Prioritize Family WealthWealth Principles
Personal investors need to think long-term. By long term, we mean as far down the line as possible. Many investors think they only need to concern themselves with their own personal retirement. This is wrong. In all cases, it’s substantially wiser to think about your family’s wealth beyond natural death or life expectancy. You should think beyond your own timeline in consideration of your finances, especially if you have children.
A common theme amongst the financially successful and prominent families is the ability to think ultra-long term. This is not simply 30 years down the road, but over the course of several generations. The thought process is simple: Your personal wealth is not your own. You are accumulating wealth both for yourself, your offspring, and their future offspring. It is to be preserved over generations, and you are only the initial collector. This cannot be done simply by giving them money alone. If they acquire the money but do not have the financial skills to manage it, it will evaporate under their upkeep. Family wealth will cease to exist.
Alongside any financial inheritance, you must pass on your acquired financial knowledge, principals, and aptitude. Your proficiency at instilling these lessons in your children will determine their approach to money. Your ability to master the skills determine your success, but teaching them to your children determines their success. It is your offspring’s knowledge and ability which determines if family wealth is maintained. Your children will deliver financial lessons and affluence to their own children, who can then teach your great grandchildren. This continues in a constant chain until the chain is broken. If a generational break in this process occurs your family wealth will dissolve and scatter into the hands of businessmen. It usually flows into the hands of those who provide luxury items, extravagant vacations, gambling casinos, mansions, and sports cars.
This is commonly referred to as the “three generation curse”. The first generation earns the money, the second generation maintains the wealth, but the third generation spends it all. This is due to a failure to properly plan inheritances, financially educate offspring, select financial advisors that are interested in maintaining familial wealth and avoid giving substantial wealth to undisciplined children. While you are learning financial wealth, sit down with the people most likely to inherit your growing wealth and teach them what you’re learning. They may need you to hold their hand through the process. Do not forget to teach them to pass these same lessons to their own offspring, and stress that their children should teach their sons and daughters as well. In three generations, your family’s wealth will be all the better for this practice.
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