Ever wondered what it would have been like to have a rich grandfather leave you a large family trust as a legacy? Having come from a small town growing up in a middle-class family, I wondered what wonderful insights the children in those families received into the world of money. The financial industry has given me the chance to finally gain an understanding, and what I found was somewhat different from what I had expected. I interviewed a few of the third-generation children of some well-known wealthy families that have maintained their wealth. It’s quite surprising how few family’s wealth lasts more than two generations and I wanted to understand why that was. My findings were consistent across all those interviewed and outlines why these families have created legacy generational wealth.
The Grandparents or Founders
The grandparents or founders of the family trusts were themselves not extremely rich. What was common is they had all worked hard for their money. They understood what it took to earn each cent which led them to being both sensible and fairly frugal with money. In most cases a lot of their wealth was tied up in their businesses and while they lived comfortable lives, they were not ostentatious. There is no doubt that the era these founders grew up in shaped some of their thinking. The one thing they all seemed to do was to help their children develop a responsible attitude to money. There seemed to be an emphasis placed on delayed gratification and having to contribute to receive.
The Children of the Founders
The children of these founders saw the work effort and sacrifices their parents made in creating a level of wealth. This along with the values that were instilled in them created a sense of responsibility with regards to the family’s wealth, long after the founders passing. It seemed that preserving and growing this wealth, while benefitting from it, was out of respect for the founders who had created it. These children understood it was a lifetime of effort
from their parents that put them in this fortunate position, and they would never squander this gift. These children in nearly all cases worked hard themselves and made their own success, enhancing the family fortune.
The Grandchildren of the Founders
The grandchildren of the founders benefitted from these strong family values and attitudes to money. While they have all enjoyed some of the privileges that this wealth has brought in terms of the best education, capital to fund businesses and other perks they have all been grounded in being both grateful for and responsible with money. They talked of how they were taught money attracts the wrong kind of attention. One of the grandchildren’s uncles recalled an interesting quote, “Real money walks quietly”. What is also remarkable is how these children have a profound social conscience and use this money to make contributions to society and those less fortunate than themselves. Nearly all these grandchildren are successful in their own right which is a reflection of the value system that has been passed down.
I covered the three generations briefly as the common theme emerges which underlies the difference between how legacy is created and why often money never transcends two generations. What gives us all hope is that it doesn’t take a fortune to start building a legacy of wealth for future generations. It does take instilling a work ethic, a strong value system and a healthy attitude to money in our children to have any chance of building legacy wealth.
Can you imagine if we could grow the generational wealth in our country? The benefits for tax collection, less drain on the fiscus and being able to educate and provide the best healthcare for our families. This seems impossible for some as they are trapped in the sandwich generation of supporting their children and their parents while trying to provide for a retirement for themselves. Most are just trying to cope and can’t see themselves ever being able to do this.
Here’s a thought. As you have heard you don’t have to start with much but if it goes three generations which is nearly 100 years of growth you will be amazed at what can be achieved. Believe it or not the money is the easy part of this. The hard part is instilling the work ethic, value system and healthy attitude to money in our children. In essence, creating more responsible citizens. If you can achieve this, not only are you on the way to creating a better life for your future generations to come, you are contributing to a better society of responsible citizens with the means and value system to truly make a difference.
That is real legacy.
If you would like guidance in building your financial legacy, please feel free to get in touch with one of our qualified independent Financial Advisors.