Your family's home economics (the theoretical kind)

galoisien · July 9, 2008, 12:33am

Pardon the blunt subject! Partially out of social science curiosity, I suppose I want to ask you all how “property” works in your family. I don’t know whether this is characteristic of ethnicity/culture, being part of a single-parent household, or also part of some universal family models, but our family is pretty collectivist. It surprises me how coldly contractual some financial arrangements mentioned here work, e.g. “I will give you X every year, but you must repay Y later on,” etc. but maybe it’s because I am biased. In fact, my father used to be like that before he left – maybe it’s just a Freudian reaction of mine.

Partially makes me post this thread is a curiosity to explore other families’ conceptions on what it means to give, after viewing various threads that talk about family finances with children, etc. There really isn’t any private property in our household, save certain items for sanitary reasons (toothbrushes, undergarments, etc.). Everything given to me can be easily taken back, and our family draws upon a common pool. We never really had any serious attempt at an allowance system – it’s always been a “one for all and all for one” kind of thing. I get to pursue my own major and career as far as fulfilling my own interests and my own life goes, but I always felt money was always collective. You are always conscious of every dollar you spend because the money you are drawing from that pool is also the same pool from which the family is drawing rent and food.

In the future, if I ever buy a house, it will be the family’s house. Conveniently for the purposes of raising a future family of my own, (and legally, God forbid if we ever have a fallout) it will be my house, but as far as we envision it, anything any of us buys is collective property.

Up to this year, perhaps naively, that’s how I thought how every family worked – "“one for all and all for one”. When I started browsing financial aid threads this year, I was kind of surprised at some money relationships worked out between children and parents, so it was only then that I realised different families distributed money differently.

To an extent I wonder if some differences are cultural. Asian families tend to have pretty large extended families, etc. When we lived in Singapore, the maternal grandmother’s home was everybody’s home – it was the “central headquarters”. In contrast, when I read Pride and Prejudice or watch Mona Lisa Smile, I get a peek into Western family structures where offspring get neatly segregated allocations for their new life, where there isn’t much collective mixing of possessions after that.

If I sound critical some parents here, or that I’m making unnecessary fuss about cultural differences – that’s not my intention. Part of it is that it just seems so foreign and disturbing to be so calculative with your children. Maybe it’s also my idealism – at some point the warmth of the collective nest must give way to the harshness of cold economic reality. Some of the “collectivism” is due to special family circumstances; having no private property among trusted family members, for example, is the best way to make the maximum utility of limited economic resources. But shouldn’t “one for all and all for one” be how a family works, regardless of family situations (save fallouts), even when the children have grown up?

emeraldkity4 · July 9, 2008, 1:27am

We never really had any serious attempt at an allowance system – it’s always been a “one for all and all for one” kind of thing.

i don’t understand this.
then how do you budget and set limits so that you have enough money for needs as opposed to wants?

Say each child gets $150 dollars to buy school clothes for the year- but one child spends that on a pair of jeans and a shirt?
do you give them more money or do you tell them what they must spend on each item?

younghoss · July 9, 2008, 1:58am

I don’t understand either. No allowance? Surely a child of 6 cannot be expected to contibute much $ to the mortgage, insurance, car payment, utilities, food, to run a household. Clearly the parents must(and want) to provide the childs’ share. That isn’t all for one, one for all. Or do the parents expect that when the child become a working adult that then the new adult must re-pay the debt incurred while living in the family home? Do the parents keep a running tally and give the bill to the new adult?
Wife and I believed an allowance helped teach value of work, money, and the benefits/drawbacks to both. I think there is a word for those who ascribe to a let’s share all the earnings equally, and we all are equal owners of everything philosophy.
My grandmother, particularly in her later years when her body was failing, was very giving with her money/property, and such. But at no time did I ever feel her stuff was mine or that I had a right to it. My son and I ask to borrow the others’ music cd for example. We believe that teaches a respect for the other. If we both believed we all had equal ownership then one of us could just grab the cd and go. I wouldn’t be comfortable with that.
As far as culture, I am an American whose ancestors were what I guess would be called central European- English, German, and a touch of Irish.

galoisien · July 9, 2008, 8:48am

We don’t have to be told to make sensible use of money.

In fact, I often have to stop my mother from buying food and other consumer products because it comes out of the same pool we use for rent and the paying of debts.

Well my parents divorced when I was 11, and by that time income could be drawn from scholarship money and ang baos.

But even when I was 6, sometimes we were told what to buy but the constant command was to spend on things with the highest MB/MC ratios (using different words, of course). Had my sister and I abused the system our access to the pool would have been revoked. But why abuse the system? Families share miseries, triumphs and fates.

Legally of course, my parents (and later, one parent) was in charge of the money. At a young age we couldn’t withdraw 2000 dollars (just over two months’ rent!) and spend it on say, a kid’s idea of luxury (if we wanted to abuse the system for just one time), because naturally the bank would forbid us from doing so.

It’s not so much as “sharing earnings equally” – it’s that earnings are part of a common pool to be drawn upon (say, where every dollar must be used for an emergency). We know that every tiny purchase is an economic burden on the family, so it’s not like if there are four family owners and two breadwinners, each family member is “entitled” to a quarter of the income stream each. Resources are not divided up at all, so there is no “equally”.

No this is clearly what I want to avoid – a mercenary relationship.

So most families don’t have common resource pools? I mean, we’ve always lived by the idea that you endure hardship now so you can enjoy abundance later. So overlooking love for one another (which I should hope of course to be the strongest incentive), there is a self-interest in not abusing the pool, because that would simply undermine the family’s ability to create a better collective future.

We plan to give back to the pool, without calculation. Naturally my mother generates most of the resources in the pool now, but in the future, me and my sister shall. Isn’t that how it should work?

What’s disconcerting to me is the idea that it seems that in some families, after a certain age, you gain financial independence from your family and that you are “sent off” with a fixed amount of resources. If you should falter or become unproductive, you cause heartbreak and are said to be “ungrateful” but your family’s economic destiny and your economic destiny are now separate.

But to me, unless you suffer some fallout or other, you never become financially independent of your family. You of course, must manage your own finances (because that is an act that requires labour, and you of course must put your own labour in), but you don’t become severed from the pool. In the future naturally, my mother will draw from the pool as we did when we were children.

cptofthehouse · July 9, 2008, 9:31am

The problem with your theory is that we are all human and we have are fallacies. If everyone is perfect in their needs and spending and awareness, it is not a problem to have a loose communal system. For non essential funds, that may be a good way to run a household. When you have certain fixed expenses, and an income that is not that much higher than those expenses, you do have to be very careful. The rent, the insurance, the utilities, transportation, medical, emergency fund, savings, retirement all have to be allocated before there is any discretionary income to discuss. By the time kids are of age to understand the workings of a family budget, certain fixed expenses are in place along with some unplanned uses of funds–divorce, family fall out, illness, other family emergency.

Also as kids leave the family, they start their own pool of funds, their own lives that do not necessarily mesh with that of their parents. I cannot conceive of sharing lifetime goals with either of my two sons. I’m not saying they are in the wrong,(well, at least for some things) and I am glad that they are so independent(sometimrs) but consensus is often not possible.

Our home is about as communal as it comes in terms of our kids. My three oldest boys are all about the same size so they share clothes. No one has ownership of a bedroom as they swap arrangements all the time depending on who is home. All being boys they hand down everything. When they left for college, they took very little in their OWN stuff, and left little of their OWN stuff. Yet they are as different as can be. I agree that if everyone were of the same mind, there would be a lot more harmony in a family, but it just does not work that way because of how unique each of us is.

calmom · July 9, 2008, 10:27am

Actually, I always had that kind of communal arrangement with my son - I didn’t give him an allowance, if he needed money he would ask for it and I would give it to him – or he’d just come take it out of my wallet – and it never was an issue because he was always very frugal. With my daughter the system did get out of hand – I don’t think my d. was really abusing it, its just that she had a harder time controlling day-to-day spending, and I got frustrated because money would disappear so fast from my wallet – so I put her on a monthly allowance. That didn’t work because she had problems budgeting that - she’d spend it all at the beginning of the month and be short of money at the end – so we shifted to weekly.

So basically, we started with the communal approach, modified it when there was a perception that it wasn’t working.

But I agree that some families seem a lot more calculating and tied to numbers. It seems like in my ex-husband’s family, everyone kept a running tally of what was “owed” for years on end. At one point in our marriage I inherited some money, and I insisted that we should use that to pay off the big “debt” my inlaws were always complaining about – so I told them we had the money to pay them back and asked how it much was owed… and then they refused to take it! That was when I realized that the whole money tally thing was more about power and control in the relationship than dollars. I’ve never had that sort of thing with my own family or with my kids – we either settle up right away or we pretty much forget about it.

galoisien · July 9, 2008, 10:29am

Naturally, and nobody would even think of touching that (except as universal policy changes).

And of course when I mean “pool”, I don’t mean you find all the resources in one account, and accounts are definitely set aside for fixed expenses, etc. It’s just that if there is any hardship where every single economic resource must be mobilised (a small-scale version of Clausewitz’s “total war”), critical investment, rescue, or otherwise, everyone’s accounts can be drawn from. Thus the numerous bank accounts set aside as “untouchable” (except to fulfill their functions) – be it to pay rent or make fixed deposit investments, or other such fun financial matters – are collective despite being set aside.

For us, divorce destroyed the original family arrangement (which was way less communal) and obliterated the previous financial stockpiles. For example, after our family’s fallout with my father, we liquidated our policies on him to collect much needed financial resources, as well as most retirement and education savings programs. It’s partially why we turned to a system that was way more communal. This is the “tried and tested” part – it has worked for 7 years.

Well okay, we aren’t flourishing, but that’s of course due to our circumstances; the flourishing part will come after we start to collect returns from our long marathon.

The theoretical part I suppose, is my assertion that shouldn’t this be the way it should be, regardless of financial situation? My father was abnormal and abusive, and it was he who set the “cold and calculative” philosophy, so we perceived the adoption of “communal finances” to be a return to the norm. My mother no longer has any real retirement programmes (though she is attempting to rebuild one from scratch, but we haven’t got much in it), so for us to continue maintaining “common pool” even when my sister and I lead separate lives is a necessity. But even if this weren’t the case – e.g. when I decide to start a family of my own (seems distant, I know! :p) – shouldn’t lifelong communalism be how it works? For my mother’s extended family (which remains very much intact and free of the horror of fallout and divorce, thank goodness), lifelong communalism is loosely practiced. When my mother’s extended family sold our old million-dollar bungalow that the my mother and her siblings used to live in (at this point I should observe that actually owning your own land is a status symbol in Singapore, so any landed property is expensive), the proceeds were distributed communally even though the bungalow only had two legal owners.

BCEagle91 · July 9, 2008, 11:06am

I think that there’s some correlation between communal vs “accounting” forms based on the relative wealth of a family - maybe like an Oreo Cookie (just borrowing a phrase from Jim Pupluva on the stock market this year). My wife is from Singapore (Indonesia going back further) and things were more communal in her household but they were very poor and I think that sharing was required for survival.

A corporate model would have families do planning and accounting. But you either need some amount of wealth or some expectation of wealth to come in order to plan. If you’re living day to day or paycheck to paycheck, then you might not feel like planning because you may feel that it won’t help.

Then if we go back to wealthy family, you may have adults managing the finances of their parents or even grandparents or certain family members because they have the ability, interest, motivation and trust.

I’ve asked my son if he’d like to manage the family finances. This would give him complete access to about 80% of our family wealth at 18 years of age. I’ve given him training in financial markets in his early teens so I have a fair amount of confidence that he could grow into a money manager. He declined saying that he’s afraid of managing so much.

In general, if someone wants something, they can pay for it with their own cash or ask me for it. I generally don’t say no. It helps a lot that the kids are very frugal; even miserly and that they appreciate what they have. If they didn’t, then I would find it harder to run things this way. We both come from difficult family situations and perhaps they’ve picked up on that.

katwkittens · July 9, 2008, 11:09am

Galoisien-

You are not alone!! We are not Asian but it has been remarked that we could be!!

We have a family pool of resources. And money is just one component of the pool. We all contribute our talents, skills, advice and wisdom and networking (surprisingly the most beneficial). Kiddos (5 of them) never received an allowance, still don’t. All family effort goes to whomever needs it most at the time. It revolves and evolves constantly. I used to manage the finances now they do most of it, especially as their respective areas of expertise have out grown my abilities and skills.

They are each unique and special but over the years have formed very deep and lasting bonds. They talk to each other daily (numerous times a day) and know each other schedules and where everyone is at all times (fall out from 9/11) even though they are often times separated by THOUSANDS of miles of sea and land. They now have a family plan for their cells (newly acquired per oldest son) with AIM on their cells and pcs. Now they talk even more than I ever thought possible, with unlimited texting.

Example: Last summer middle daughter needed to stay at school due to paid research opportunity and classes. She needed a tutor for one class so she paid for younger son (designated tutor) to fly and take classes with her there. Also sounding board for research. She also had team practice (NCAA) to deal with as did he. So she arranged for his workouts, classes and research there. He gave up another research internship to help her out.

All worked out great! His additional classes helped gain his research internship THIS summer and she did well in her classes and research. She paid because she had the money last summer. This summer is the opposite. Oldest son and daughter have the most responsibility for now, but when he is out of the country and unreachable she is.

Works well for our family, 25+ years and they have far exceeded the dreams and goals they set for themselves years ago. They are right smack in the middle of creating new ones!

Kat
also a single-mom

whatever4 · July 9, 2008, 11:48am

Actually I understand what you mean, galoisien, and I think a somewhat modified form of your model is common in U.S. families. Our oldest just graduated from high school, and up through this point, we have focused on meeting the needs of each family member, independent of what that person is contributing to the pot and of whether what that person needs is more or less than other family members. And while we expect our kids to achieve financial independence as adults, we will always be willing to help them out as much as we are able, especially in emergency situations. On the other end of the spectrum, many American families find themselves assuming financial responsibililty for elderly parents when their parents can no longer provide for themselves. It’s not exactly “one pot,” but it’s not as if everyone is operating completely independently either. (Is your mother still contributing to her parents’/siblings’ household “pot” in Singapore?)

As our eldest heads off to college, we have had to think through how we are going to handle things financially. When there is more than one child, do you pay for an Ivy League education for one and a community college for another, and call it good? Do the parents pay for it all with an expectation that the kid pays it all or some of it back to “the pot”? We have decided we are able to contribute up to a certain amount per year, with the child needing to take out loans or work to cover anything over that amount if the cost of the chosen school is higher. The child will not be obligated to pay back what we have contributed. We do not want our kids to be obligated to provide for us in our old age (which is why we are limiting how much we can contribute for college), and we want to launch them into adulthood unencumbered by lots of debt (to us or to others).

I am going to guess that very few parents are actually as “calculating” in weaning their college-age and adult children off the family teat as you think. (In fact the trend of adult children living at or moving back home has gotten a lot of attention from the media and social scientists the past few years.) My guess is that most American parents want to help their kids become self-supporting and financially independent, but are willing to help their adult kids out financially, if necessary (and if the parents are financially able to do so). Probably not a lot different from your situation?

Your family's home economics (the theoretical kind)

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