What's your definition of "Family Money"?

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revsk
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What's your definition of "Family Money"?

Post by revsk »

When someone has "family money" - what does that mean to a boglehead?

Do you consider yourself coming from or having it?

I've followed the Boglehead philosophy before I knew there was a name for it and have recently been told I have family money when all along I feel I've simply been sticking to the plan.

Would love to hear your definitions!
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retired@50
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Re: What's your definition of "Family Money"?

Post by retired@50 »

Maybe when you've inherited more than you've personally saved...

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BullMoose
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Re: What's your definition of "Family Money"?

Post by BullMoose »

I don’t know that I’ve ever heard it used in the first person or, for that matter, used in a positive way...

I’d say, a situation where there is sufficient starting capital that outpaces initial earnings potential.
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momvesting
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Re: What's your definition of "Family Money"?

Post by momvesting »

I think it is kind of a vague term and people will have different interpretations. To me it means that something (trust, annuity, etc.) has been set up so that it could support you throughout your adult life if you chose not to be employed. You could still choose to work and add to your income, but sufficient income has already been provided.
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Re: What's your definition of "Family Money"?

Post by esteen »

I've never heard a definition, and I don't think I've heard the term "family money" so much as "coming from money". But in my personal very unscientific interpretation it means someone whose family provides them enough wealth that they don't have to ever work if they chose not to, and could still live a relatively comfortable life.
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Re: What's your definition of "Family Money"?

Post by Grt2bOutdoors »

1. Inherited money
2. You were given/gifted a significant sum of wealth such that you could not have possibly earned in in the traditional sense
3. You have the unconditional financial backing of family benefactor
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Re: What's your definition of "Family Money"?

Post by watchnerd »

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Re: What's your definition of "Family Money"?

Post by SmileyFace »

Grt2bOutdoors wrote: Tue Apr 13, 2021 12:16 am 1. Inherited money
2. You were given/gifted a significant sum of wealth such that you could not have possibly earned in in the traditional sense
3. You have the unconditional financial backing of family benefactor
Good definition!

If you started with a high negative networth like many of us (school loans + mortgage) and worked hard and saved/invested - that is not family money - it is made money. It may become family money to the next generation once you pass your success down.
I certainly didn't come from it nor have it. I have the opposite (helping upper generation who didn't plan/save).
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Re: What's your definition of "Family Money"?

Post by dbr »

I think to be family money it is more than just inherited or expected to be passed down but also that the accounts are owned in trusts or entities that are joint to a number of individuals. This implies that no single person can just do something with all the money. There is an implication that this money is supposed to grow rather than shrink while being able to supply income to family members in perpetuity.

I don't think a person simply inheriting money and wanting to pass it down to his immediate children is what is meant by the term.
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Re: What's your definition of "Family Money"?

Post by Soon2BXProgrammer »

revsk wrote: Mon Apr 12, 2021 11:00 pm When someone has "family money" - what does that mean to a boglehead?

Do you consider yourself coming from or having it?

I've followed the Boglehead philosophy before I knew there was a name for it and have recently been told I have family money when all along I feel I've simply been sticking to the plan.

Would love to hear your definitions!
Family Money = older generations have so significant wealth that they gift every year up to the gift limit to start wealth transfer early.

We don't have family money, but we have many generations of millionaires, but because the older generations need their money, they can't give it away. all three generations are self made and still alive. However, the next, (my children) probably wont be.. We are on the cusp of "family money"
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Re: What's your definition of "Family Money"?

Post by dbr »

Really having family money means one is in a different world from anything having to do with Boglehead investing. It is possible that MacKenzie Bezos has "family" money and so does/will Mrs. Warren Buffett. Other people with family money are, or used to be, named things like Astor or Rockefeller. Family money is mainly in businesses and land holdings and not in stocks and bonds at a broker.

If all you are talking about is inheriting some money, using Boglehead ideas to manage that and whatever one adds to or removes from it, and then letting the excess pass to one's children, that is not in the special class of "family" money.
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Re: What's your definition of "Family Money"?

Post by FoolMeOnce »

I don't think it has to be Rockefeller or Buffet size wealth. I'd apply the term to any generational wealth. I was a millionaire before I had my first post-grad job due to "family money," but I'm not flying private jets to second homes while an au pair raises my kids. The family money was gifts and good investments made on my behalf as a kid. Relatives were in similar positions. It started a couple generations before me and it will continue at least with my kids.
Last edited by FoolMeOnce on Tue Apr 13, 2021 9:54 am, edited 3 times in total.
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Re: What's your definition of "Family Money"?

Post by rage_phish »

When I think of the term family money, I picture people living off trust funds. Not having to work

But in actuality it’s probably much less than that and likely describes myself. (Always had the safety net of my parents, college fully funded. Help with my first down payment. Then married my wife who had the exact same from her parents. We have had an immense leg up simply by the privilege we were born into)
delamer
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Re: What's your definition of "Family Money"?

Post by delamer »

dbr wrote: Tue Apr 13, 2021 8:29 am I think to be family money it is more than just inherited or expected to be passed down but also that the accounts are owned in trusts or entities that are joint to a number of individuals. This implies that no single person can just do something with all the money. There is an implication that this money is supposed to grow rather than shrink while being able to supply income to family members in perpetuity.

I don't think a person simply inheriting money and wanting to pass it down to his immediate children is what is meant by the term.
This is an interesting point.

The parents of the husband of some neighbors of ours were well-to-do. They gifted significant sums of money to the neighbors and their kids, covering college costs, summer camps, etc.

I wondered at the time what would happen to the next generation. Would the current grandparents leave a trust fund so that their great grandchildren (and beyond) would benefit in the same way? That would be family money.
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Re: What's your definition of "Family Money"?

Post by loghound »

It's a pretty loose word. I've known people who consider a $10k gift 'family money, other people consider a good inheritance 'family money' (but 'good' can mean $100k or it can mean $10M). In some cases, I've seen people refer to 'family money as the money their parents have and occasionally they get to benefit (paid for vacations, rent help, etc.)

I do like this definition
delamer wrote: Tue Apr 13, 2021 10:01 am dbr wrote: ↑Tue Apr 13, 2021 6:29 am
I think to be family money it is more than just inherited or expected to be passed down but also that the accounts are owned in trusts or entities that are joint to a number of individuals. This implies that no single person can just do something with all the money. There is an implication that this money is supposed to grow rather than shrink while being able to supply income to family members in perpetuity.

I don't think a person simply inheriting money and wanting to pass it down to his immediate children is what is meant by the term.
as perhaps the 'classic' definition, but I don't know how often it occurs anymore.

One tragic thing (well I think it's tragic) is how hard it is for some families to establish generational wealth while others seem to be able to pass it along for many generations. I've often wondered if it's just luck, a series of bad decisions, a cultural thing or something systemic in our society.
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Re: What's your definition of "Family Money"?

Post by stoptothink »

SmileyFace wrote: Tue Apr 13, 2021 6:40 amI have the opposite (helping upper generation who didn't plan/save).
Yeah, does it count as "family money" when you are helping your in-laws and (to a lesser extent) your parents?
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Re: What's your definition of "Family Money"?

Post by runner3081 »

No concept of what this is because neither my wife nor I have, or will ever receive any family money.

Nothing to get.
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Re: What's your definition of "Family Money"?

Post by TomatoTomahto »

Soon2BXProgrammer wrote: Tue Apr 13, 2021 8:35 am Family Money = older generations have so significant wealth that they gift every year up to the gift limit to start wealth transfer early.
I don’t think of us as being wealthy or having “family money,” whatever it turns out to be defined as, but we do gift to the annual max.

A term that we use in the family is “safety net.” One son, for example, took a challenging financial path because he knew that our family safety net would backstop him if necessary. Turnaround being fair play, he’ll someday be our safety net :D
I get the FI part but not the RE part of FIRE.
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Re: What's your definition of "Family Money"?

Post by sailaway »

runner3081 wrote: Tue Apr 13, 2021 10:48 am No concept of what this is because neither my wife nor I have, or will ever receive any family money.

Nothing to get.
I inherited $3000 from my maternal grandmother...

I think it is all relative. Coming from a lower to middle middle income family, I see family money as everything one does to help the next generation build wealth in ways that they would not have been able to do on their own. It would be interesting to compare individual answers of family money with those on the wealth/ rich threads. I imagine each individual to have similar thresholds for both.
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Re: What's your definition of "Family Money"?

Post by Soon2BXProgrammer »

TomatoTomahto wrote: Tue Apr 13, 2021 10:51 am
Soon2BXProgrammer wrote: Tue Apr 13, 2021 8:35 am Family Money = older generations have so significant wealth that they gift every year up to the gift limit to start wealth transfer early.
I don’t think of us as being wealthy or having “family money,” whatever it turns out to be defined as, but we do gift to the annual max.

A term that we use in the family is “safety net.” One son, for example, took a challenging financial path because he knew that our family safety net would backstop him if necessary. Turnaround being fair play, he’ll someday be our safety net :D
Makes sense. my point is... being able to gift the annual gift limit to your children every year, as a symbol that you have more then enough, then you are starting to be at the point where you have family money... it might not be extreme, but you have more wealth then you need.

This in my mind is just one way a symptom of family money could show... another example is.. if you decided to pay some amount for higher education for lots of people in your extended family...
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Re: What's your definition of "Family Money"?

Post by bogledogle »

Any money you get from your family is family money. Including the money for school, food, housing, clothes and shoes ..etc while you grew up. You stop consuming your family's money and hopefully start building your own when you start making your own income.
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Re: What's your definition of "Family Money"?

Post by Ramjet »

revsk wrote: Mon Apr 12, 2021 11:00 pm When someone has "family money" - what does that mean to a boglehead?

Do you consider yourself coming from or having it?

I've followed the Boglehead philosophy before I knew there was a name for it and have recently been told I have family money when all along I feel I've simply been sticking to the plan.

Would love to hear your definitions!
Who told you that you have family money and in what context?

I think family money is when your relatives are well off and you have received a sizeable inheritance or regular gifts, e.g., college tuition, house down payment, large sum of cash, etc.
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Re: What's your definition of "Family Money"?

Post by FoolMeOnce »

TomatoTomahto wrote: Tue Apr 13, 2021 10:51 am
Soon2BXProgrammer wrote: Tue Apr 13, 2021 8:35 am Family Money = older generations have so significant wealth that they gift every year up to the gift limit to start wealth transfer early.
I don’t think of us as being wealthy or having “family money,” whatever it turns out to be defined as, but we do gift to the annual max.

A term that we use in the family is “safety net.” One son, for example, took a challenging financial path because he knew that our family safety net would backstop him if necessary. Turnaround being fair play, he’ll someday be our safety net :D
I've read enough of your posts to think of you as being wealthy... :wink:
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Re: What's your definition of "Family Money"?

Post by TomatoTomahto »

FoolMeOnce wrote: Tue Apr 13, 2021 2:04 pm
TomatoTomahto wrote: Tue Apr 13, 2021 10:51 am
Soon2BXProgrammer wrote: Tue Apr 13, 2021 8:35 am Family Money = older generations have so significant wealth that they gift every year up to the gift limit to start wealth transfer early.
I don’t think of us as being wealthy or having “family money,” whatever it turns out to be defined as, but we do gift to the annual max.

A term that we use in the family is “safety net.” One son, for example, took a challenging financial path because he knew that our family safety net would backstop him if necessary. Turnaround being fair play, he’ll someday be our safety net :D
I've read enough of your posts to think of you as being wealthy... :wink:
I prefer the term “comfortable.” I can’t even count high enough to say how many orders of magnitude fewer we have than Bezos.

ETA: in a concurrent thread, I bemoan that we don’t pay up for business class flights unless we have points.
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Re: What's your definition of "Family Money"?

Post by hnd »

I think family money is kind of used as mostly an insult or a way to justify someones successes. either to someone who doesn't do much and can afford to because of "family money" or to describe someone who is successful but was only able to be successful because of "family money" (ie moving up through a family owned company or getting a chunk of money to start a business)
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Re: What's your definition of "Family Money"?

Post by BlueMoonXD »

rage_phish wrote: Tue Apr 13, 2021 9:28 am When I think of the term family money, I picture people living off trust funds. Not having to work

But in actuality it’s probably much less than that and likely describes myself. (Always had the safety net of my parents, college fully funded. Help with my first down payment. Then married my wife who had the exact same from her parents. We have had an immense leg up simply by the privilege we were born into)
This is how I see it as well. I don't associate myself our my SO as having "family money", our standard of living is ultimately tied to our own fortunes and success, but we certainly are ahead of the curve for our age (under 30) because of having benefitted from both coming from affluent families. We're not literally spending family money, but we obviously benefited from family wealth. I suspect some variation of this situation isn't uncommon on this forum.

To someone born in poverty I suspect they would view my situation as having "family money", but I do think it's fundamentally different from people who were born into enough wealth to live on.
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Re: What's your definition of "Family Money"?

Post by leftcoaster »

Generational wealth. If you are thinking of hiring a "family office," you're in the club.

Intra-family mortgage writing is another possibility.
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Re: What's your definition of "Family Money"?

Post by DharmaBum »

In my mind, there are multiple aspects to "family money".

1) Money that ensures lineal descendants of the original wealth creator will all be considered "wealthy" by contemporary standards based on the money they have or will inherit.
2) Wealth has successfully been transferred across more than three generations--it's more than just having rich grandparents.
3) There is a series of legal and social structures that have been put in place to transfer and ensure that the wealth grows/persist, such that the family financials look and run more like a business
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Re: What's your definition of "Family Money"?

Post by stoptothink »

BlueMoonXD wrote: Tue Apr 13, 2021 2:45 pm
rage_phish wrote: Tue Apr 13, 2021 9:28 am When I think of the term family money, I picture people living off trust funds. Not having to work

But in actuality it’s probably much less than that and likely describes myself. (Always had the safety net of my parents, college fully funded. Help with my first down payment. Then married my wife who had the exact same from her parents. We have had an immense leg up simply by the privilege we were born into)
This is how I see it as well. I don't associate myself our my SO as having "family money", our standard of living is ultimately tied to our own fortunes and success, but we certainly are ahead of the curve for our age (under 30) because of having benefitted from both coming from affluent families. We're not literally spending family money, but we obviously benefited from family wealth. I suspect some variation of this situation isn't uncommon on this forum.

To someone born in poverty I suspect they would view my situation as having "family money", but I do think it's fundamentally different from people who were born into enough wealth to live on.
Based upon surveys done by SoFI, 29% of parents plan to fully fund their children's college education, but the reality is less (<20% of students who do end up going to college, currently ~69% of young adults). It's just assumed on this board that parents will cover the cost for their child's college, yet the data suggests that isn't all that common. That alone would probably qualify as "family money" in the minds of a significant portion of the population. I (as a young adult) definitely would have considered anybody who got their college paid for by their parents as coming from "family money". I would assume many will say that about my kids (many of our relatives have already said that, in so many words), but we aren't wealthy by any stretch among members of this board.
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Re: What's your definition of "Family Money"?

Post by Watty »

revsk wrote: Mon Apr 12, 2021 11:00 pm Would love to hear your definitions!
It can mean anything.

There was a post a while back where someone mentioned an older relative thought they were well off because of their extensive Beanie Baby collection. :oops:

revsk wrote: Mon Apr 12, 2021 11:00 pm I've followed the Boglehead philosophy before I knew there was a name for it and have recently been told I have family money when all along I feel I've simply been sticking to the plan.
It would probably be best to ask whoever said that for more details. Unless there is some sort of money in a trust though you cannot really count on it. Some stories I personally know of;

1) Retired couple had a seven figure net worth. There is a longer soap opera version but the husbands dies, wife remarries, and the original couples kids get nothing.

2) When I was a teenager I worked a couple of summers in a relatively high end nursing home where most people likely had some "family money". A mother in her 90s and a daughter in her 70s shared a room and the mother was actually doing a lot better than the daughter. You might not live long enough to get any of the "family money".

3) It is not uncommon for a couple to have once side of the family with some significant money but the other spouses family to have modest means. If they divorce either before or after receiving an inherence the spouse with modest means may not get any of that inherence.
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Re: What's your definition of "Family Money"?

Post by 22twain »

dbr wrote: Tue Apr 13, 2021 8:29 am I think to be family money it is more than just inherited or expected to be passed down but also that the accounts are owned in trusts or entities that are joint to a number of individuals. This implies that no single person can just do something with all the money. There is an implication that this money is supposed to grow rather than shrink while being able to supply income to family members in perpetuity.

I don't think a person simply inheriting money and wanting to pass it down to his immediate children is what is meant by the term.
When I first saw the thread title, I thought more or less along those lines, too. Then I realized that I couldn't remember any specific instances of seeing the term "family money" actually being used like this. So I did a Google search, first without quotes, then with quotes (to prioritize keeping the words together). I didn't come up with anything like that, just general stuff about families and money issues, at least on the first couple of pages of search results. Maybe "multigenerational wealth" is the "in" term for this nowadays.
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Re: What's your definition of "Family Money"?

Post by revsk »

Reading the responses so far it seems any definition is inherently comparative in nature to the one making the definition (i.e. someone else seems to be the one with family money not me). It seems that even many of those who transfer wealth from one generation to another often don't see themselves as possessing what would later be defined as "family money".
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Re: What's your definition of "Family Money"?

Post by celia »

It depends on what you mean by "family". It could mean you and your spouse and all the kiddos. Or it could refer to the extended family of one of you.

In the first case, our family money is what DH and I earned by working or investing. In the second case, it could mean what you get from your separate relatives (by inheritance or not). Neither case implies the amount is large, but rather where the money originated.
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Re: What's your definition of "Family Money"?

Post by 22twain »

revsk wrote: Mon Apr 12, 2021 11:00 pm have recently been told I have family money
It might be helpful to describe the circumstances or context in which you were told this.
It's "Roth", not "ROTH". Senator William Roth was a person, not an acronym.
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Re: What's your definition of "Family Money"?

Post by Doctor Rhythm »

22twain wrote: Wed Apr 14, 2021 1:00 am
revsk wrote: Mon Apr 12, 2021 11:00 pm have recently been told I have family money
It might be helpful to describe the circumstances or context in which you were told this.
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Re: What's your definition of "Family Money"?

Post by mmcmonster »

rage_phish wrote: Tue Apr 13, 2021 9:28 am When I think of the term family money, I picture people living off trust funds. Not having to work

But in actuality it’s probably much less than that and likely describes myself. (Always had the safety net of my parents, college fully funded. Help with my first down payment. Then married my wife who had the exact same from her parents. We have had an immense leg up simply by the privilege we were born into)
The ability to get to your first post-college job debt-free because of wealth given to you by family is probably family money. Also, the ability to choose which college you go to without being too concerned about the price tag.

This is in distinction to getting some money from family but ending college with some debt still that you need to pay off or having to take a job while in college to help defer the cost (as opposed to taking a job to have some extra spending money).
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Re: What's your definition of "Family Money"?

Post by Wanderingwheelz »

revsk wrote: Mon Apr 12, 2021 11:00 pm When someone has "family money" - what does that mean to a boglehead?

Do you consider yourself coming from or having it?

I've followed the Boglehead philosophy before I knew there was a name for it and have recently been told I have family money when all along I feel I've simply been sticking to the plan.

Would love to hear your definitions!
My dad and I are both Bogleheads. He’s 30 years older than I am (ages 49/79) and if I had to take my best guess his net worth is somewhere around triple mine. I have no idea, but his real estate alone roughy equals my entire net worth.

So, yes most people would consider that my wife and I have “Family Money” and pretty much everyone would consider my dad having it. I guess by extension I share in his since in co-trustee on one of his properties that is conservatively valued at $2.5MM.

Maybe I’m in a somewhat unusual situation of having it AND coming from it? Having family money is nice I guess, since I’m sure I could get a low loan rate if I all of a sudden hit the skids, but there no better money than what you worked to earn.
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Re: What's your definition of "Family Money"?

Post by SuzBanyan »

mmcmonster wrote: Wed Apr 14, 2021 6:49 am
rage_phish wrote: Tue Apr 13, 2021 9:28 am When I think of the term family money, I picture people living off trust funds. Not having to work

But in actuality it’s probably much less than that and likely describes myself. (Always had the safety net of my parents, college fully funded. Help with my first down payment. Then married my wife who had the exact same from her parents. We have had an immense leg up simply by the privilege we were born into)
The ability to get to your first post-college job debt-free because of wealth given to you by family is probably family money. Also, the ability to choose which college you go to without being too concerned about the price tag.

This is in distinction to getting some money from family but ending college with some debt still that you need to pay off or having to take a job while in college to help defer the cost (as opposed to taking a job to have some extra spending money).
I agree with both posts even if it means I have to admit that I came from “family money.” Even though they had very little savings, my parents were always an economic and emotional safety net for me.

My parents cash flowed my state college tuition and room and board because my Dad worked a second job. This was possible 40 years ago in a way I don’t think it’s possible today. My parents also helped with my first home, by using equity in their home as down payment and renting it out to me at FMR until I could afford to buy it from them at FMV. All of that gave me a leg up that not available to everyone.
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Re: What's your definition of "Family Money"?

Post by andypanda »

My definition? When various family members have serious money, and/or trusts, and the money is used wisely for the benefit of all the family members as needed with a serious eye to the future.

I know a couple who started off their married life working hard and they became very successful, one as a stockbroker and one as a partner in a very large law firm. Let's just say they were eventually worth umpteen million. They had parents and relatives who were successful to varying degrees and over the 40 years I've known this couple the money/investments have multiplied many times and been handled wisely in terms of investments, taxes, trusts and whatnot.

They have their money and they've had to hire a 'family office crew' to handle their 200-page federal taxes every year, the multiple trusts' management of the late relatives' warehouses, 1500 townhouses in LA, houses and condos in CT, CA, HI, etc., stocks, and a bunch of stuff that's been mentioned and that I've forgotten. They are both very nice down to earth people. The kids went to school and got jobs and got married, etc. They're not soap opera material.

The thing about family money is that is makes major life events easier. When an adult child needs to move the family across the country due to a job transfer, there's money to buy a house and have it waiting when the family arrives and then sell the old one.

In a very real sense, the money does not belong to the living members of the family and is not theirs to spend as they see fit. It belongs to the future.
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revsk
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Re: What's your definition of "Family Money"?

Post by revsk »

22twain wrote: Wed Apr 14, 2021 1:00 am
revsk wrote: Mon Apr 12, 2021 11:00 pm have recently been told I have family money
It might be helpful to describe the circumstances or context in which you were told this.
I was letting someone know of the annual gift allowance my wife's grandfather has given to his grandkids as contributions to their Roths since they were old enough to work and qualify. It started as as an incentive for his grandkids to get a job and earn income to the limit. He's 94 now.

The person said "It must be nice to have family money."
halfnine
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Re: What's your definition of "Family Money"?

Post by halfnine »

Family Money follows the same definition pattern as Upper Class. No matter how much your family gives your or how much money you make neither of those actually apply to you, it only applies to the people that are the next level up from you.
stoptothink
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Re: What's your definition of "Family Money"?

Post by stoptothink »

revsk wrote: Wed Apr 14, 2021 3:27 pm
22twain wrote: Wed Apr 14, 2021 1:00 am
revsk wrote: Mon Apr 12, 2021 11:00 pm have recently been told I have family money
It might be helpful to describe the circumstances or context in which you were told this.
I was letting someone know of the annual gift allowance my wife's grandfather has given to his grandkids as contributions to their Roths since they were old enough to work and qualify. It started as as an incentive for his grandkids to get a job and earn income to the limit. He's 94 now.

The person said "It must be nice to have family money."
Doesn't sound like it was used in a derogatory manner. A grandfather making annual contributions to the Roths of his grandkids can't be all that "normal", right? Best as I can find, ~.9% of people have trust funds. I'm sure I know people who receive gifts like this or have trust funds (I just don't know about it), but I genuinely didn't even realize gifting like this existed until I joined this board.
tim1999
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Re: What's your definition of "Family Money"?

Post by tim1999 »

I have an occasional golf partner that is almost 40 years old, married with 3 kids, living in a very nice mortgage-free house in an upscale suburb. To my knowledge, he has never worked a day in his life, nor has his wife since they got married.

He would always avoid the subject, but once he let it out after about 5 post-golf rum and cokes that he basically gets a monthly "stipend" from his parents, who inherited a wildly successful business and sold it maybe 20 years ago. They also paid cash for his house as a "wedding present." Based on his lifestyle, I'd guess that "stipend" has to be at least $200k per year. I'd also guess his parents already have put money away for their grandchildren's college educations.

That's what I call "family money".
dbr
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Re: What's your definition of "Family Money"?

Post by dbr »

stoptothink wrote: Wed Apr 14, 2021 3:43 pm
revsk wrote: Wed Apr 14, 2021 3:27 pm
22twain wrote: Wed Apr 14, 2021 1:00 am
revsk wrote: Mon Apr 12, 2021 11:00 pm have recently been told I have family money
It might be helpful to describe the circumstances or context in which you were told this.
I was letting someone know of the annual gift allowance my wife's grandfather has given to his grandkids as contributions to their Roths since they were old enough to work and qualify. It started as as an incentive for his grandkids to get a job and earn income to the limit. He's 94 now.

The person said "It must be nice to have family money."
Doesn't sound like it was used in a derogatory manner. A grandfather making annual contributions to the Roths of his grandkids can't be all that "normal", right? Best as I can find, ~.9% of people have trust funds. I'm sure I know people who receive gifts like this or have trust funds (I just don't know about it), but I genuinely didn't even realize gifting like this existed until I joined this board.
At a limit of 5K or 6K or whatever per year per grandchild that is just a couple of tens of thousands of dollars given away each year. That is indeed a nice and generous gift which is probably not typical but is certainly not uncommon. Amounts like this would not rise to the level of trust funds. It is just a gift. I was just checking that 8% of US individuals are millionaires and in the grandparent group more than that. So someone entering "older" age with a million dollars in assets thinking about maybe $100k or so going to each of several grandchildren eventually would very reasonably be funding those Roths. So maybe the number for "not uncommon" is a family in ten or something, give or take a good range.

You could call that family money, no objection to that, but it is not remotely close to family fortunes in the billions of dollars where things are held in shares of family businesses and trusts generally intended for perpetuity rather than as a nice head start to encourage financial responsibility.

Note, it is not important to decide what a word has to mean, but it is interesting to recognize the range of situations that can exist.
Last edited by dbr on Wed Apr 14, 2021 4:48 pm, edited 1 time in total.
Tingting1013
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Re: What's your definition of "Family Money"?

Post by Tingting1013 »

My father’s tech company just IPO’d and he is about to cash out mid eight figures in stock. He’s talking to one of the Big 4 about setting up a family trust.

I will report back in a few years what having “family money” feels like.
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firebirdparts
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Re: What's your definition of "Family Money"?

Post by firebirdparts »

I visited Asheville and learned about George Vanderbilt as a tourist when I was just a boy. So that weighs heavily on my thinking. I think it's a more important distinction that you die with less than you were born with.

Spending that fortune was a gargantuan task, but it didn't prove to be a superhuman task.
A fool and your money are soon partners
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StevieG72
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Re: What's your definition of "Family Money"?

Post by StevieG72 »

Money that I do not have! Family money is old money.
Fools think their own way is right, but the wise listen to others.
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CyclingDuo
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Re: What's your definition of "Family Money"?

Post by CyclingDuo »

revsk wrote: Mon Apr 12, 2021 11:00 pm When someone has "family money" - what does that mean to a boglehead?

Do you consider yourself coming from or having it?

I've followed the Boglehead philosophy before I knew there was a name for it and have recently been told I have family money when all along I feel I've simply been sticking to the plan.

Would love to hear your definitions!
Perpetuity.
"Save like a pessimist, invest like an optimist." - Morgan Housel
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