Rich People and Their Kids

[Habitual readers of BMA know that I belong to an obscure sect that prohibits blogging on Thursdays. I realize that leaves many of you with time to kill and that some of you have not yet read every one of the 317 posts I’ve lovingly hand-crafted for your enjoyment. So today I inaugurate what may become a regular habit: The Thursday Rerun.

Today’s originally ran July 27, 2009.]

Friday’s edition of Wealth Matters in the New York Times told us about the children of rich people. Turns out that if you are rich enough, instead of just Toddler Cart Crop - Remi  Jouan relying on your spouse, you can hire somebody to tell you what a lousy parent you are.

One of the several intriguing things about Wealth Matters is that the author apparently doesn’t know any rich people, or at least none that will allow him  to quote them. Instead, the columns seem to be written based on talking to people who talk to rich people. Or so they claim.

Sources for this week’s installment include a partner at a consultancy called Relative Solutions which "works with family businesses" and a partner at "BBR Partners, an adviser to ultra-high-net-worth clients." I suppose that both are keen to be quoted because they hope potential clients will read the column. I’m not sure that’s a sound business strategy.

What these advisors to the rich reveal is that if you’ve got so much money that your kids will never need to work for a living, it is hard to get them to work for a living. Good to know.

The Millionaire Next Door discussed this problem, sorta. It spilled a lot of ink on the dangers of giving your kids money. I think the subtext was that if you give the money away you won’t have it anymore, and that is a bad thing, but the authors also went on at length about the crippling effects of unearned money.

On the other hand, Wealth Matters seems to be swimming against the popular personal financial wisdom tide. Don’t rich parents habitually pass on the secrets of the ways of money to their offspring? And how can it be that there are consultants to help the rich deal with money issues like these? Didn’t they get rich because they are skilled at such things?

When I was growing up I knew a kid who worked every summer in high school, doing the sort of just-above-minimum-wage jobs you’d expect an earnest teenager to do. Most the rest of us weren’t so earnest. One day this guy mentioned how annoying it was that he got to keep less than half of what he earned.

It hadn’t really occurred to me until he brought it up, but this kid’s family was quite rich. He had a trust fund that put him into the top tax bracket, which in those days was north of 50%. Nevertheless, his parents made him go out and get a job every summer, because it was the right thing to do.

When I was young I thought this was an example of great parenting. Now I am not so sure. Granted, my kids are in absolutely no danger of not having to work for a living as adults, so for me this is merely an academic question. (As it is, I suspect, for just about all readers of the Wealth Matters column.)

Idealistic notions of work as personal fulfillment aside, just about everybody works for the money. Some of us may not be making as much as we possibly could, preferring to do something a little more pleasant or fun than the income-maximizing job, but I don’t know anybody who would keep doing what they do if they weren’t paid to do it, even if they didn’t need the money.

Is training your children to believe that working every day is the right thing to do, even if you don’t need to, a good idea? I’m not so sure. Raising them to think that work is not about money seems like begging them to make poor career choices later on. And teaching them that they never need to worry about money when, like just about everybody else, they most certainly do, is a disaster waiting to happen.

Like most parenting issues, my take on this is to avoid over-thinking it. Money and work are what they are. With age-appropriate details, I plan to tell my kids the facts as I know them. Here’s where the money comes from, there’s where it goes. If you want to live well, expect to work hard. They’re bright kids. They’ll figure it out.

[Photo – Remi Jouan]

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