Recently Bob Paquette, morning host on the local public radio station WFCR-FM, Amherst, Massachusetts, interviewed me (Jayne). (You can hear the interview here.) Mr. Paquette’s last question was so provocative that Rich and I found ourselves having a lengthy discussion about it.
The question: Does the way the rich get ready to transfer their wealth to the next generation have some impact on the rest of us?
Here are the highlights of our brainstorming that resulted.
If they’ll be giving a lot of it away that will be beneficial to society…
In the aggregate, the extent to which our children have their expectations – not their needs or wants – might be interesting to watch. Perhaps their parents told them, “You don’t need to worry about your financial future.” Their children may have thought their parents meant, “We’ll take care of all your financial needs.” But the parents may have meant, “You don’t need to worry because we have confidence in your ability to provide for yourself and your family.” The adult children could be in for a very rude awakening.
In other situations, the parents may have intended to support their adult children’s lifestyle, but can no longer afford to do so after the financial meltdown, or because their own health or other circumstances have changed.
Many families don’t communicate at all about money, leaving the children to make assumptions or simmer in uncertainty their entire lives, wondering if they will inherit and how much they might inherit.
The bottom line is a lot of people will be ill prepared to take care of themselves and their families. Parents give their children a tremendous gift when they clearly communicate their intentions. No matter how much or how little they intend to bequest to their children, they do their children a huge disservice when they don’t expect them and prepare them to be productive.
We hear parents say all the time, “We want our children to have it easier than we did.” What a shame that is! Parents who try to protect their children from adversity, who bail them out of every mistake and cushion them from every possible source of pain are robbing their children of critical experiences to make and learn from their own mistakes. Resiliency can only be acquired through trial and error, but getting oneself into scrapes and having to figure out how to get out.
People who have built successful companies or worked hard to achieve success in any profession or job often look back on their early struggles with a gleam in their eyes. They are proud that they survived. They are not afraid to take calculated risks because they have learned how to extricate themselves from the grit and grime of failure. Parents are wise to let their children make some mistakes as they grow up, when those mistakes are bound to come with a smaller price tag. Better they lose $20 on an unwise purchase than $20,000 on a hair-brain investment scheme later in life.