If you’re wealthy, you’re at least somewhat concerned about the effect your money will have on your kids. Growing up wealthy can be a big obstacle to true success; if everything comes easy, your kids will never understand the value of discipline, hard work, and what being successful truly means. The vast majority of millionaires in the U.S. are first generation, and kids who inherit money tend to not hold onto it for very long. 70% of wealthy families lose their fortune by the second generation, and 90% by the third.
Inspirational stories abound of very successful people who grew up poor and rose to the upper class. In some ways, growing up in poverty fuels your motivation and drive for success.
How to set your children up for success
No matter how much money you have or how much money your children will inherit one day, there are some basic lessons that every child needs to learn growing up. One of the most difficult things to do as a parent is watching your child make mistakes and not bailing them out. It can be painful to see your children suffer, and when you have the means to stop that suffering it can be hard to resist the temptation.
Allowing your children to make mistakes, though, will be critical to their success later in life. They gain valuable problem solving and coping skills when they learn to solve or deal with their own problems. If you take care of your children’s problems for them you may be saving them from some initial pain and suffering, but you are limiting their growth and development as human beings.
Children born to families who make less money don’t have this problem; their parents are unable to solve all of their problems and take away their pain and suffering, even if they want to. A parent’s money, power, and influence can make many of their children’s problems disappear, but they would be better served solving their own issues.
Don’t go too far in the opposite direction, either
You don’t want your kids to grow up feeling entitled, but you don’t want them to grow up resenting you, either. It’s important to reward hard work, discipline, and other positive characteristics your children exhibit. Make sure your children understand how lucky they are to have the advantages in life you can afford to provide, and make sure they earn any financial rewards. If they are rewarded even when exhibiting negative or entitled behavior, that negative behavior will only get worse.
Withholding too much from your kids in an effort to not make them entitled can backfire too, though. You’ll want to find a balance between rewarding your children’s success and hard-work but not punishing them for being born into a wealthy family. Children must be taught to work for the things they want.
Making sure you kids don’t grow up to be spoiled is no easy task. Believe it or not, there are other downsides (and things you’ll want to avoid) if you’re wealthy. Watch our latest show, The Dark Side of Being a Millionaire, below to learn how to be wealthy without letting it ruin you.
