Why Wealth Rarely Survives Grandchildren – Episode 624

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[00:01] Welcome to the Prosperity Podcast. Prosperity Thinkers, welcome to the podcast. This is a special one because this came in from one of our listeners. And as we talk, we have a special email address support at ProsperityThinkers.com for podcast listeners. This one was sent to that and it’s really a legacy question. So it’s a MarketWatch article. I’ll give you the title. We’ll put it in the show notes. It’s an opinion piece that says, why wealth rarely survives grandchildren and how your family can beat the odds. So Kim, take it away. You’ve seen this. Where do we go from here so that we can get one? Is this a problem? Two, we’ll dive into fixing it. Well, I actually didn’t look at the article.

[00:53] So you’re going to use your quick start and take a peek at it and feed me anything else you think I need to be conversing about while I give a setup to this because that will make it even more real, right? So thank you, Mr. C, for sending this in. It’s always a joy to have this kind of thing to talk about. And what’s so interesting is that wealth doesn’t make it past three generations in the United States. So we use the term shirt sleeves to shirt sleeves, right? Because in theory, blue collar workers wear short shirt sleeves and white collar workers that in theory are doing better wear long sleeves. And so that’s why it’s stated like that. There is an exact identical saying in the Oriental area of the world called from

[01:48] rice patties to rice patties. And I have heard other examples of this in parts of Europe and parts of other aspects in the world where families don’t make it with wealth past three generations. And it really all bottles down to just one thing. And that is that when us parents, and I include myself, want to raise our children and we think it’s best to give them a life that we didn’t have and we take away some of the healthy struggles that we had because they were hard and we don’t enable our children to deal with the healthy struggles, they lose something. And then when that gets passed on to the next generation, even more gets lost. And so now you have this classic, the first generation raised up all the money.

[02:54] The second generation often has a negative aspect about it because their life wasn’t maybe as good as it could have been even though the first generation tried to make it as good as possible. And so they want a life that’s different and then they pass that to the third generation and now the money is gone because the third generation doesn’t remember anything about the first generation. And it’s very sad. It is amazing how much wealth gets destroyed. You have some really public examples of this. The Vanderbilts are a very well known family that destroyed wealth by the second, third, fourth generation. You’ve got other examples where frankly it was destroyed in the second generation. And this is partly because, especially in America, we do not talk about money

[03:43] in our families. And so that’s problem number one. Now Spencer, what else have you found if you were able to get that article live that they are speaking about? Oh yeah. I’ve got it live. I’ve got questions. I’m ready to go. I love this because, and the reason why this is so good is because it is a problem that every single family that creates wealth will have. Meaning if you’re in a family that’s born into wealth, then you have to find your identity and feel like you earned it, even though it was set up for you. I’m not going to say given. I’m going to say set up. And if you are a family that had nothing and you had to get it, you inevitably want to make it easier for your child. And then that’s where the problem lies is do you make it too easy or do you

[04:39] make it too hard? What does that look like? Difficult. The article right here is it goes back to a couple of pieces, which is one, the family communication and values and the family literacy. So what would you call the foundation? What’s the value foundation that you would put on this, Kim? Well it is a story that gets shared and sometimes numerous stories that get shared. So for example, there was a time when I was a senior in high school. I was showing 4-H animals at the county and state fair. I had done very well in this space. Massive number of wins and ribbons and prizes and awards and scholarships, etc. And I had a pig that absolutely flat out would not cooperate. So for those of you who don’t know, when you show a 4-H pig in the ring with

[05:37] a judge and a few other pigs, you use a cane. And the pig, when well-trained, and my pigs were always well-trained, will turn left, right, or stop based on where you place the cane. For whatever reason, and this does happen, this pig was having none of that. And all it wanted to do was root in the corner of the pen. And you’re not supposed to get in there and move it with your legs. I couldn’t even do that. The pig just wouldn’t move. You know, it’s a 250 pound pig, it’s not a lot I could do about it anyway. Embarrassing, horribly embarrassing. Yet I’m in a ring in the middle of a fair with my friends, family, a whole bunch of people that I don’t know watching. So I had a choice to make. I could either break down and cry, which is absolutely what I felt like doing.

[06:31] Or I could just stand there and wait it out, because there was no other thing that could happen. And thankfully, I stood there and waited it out. And it was because of many years of work, of learning what to do when I lost, right? Whether it had been sports, or friendships, or animals, or what have you. I mean, in the end, two men with boards had to come get and physically remove this pig from the ring. I don’t know what was in that corner, but that pig wanted it. So that’s an example of a value orientation story that when told to children and grandchildren, they will remember. Now, what they wouldn’t remember is if I preached to them about the value of sucking it up, because that’s the best way that I can describe

[07:26] that value at a time. The value of in the face of loss, maintaining equilibrium. Like if I spoke with them about that, and said that’s a value, and tried to get them to do that, it would mean nothing. They would forget it, or worse, be mad and wanna run the other way. But if I share the story, and I’ll admit, I am not good at this. I have worked at learning how to tell stories and be better about it. Nevertheless, I know that if that story is shared, they will remember aspects of it, of the value that I held dear to me, that I want to instill in them. So that’s the best example that I can do, is share a story about sharing a story. I love the values in there, because the heartbeat of the family

[08:20] will shape that. As we were talking and going through this, it had me think of the prodigal son and that Bible story. And there’s one piece in there I think that we often overlook, which is the prodigal son, if we think of that, came from a wealthy family, one brother stayed at home, did the work. We don’t have all the context, so we have to use our imagination and fill the gaps. Another brother took the wealth and had an amazing time, a worldly amazing time, and then decided once he was destitute to come back. Here’s the key piece that I wanted to touch on, which is that he decided to come back and work, meaning work was an instilled value. Regardless of tons of wealth or no wealth, that was the value.

[09:13] So Kim, you’ve raised kids that know how to work. You’ve had people that you coach and you’ve worked with that have a lot of wealth where they have kids that know how to work, and there’s people that have no value of work. How are you helping instill that? Well, I believe that it starts when the child is around one or two years old and creating gigs, G-I-G-S, that a one or two year old child can do. This sounds amazing, yet it’s totally doable. We have thousands of examples, enables that child to appreciate the value of work and not see work as a four letter word to be avoided. Now, I will admit to you, I was not loving this when I was a child and raised this way, yet as I became an adult and saw the value of the way

[10:13] that I was raised, it was very easy for me to raise my own children that way. And I can see already in my almost two year old granddaughter, her parents, one of which is my daughter, raising her that way. And it absolutely is a joy and a delight because I know the success that an adult that has been raised with gigs, not chores, right? No allowance, that’s socialism. But gigs and the opportunity to earn money, in addition to expectations, which are things that are absolutely just part of living in the home that they do not earn money for, are the success factor in that space. So we have an entire membership built on teaching families how to raise financially competent kids. Everybody talks about financial literacy, but you cannot homework money any more

[11:16] than you can homework values, those have to be taught in the real world. And so inside our prosperity parents membership at prosperityparents.com, there’s free version and a paid for version. And if you want fast success, jump into that paid for version. There’s a couple courses there, there’s an app, there’s work that can get done every single week. In the space of creating gigs from age one to age 20. And that is what is going to help make the difference with a family situation as it relates to their children becoming financially competent. I like it. Okay, we’ll put a link to that. I’m gonna throw you one curveball. You think fast on your feet and it’s this. We’ve talked about the values.

[12:08] We’ve talked about earning money, having gigs. There’s one other piece to legacy and wealth, which is charity and giving. So can you give us one tip, one suggestion that parents or grandparents can do to help the kids associate and create that value system with giving money and charity? Absolutely, it’s the three jar system. So money that a child is given for like birthdays and Christmases or earns from the gig work that they do. Whether they earn it from you as a parent or other community members as they get older and more capable. It goes into the three jar system. The first is the save jar. The second is the spend jar. And the third is the share jar. So save, spend, share, and frankly, some families might wanna adjust that order a little bit.

[13:11] Maybe it’s save, share, spend, and that’s fine. I mean, the order is not the important point. And in the early years, it’s very important to have these be physical jars where the child can actually see the growth that is occurring. And maybe as a parent, you even match it and start to teach things like compound interest. And that type of piece of activity level that the young children are capable of learning about, but so much easier when they can see it. So that’s the ticket, are the three jars. Save, share, I like that order better, and spend. So good. Kim, thank you for sharing this today. We’ll make sure to put links to all of the resources that we talked about inside of the show notes. And for you listeners, continue to share articles,

[14:01] share other information, or if you’re just stuck somewhere in your family situation, send an email to support, actually it’s hello at prosperitythinkers.com. That’s the special one, hello at prosperitythinkers.com. Thank you. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit prosperitythinkers.com.