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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How to raise rich (but not spoiled) kids : 10 ways to help wealthy kids grow into financially successful adults
Like article author Jocelyn Black Hodes, my family also raised me to be financially accountable to myself. Yes they paid for college, yes they definitely helped me along the way, but for the cars I drove after I got my drivers license were their used cars.
In addition to making me aware of the values and respect for money, they also gave me the gift of empowerment, showing I didn't need their money to stand up on my own two feet and be independent. It prepared me as an adult when coming into money how to have a respectful healthy relationship with it. And this is something you can help your kids with too.
Here are some quick highlights of the article:
1. Teach them early- Allowances, separate banking accounts, teaching them to budget, involve them in household budgeting
2. Set up a Roth IRA they can contribute funds to from their jobs
3. Have your kid be part of the process of setting up a 529 College Savings Plan
4. Give them a housing head start -By gifting your kids the down payment on a house, you help them get a head start but also help them learn about tax advantages of owning real estate.
5. Foster the Family Business - Put your kids on the Payroll for jobs they can do within your company. This helps them get exposure to where and how the money comes, and could help them sustain you family legacy of your business
For the full article - click the link for Source
Source: June 16th, 2014 MarketWatch The Wall Street Journal, Author Jocelyn Black Hodes