You may have heard of the phrase “shirt sleeve to shirt sleeve” which refers to the common belief that for most of the Wealth in Family, will be gone within 3 generations. And time and time again this deems to be true, based on my personal research and conversations with friends and clients. Below I also bring up 3 steps to how to break this curse.
Here is what happens with each generation:
1st Generation - this person or together with their spouses, they start with no real financial means, but they works hard to gain the money. Usually this is driven by a deep desire to create a long lasting wealth legacy so they and their family. so they don’t have to suffer or struggle with financial issues. These folks are the Earners. They do all the work to make the fortune, and some tend to have more conservative views on their money.
2nd Generation – Children of 1st Generation of Wealthy may either have first hand experienced the family come into money or they were born into it. Either way, they benefit from the money in the family, usually don’t have to work for it. These generations are the Gainers. They will usually gain this money through inheritance or through trust funds. They enjoy the benefits of their gained money, They buy the nice houses, wear beautiful clothes, spend their time on Charity or on the Board Arts Boards. And unless they have the right circle of trust (various personal and financial advisers) this is where the family fortune plateaus.
3rd Generation– The Children of the 3rd generation were born wealthy have learned their financial values from their family and peers. Most have never had to work hard for anything and lack exposer to natural challenges that come when money needs to be earned. Unfortunately they tend to run into problems with entitlement or money guilt. This is the generation that tends to consume the financial fortune which leaves no financial legacy for their children.
The Fourth Generation - The Children of the 3th Generation, even though they were raised around money, have to live with the reality, there is nothing left in the fortune and they find themselves in the situation where to start the process all over again.
So what can be done about this?
How can this 4th Generation Curse be broken?
Here are three things that can make a difference:
One. Parents teach your children what they need to know
+ Teach your children how to have a healthy sense of responsibility and respect for money
+ Expose them to situations where money can’t buy happiness but their own efforts can
+ Teach them about creating short term and long term goals – this will help them see their life as whole and not just what is happening at the moment
Two. Get really clear about your own personal life purpose and meaning so you can come up with a Personal Plan to help you figure out what you want your life to be about
+ Self-Exploration – Read books, attend seminars and reflect through meditation and journaling
+ Get a Private Empowerment Coach – If you find you need more than Self Exploratory work. If you want to have a trusted partner on your journey to help you figure things out, create plans and take action. Your Coach can help you, overcome what is blocking you, create a balanced happy life with purpose and meaning. My clients are looking for that one on one support to take them to the next level of life satisfaction.
+ Meet with a Psychotherapist – If you find yourself facing persistent depression, anxiety, despair or grief, you should find a trusted therapist to help you through the dark back into light
Three. Surround yourself with the right Legal and Money Advisers* who really listen to you and will align your Personal Plan with your Financial Life. And most importantly of all, they should be all working together in alignment on your behalf.
+ Financial Advisers – From Insurance to Investments, you need a set of Financial Advisers that you trust to act in your best interest based on your needs and desire to grow and maintain the wealth legacy for generations to come
+ Certified Public Accountants – A good CPA can help you with Tax protection strategies and help you keep track of your financial health.
+ Legal Advisers – From Estate to Tax Attorneys, it is important to protect your wealth and your family with legal experts who are well versed in working with Legacy Family Wealth.
So in summary, if you educate your Kids, get your own Personal Plan in order, and use that Personal Plan to work with your Legal and Money advisers, you can overcome the curse of the 4th generation, and your money can last for many more future generations. And that is a beautiful thing!
* Note: Sometimes you get all or some of these roles in one place if you belong to a Family Office
As a Private Empowerment Coach, Holly Hansen believes she has the best job in the world, by helping you discover, define and create a wonderful life, and she will also help you eliminate personal blocks that limit your personal happiness and fiscal health. Holly Hansen is not a Financial Adviser, she is focused on you as a coaching client and your personal needs, so you can effectively help you communicate to your Financial and Legal Advisers how they can best support you.
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Today there are a number of ways you may find yourself suddenly with a large sum of money.
Besides winning the lottery, you may come into money through inheritance, life insurance payouts, selling your business. This can also include if you have sudden success as a professional athlete or in the creative arts, like a musician or an actor.
Coming into money can turn your life upside down overnight, and not always in a good way .
Some people handle this fiscal change with grace and ease, and others end up feeling stressed out, overwhelmed and in some cases financially self-destructing. We have all heard of stories where lottery winners are completely broke within a short period of time, people blowing through trust funds, former sports professionals now bankrupt and living in friend’s houses and rappers whose houses have been foreclosed on. I have personally watched families self-destruct and be torn apart by money too. So in this post I want to offer some guidance on how to handle this fiscal change in your life with intelligent grace.
How to get used to your new your fiscal status
So perhaps you’ve come into money, and suddenly you find yourself drowning in a sea of questions and possibilities, so to help you get back your equilibrium here are a few things to help you stop from spinning out of control.
1) If you are feeling overwhelmed - Take a Breather
This may seem like over simplified advice, but sometimes you need a moment to pause to let this
financial shift in your life settle in. Aside from addressing timely or urgent financial decisions, take a day, a week, even take a month if you need, but go about your life as if nothing has happened, to help you feel normal for now. If you think about the money, reassure yourself, you don’t have to come up with any answers until you are ready.
This is especially critical if you received the money through an inheritance. Give yourself a break, be kind, you have potentially faced a sad loss and need to honor those emotions before anything else.
2) Build your team of Trusted Wealth Advisers to help you create a healthy wealth plan that supports your dreams and goals
Once things have calmed down a bit and you feel more centered, gather together the trusted wealth advisers you need to help you manage it all.
Your Wealth Advisory team should include:
1. Attorney (example - Estate Planning)
2. Financial Advisor
3. Certified Public Accountant
4. Wealth and Transformation or Empowerment Coach/ or Therapist
Critical factors when choosing your Wealth Health Advisers:
+ Are they already successfully serving clients with their wealth advisory experience and education?
+ Do they have experience working with clients in similar situations and fiscal status as you? Don't be shy, ask them for recommendations from their current clients – and then pick up the phone and see what their current clients experience with that advisor has been.
+ Are they a good fit for helping you achieve your personal and fiscal goals in life?
A word of caution: Never make an emotional decision when choosing your wealth advisors.
It is really important not to hire someone as a wealth advisor because you feel bad or guilted into doing it. Just because your Uncle Joe is a CPA for some small businesses, does not qualify him to know how to best serve your needs. Advisors have to not only be someone you can trust, they should also be great at what they do for wealthy clients, to help you keep and grow your money.
Fortunes have been lost by trusting the wrong people. Don’t let this happen to you.
In fact, my own grandfather hired the wrong financial advisor, who stole a half a million dollars from him before it was discovered. Needless to say he was more cautious about the next financial advisor he hired. So at an early age, I learned about how critical it is to select the right wealth advisors.
3) Decide what to tell people about your financial change
One of the things you may be excited, nervous or stressed out about is deciding what to share with your friends and family about your new financial status.
There are so many unknowns you face when you have these conversations about how your fiscal status has changed and what that means to you… and what that means to other people in your life too. The best place to start is to ask yourself the following questions, and keep working on the answers until you feel comfortable with what you would say.
Some Questions you might think about :
+ Should I tell everyone, or if not, who do I want to share this with?
+ What will I tell people who are asking me why I am quitting my job, or no longer working?
+ What if someone asks me what I do for a living?
+ What if a family member or friend asks me for money and I don’t feel comfortable about it, what should I say?
By preparing and coming up with answers to questions like these, even before someone asks you, you will feel more comfortable answering when you are asked. So whether you write in a journal or practice answering these questions in front of a mirror, by practicing how you will reply or have that conversation will make it a lot easier.
One more word of caution: It can be risky telling strangers you are wealthy
Although the world is full of wonderful people, there are a lot of bad seeds out there. There are some who will steal from you through false investments, or literally break into your home, or even try to steal your identity if they know you are wealthy. So I would caution you to be discreet about who knows you have come into money. For example - social media is not the right place to announce your new wealth!
If you follow the above 3 steps, you should be well on your way towards getting adjusted to the changes, challenges and opportunities that come with having wealth suddenly come into your life. Don’t worry once you have your trusted advisors in place, and you get your personal equilibrium back, you will get to a “new normal”, a life with money. And then you can be free to focus your life on your passions and purpose.