Back in the 80s there were two popular shows on TV – one cartoon and one sitcom – that portrayed a ridiculous interpretation of what a wealthy kid’s life might be like. In Silver Spoons, Ricky (played by Rick Schroder) meets his maturity-stunted father, who has never had to work a day in his life. The father is portrayed as child-like, lacking ambition and whose only real purpose was to chase the next ‘fun’ thing to do. Ricky wasn’t raised in extreme wealth and has issues with the lazy and childish behavior of his new dad – it’s a role reversal, and sets the stage for a father-son relationship that is upside down, where the child is often parenting the parent. In the cartoon Richie Rich, Richie is a problem solver – with two of everything money can buy. His parents are absent from much of his life and adventures. The vast fortune is spent with reckless abandon, based on the whims of the 8-year-old protagonist, and the wants of those hangers-on around him.
Both could be used as examples of how wealth can corrode and negatively affect those that inherit it. In the 1980s, money wasn’t openly discussed with the next generation. Parents would say “we’re comfortable,” or “we are doing ok,” when asked about the family finances, and that was the extent of the information shared around the dinner table. This was the norm for the times, and thankfully, times are changing. Individuals like Bill Gates, Melinda French-Gates, MacKenzie Scott, Jeff Bezos and Warren Buffet are leading the shift in how families distribute, discuss, and define family wealth. There is a fresh, new take on how to raise children in affluence, while giving them room to grow and achieve in their own right. How are the wealthiest among us carving out space and insuring their children reach their full potential? We will discuss three paths that the ultra-wealthy are leveraging to help inform their parenting.
1. The Philanthropic Mindset
When the Gateses and the Buffets created the Giving Pledge, they started a global conversation about generational wealth. At the writing of this article, over 230 families from 28 countries have signed the pledge, which promises signers will give at least half of their fortune to philanthropy. Philanthropy isn’t new – many philanthropists of the Gilded Age are still used as the “gold standard “of giving. Think Rockefeller, Carnegie, Roosevelt and a few others with names on large buildings and museums. But the idea of giving away a majority of family wealth is a relatively new concept.
Philanthropy can be a great tool to teach compassion and selfless giving, but it can also backfire if the “pot of gold” is seen as more play-money than real, or the intent of the gift is to score a place at a black-tie event or alleviate guilt for being wealthy. This idea of philanthropy as a tool needs to be carefully introduced to children at an early age so they can learn how to be responsible, thoughtful, and impactful in their process. Providing children with the opportunity to research and develop their own giving plans at young ages can acclimate them to the idea of philanthropy, as well as spark curiosity and encourage learning about the nonprofits they want to support. Starting small, with good perimeters and guidance, can bring joy and meaning to each dollar placed.
2. Servant Leadership
As described in our earlier synopsis of Silver Spoons, wealth without structure can lead to a ‘hole’ in a person’s soul – where their life’s purpose would otherwise reside. History has recounted how children of the very wealthy, like John D Rockefeller Jr., or Jamie Johnson, heir to the Johnson & Johnson fortune, often felt lost in their parents’ shadows, believing they weren’t nearly as smart or talented as their successful parents. Guiding children towards a life of purpose through volunteerism, giving them autonomy around major life decisions, or delaying inheritance while they get their feet wet in the career-world, can help kids develop a healthy sense of self. Allowing them to fail, to struggle, and to make their own decisions with their lives and their livelihoods enables them to develop a sense of ownership and pride of purpose. It’s a natural instinct for parents to want to rescue children when they are struggling, however, modern thinking is leaning toward the idea that giving kids the gift of their own destiny can do wonders for their own sense of purpose, and their self-esteem overall.
3. Demonstrate a Healthy Relationship with Money
Money is a great tool – but it isn’t a parent, it isn’t love, and it isn’t a relationship. You can help kids understand the importance of meaningful relationships by being present in their lives. Steve Jobs was home for dinner every night. Mark Cuban and his family spend weekends without outside help to carve out a ‘normal’ family existence. Be there with your kids and talk to them about money. Normalizing the conversation about how your family uses money, how it doesn’t use money, and what the expectations are around money can become the building blocks to a life of purpose and a philanthropic mindset. Kids watch parents – and if parents are mindful about their spending, don’t abuse money or think that it will solve their problems, then kids will follow suit. Being open about the responsibilities of wealth and family values will enable the next generation to view money as a tool to help them with the blueprint of their lives, not the defining factor of their own self-worth.
Parenting in the age where sudden wealth is often just one IPO away can be tricky. Having a concrete sense of family values, direction, and a willingness to have uncomfortable but necessary conversations around money can help a family navigate the more difficult nuances of raising kids around new wealth. At Coldstream, we understand it can be difficult to know how to start the conversation, so we have developed tools and resources to help the families we serve have thoughtful discussions around wealth and family dynamics. We facilitate deeper dialogue around each of these topics, while also shedding light on other strategies for successfully raising affluent children. If we can assist you or your family in this way, please reach out to discuss.