle will encounter her SUV, paid for by your generosity, every time you see her.

Your generosity, now disguised as a family tradition, has transformed your adult daughter back into a dependent. You tossed her out into the world, and your December donation has boomeranged her back into your portfolio of responsibility. But still, it’s not your fault.

It is, however, worth asking: at what point does this all become your fault?

You enter the spotlight of culpability the moment you give your daughter money, when you yourself are financially on shaky ground. Especially in light of what she consistently does with the money.

At this point, you might be thinking “I don’t care what my daughter does with the money. It’s a gift.” But that’s simply not true. You do care what she does with the money. You care whether or not a person who you’ve theoretically helped become independent at one point in her life, has become dependent on you once again.

Your daughter doesn’t need the money. She wants the money. And based on what you wrote, you need the money but aren’t sure you want the money. For that reason alone, my answer is a hard no.

There’s one last element to this which is disconcerting. If you need financial assistance from your daughter and her husband at some point in the near future, it doesn’t seem as though they’re equipped to provide it. They were given the opportunity to create stability with your gifts, but they chose stuff instead. They don’t have a line to throw you if you find yourself drowning because they used the rope to climb the lifestyle ladder.

While it may not be immediately clear, ceasing the $10,000 gifts will be the best moment of your daughter’s financial life. She must become independent once again.

This article is published courtesy of USA Today.