Whose money is it anyway?

One of the joys of wealth is being able to share that success with family. For first generation individuals who worked hard, often starting in challenged circumstances, the knowledge that their children and grandchildren will never suffer the same struggles, is a comfort.

Yet it is possible to underestimate the importance of the struggle in shaping the person. Without the failures, the long hours and the sleepless nights, the spoils of success would not be so sweet.

It is in persistence and in overcoming obstacles that a sense of self-worth is reinforced.

For many second and third generation individuals their parents’ and grandparents’ successes can, rather perversely, inhibit their own.

By using money to overcome obstacles in life, wealthy parents are in danger of removing their children’s motivation to work. Without working there is no sense of achievement, since rewards are given merely by virtue of being part of a rich family.

The danger of charity

Essentially since the child is not earning the money they are the recipients of charity. This is hugely infantilising which undermines a sense of worth and creates dependency. It removes the necessity, and therefore the motivation, to accomplish anything alone.

This lack of work ethic is a considerable contributor to the third generation’s sense of entitlement. From birth they are afforded all the trappings of a luxurious lifestyle and unlike the second and first generations, they were not witness to the effort it took to get them.

As we have explored in earlier articles  all humans are born with an innate sense of entitlement since this is necessary for survival. It is only when children reach the toddling stage that they are first aware of the word ‘no’ and, as every parent will know, they manifest their rage: the terrible twos.

This stage is absolutely necessary to stop children having an inherent sense of entitlement. They need to learn that the world does not revolve around them. Understanding that one does not automatically get what one wants instils a work ethic. Even at a very young age, children can understand that they must earn a reward.

Work/reward relationship

Throughout life this lesson needs to be repeated to continue to motivate us to work and realise a sense of self-esteem. It is important to see that one can do something that others value.

At school, diligent studying is rewarded with qualifications; on the sports field, hours of training are rewarded with victories; in business, dedication to the job is rewarded with pay or promotions. The work/reward relationship is crucial in driving self-esteem which is pivotal in achieving happiness.

For many children in wealthy families much of the work/reward relationship is skewed. Throughout their childhood and adolescence, it has been made clear that the family fortune is theirs by virtue of birth. ‘One day all this will be yours’ has been the lifetime refrain but with no conditions attached.

Rather than hearing: “If you work incredibly hard and show a dedication to the family business, then all this could be yours”, the reward is unconditional.

At the same time, many third generation individuals feel that the money belongs to them, even where the fortune is not physically under their control.

Creating confusion

Not only does this prevent the child from understanding that wealth is a reward not an entitlement, it also creates confusion.

For example, the G3 child needs more money to perhaps pay for a holiday or bail them out of a scrape. The parent or grandparent does not accept that on this occasion that they should provide the money. The G3 individual can neither believe they are hearing ‘no’ nor that the money is not already theirs anyway.

Such a situation can only create conflict. The G2 individual feels exploited or frustrated by their child’s behaviour. The G3 individuals feels hard done by.

Yet more complication arises when the G3 child does not want to take over the family business. The pressure of continually hearing that the business will be theirs might undermine their own endeavours, leaving them feeling worthless. If the G2 individual assumes the family business is more important than their child’s own ambition and goals, they remove that child’s self-esteem, which is one of the cornerstones to achieving happiness.

Set boundaries

The solution is to be clear with children and set boundaries.

The money is yours not theirs. Any allowance is decided by the person who has earnt the money and not by the recipient. The family home is the parent’s home and not the child’s.

As a 12-year-old I visited my dad’s company and looked around and said to him: “You are in charge of the company which makes me number two. As I’m second in charge I can tell people what to do.”

Without hesitation, my dad replied: “You are not in charge of anyone. You are not number two you are no one at all. If the cleaner asks you to clean up, or the switchboard operator asks you to answer the phone, you will do it or you won’t be here.”

This was entirely appropriate and left me in no uncertain terms as to whose business it as and whose money it was.

Proportion is important too. The money that is given to G3 individuals must be manageable since vast sums of money require maturity and responsibility to process and respect. If they have earnt their own or shown some propensity to work alone, rewarding them is beneficial. It can reinforce their work ethic and motivate them to do more. Simply providing charity offers no incentive to grasp the nettle alone.

Money should be used to give them a fishing rod not a fish. In other words, to provide education, or to help them set up a business, or to have experiences that will improve their emotional intelligence.

Money should be used to help further a child’s life not to undermine it. Parents need to retain control of what they give, and ensure their children understand why they are receiving what they do.

Ultimately parents are in a position to use their wealth to develop their children but to do that they must set boundaries. Allowing children unlimited access to the family wealth risks infantilising them and preventing them from achieving their true potential.


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