Like all good things in life, financial success is a double-edged sword, especially if you have kids. Here is a guide on Raising Financially Responsible Children.
Most business owners want to achieve financial success. If you have already achieved it, then congratulations! Feel free to invite me for a spin in your new Lamborghini Aventador. Like all good things in life, financial success is a double-edged sword, especially if you have kids. Wealthy entrepreneurs face a tremendous dilemma: how do you raise financially responsible children? Can you give them a taste of the good life that you worked so hard to achieve without spoiling them? It’s not easy. So what can you do?
Option one: Give them nothing
Wellington Burt, a lumber entrepreneur, died in 1919 as the eighth richest man in the country. He was not happy with how his children or grandchildren turned out. Upon his death, Burt indicated that his fortune was to be held in trust until 21 years after the death of his grandchildren. At that point his remaining heirs would be given access to the fortune. Ouch.
So not only did he not raise financially responsible children, he decided to spite them by denying them access to his fortune after his death. His last grandchild died in 1989 and 12 decedents recently split the approximately $100 million fortune. Obviously this is a terrible idea. He most likely ate Thanksgiving alone, his children resented him, and it doesn’t seem like there are any winners—except for the heirs who were born with a winning lottery ticket.
Option two: Indulge them
Being successful takes a great deal of hard work and sacrifice. I liken building a business to trench warfare at times. You have to work really hard to make a little progress each day. Once you make it, one of the perks is to protect your children from this harsh reality. As a nurturing parent, this seems like the right thing to do. But sadly, it’s just as bad as option one. Just take a look at all of the trust fund babies that roam the clubs of New York at night without any meaning, purpose or direction in life. Many had parents, grandparents or great-grandparents that built their fortunes from nothing.
Indulging your children can provide a false sense of entitlement, making them spoiled brats. It can also lead to great personal insecurity and a lack of self-confidence, as they don’t know if they are capable of achieving success in life without piggybacking on their parent’s success. They may grow up to be unhappy people. No amount of gilding can fix that.
