Children of Wealth
What do Bill Gates, Sting and George Lucas have in common? They plan on giving only a small portion of their vast wealth to their children. Their reason is simple … they place great importance on their children succeeding on their own merits. This leads to an important question: Can wealthy parents raise children with strong values and empathy for those less fortunate amid vast personal wealth?
To view the full article please register below:
Children of Wealth
What do Bill Gates, Sting and George Lucas have in common? They plan on giving only a small portion of their vast wealth to their children. Their reason is simple … they place great importance on their children succeeding on their own merits.
Though Bill Gates’s or George Lucas’s children may not inherit their parents’ massive wealth, it is fair to say the children are blessed with abundance. Which leads to an important question: Can wealthy parents raise children with strong values and empathy for those less fortunate amid vast personal wealth?
The Trouble with Wealth
Growing up with extreme wealth can be a burden for many children, the impact of which can carry well into adulthood. Among these myriad impacts, the most harmful may be:
- Delayed maturity from not being tested with deprivation or failure.
- Low self-esteem since they cannot always point to their own accomplishments.
- Self-discipline can be lacking since they have never had to focus on long-term goals or strive for something important.
- An absence of motivation arising from boredom or the lack of driving needs.
- Guilt, rooted in having unmerited good fortune.
- Alienation from other segments of society.
- Discomfort with power—either afraid of using it since it wasn’t earned or misusing it out of a sense of inadequacy, confusion or insecurity.
Tips for Avoiding the Worst Outcomes of Wealth
There are a variety of ways wealthy parents can teach children about money, providing important life lessons about the value of work, saving and helping others.
- Parents shouldn’t give their children everything they want. They should be provided with an age-appropriate means to earn money and required to save for the things they want.
- Parents can teach their children a strong work ethic by requiring them to do household chores and encouraging them to seek summer employment.
- If parents are going to provide an allowance, be sure it’s not excessive, nor supplemented with “additional funding” because the child exhausted his or her allowance before the start of a new week.
- Let children experience failure. Parents naturally want to protect children from pain and hurt, but failure holds important lessons and readies them for the real world.
- Require hands-on charitable involvement from an early age to expose them to the less fortunate in society and to teach them the value of helping those less fortunate.
Of course, not every wealthy parent will share the wealth transfer philosophy of Bill Gates, so if great wealth is to be transferred, consider giving that wealth away when children are older and more mature—a strategy that can be accomplished through trusts. This is where an investment professional can help with plans for the future, particularly in ensuring business continuity with generational wealth.
Please reference disclosures: https://blog.americanportfolios.com/disclosures/