RULES FOR AFFLUENT PARENTS AND PRODUCTIVE CHILDREN
The affluent who have successful adult children have given us much valuable information on how they raised them. Here are some of their guidelines:
1. Never tell children that their parents are wealthy.
Why is it that many of the adult children of UAWs are more likely to earn high incomes than to accumulate wealth? We believe one of the major reasons is that as children they were constantly told their parents were wealthy. Adult UAWs tend to be the product of parents who lived in ways they thought appropriate for wealthy people to act. They lived the high status/high-consumption lifestyle so popular in America today. It’s no wonder their sons and daughters attempt to emulate them. Conversely, adult PAWs whose parents were wealthy have told us time and time again:
I never knew my dad was wealthy until I became executor of his estate. He never looked it.
2. No matter how wealthy you are, teach your children discipline and frugality.
As you may recall, in Chapter 3 we profiled Dr. North, a wealthy man whose adult children live frugal, well-disciplined lives. Dr. North detailed how he and his wife raised their children. Simply stated, they taught by example. Their children were exposed to credible role models whose lives were characterized by their discipline and frugality. Dr. North said it best:
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Kids are very smart. They will not follow rules that their parents themselves do not follow. We [my wife and I] were well-disciplined parents.... We lived the rules ... we taught by example.... They [the children] learned by example.
There must be congruency between what parents tell their children to do and what we as parents do. Kids are very perceptive in pointing out inconsistencies.
Dr. North received a birthday gift from one of his daughters when she was twelve. It was a poster titled “The King’s Rules.” On it, his daughter wrote down the rules that her father preached to his children. Dr. North still keeps this poster in his office, prominently displayed behind his desk.
Kids are looking for discipline and rules. She honored me with the poster. Kids must be trained to take responsibility for their actions. Today all my children are well disciplined and frugal. They adhered to the rules. Why? Because their parents did.... Actions speak louder than rules that are just words, not actions.
What were some of the rules Dr. North’s twelve-year-old daughter listed on the poster?
◆ Be tough ... life is. In other words, there is no promise of a rose garden. Never say “poor me” ... [or] feel sorry for yourself.
◆Don’t walk on the back of your shoes.... Waste not, want not. In other words, don’t abuse your belongings. They will last longer.
◆ Close the front door.... Don’t waste your parents’ money letting the heat out.
◆ Always put things back where they belong.
◆ Flush.
◆ Say “yes” to those who need help before they ask.
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3. Assure that your children won’t realize you’re affluent until after they have established a mature, disciplined, and adult lifestyle and profession.
Once again, Dr. North said it best:
I have set up trusts for my children ... some estate tax advantages. But my plan will not distribute money to my children until they are forty years of age or older. Because in this way my money will have little effect on their way of life at that age. They will have already adopted their own lifestyle.
Dr. North also told us that he never gives his children cash gifts, not even now that they are adults.
Cash gives them too many options, ... especially in the case of young children. Media, especially TV, controls the values of our young. Just like they try to control what we think is funny with canned laughter.... [There’s] too much emphasis on consumption.... I have never just given cash for this reason. What I have always told my children [is] if you need to make a major purchase, you first must fund a good bit of it yourself.
4. Minimize discussions of the items that each child and grandchild will inherit or receive as gifts.
Never make light of verbal promises: “Billy, you will get the house; Bob, the summer cottage; Barbara, the silver,” especially in a group setting, especially when consuming alcohol. You may too easily forget or confuse who gets what, but the kids are not likely to forget. They will hold you and their siblings responsible for being shorted. False promises often lead to discord and conflicts.
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5. Never give cash or other significant gifts to your adult children as part of a negotiation strategy.
Give because of love, even obligation and kindness. Adult children often lose their respect and love for parents who submit to high-pressure negotiating tactics. Coercion of this type is often the product of the manner in which parents negotiate with their young children. Even pre-teens are taught the benefits of “Johnny got a bike so I should get a wagon.” Johnny and his brother should receive symbols of love and kindness but, instead, they learn that Mom and Dad must be pushed, squeezed, and coerced into giving. The boys may begin to view each other as adversaries.
Often parents perpetuate conflicts even among their adult children. Have you ever told one of your children or grandchildren something like the following:
We helped your brother remodel his house/sent his kids to private school/paid his health insurance. We want you to have a few extra dollars. Would $5,000 be all right?
What’s wrong with such offers? Often those on the receiving end view them as signs of guilt or appeasement on the part of their parents.
6. Stay out of your adult children’s family matters.
Please note, parents, that your vision of the ideal lifestyle may be diametrically opposed to that of your adult son or daughter, as well as that of your son-in-law or daughter-in-law. Adult children resent interference from their parents. Let them run their own lives; ask permission even to give advice. Ask permission also when contemplating giving significant gifts to your children.
7. Don’t try to compete with your children.
Never boast about how much money you have accumulated. This sends a confusing message. Often children can’t compete with their parents on this basis, and do not really want to. You don’t have to boast of your achievements. Your children are wise enough to appreciate what you have accomplished.
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Never start a conversation with “When I was your age, I already had ...” To many successful, achievement-oriented children of the affluent, accumulating money is not the superordinate goal. Instead, they want to be well educated, to be respected by their peers, and to occupy a high status position. For many of these sons and daughters, the variations in income and wealth among occupations are much less important than they are for their parents. The typical first-generation affluent American is a business owner. He has a high net worth but often low self-esteem. The low-status, high-net worth parent often lives vicariously through his well-educated adult children who occupy highstatus professions. Ask a self-made millionaire a simple question: “Mr. Ross, tell me about yourself.” A prototypical multimillionaire (a high school dropout) recently answered this way:
I was just a kid, a teenager, when we got married ... never finished high school. But I started a business.... Today I’m very successful, got dozens of college graduates, my managers, working for me.
By the way, did I mention that my daughter will graduate with honors from Barnard College?
This same millionaire never wanted any of his children to be entrepreneurs. And, in reality, most of the children of the affluent never do become business owners. Money is second or third on their list of goals and achievements.
8. Always remember that your children are individuals.
They differ from each other in motivation and achievement. Try as you may via economic outpatient care, inequalities will exist. Will economic outpatient care reduce these differences? It’s unlikely. Subsidizing underachievers tends to enhance differences in wealth, not reduce them. This, in turn, can cause discord, since high-achieving brothers and sisters may resent such gift giving.
9. Emphasize your children’s achievements, no matter how small, not their or your symbols of success.
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a conversation with “When I was your age, I already had ...”
To many successful, achievement-oriented children of the affluent, accumulating money is not the superordinate goal. Instead, they want to be well educated, to be respected by their peers, and to occupy a highstatus position. For many of these sons and daughters, the variations in income and wealth among occupations are much less important than they are for their parents. The typical first-generation affluent American is a business owner. He has a high net worth but often low self-esteem. The low-status, high-net worth parent often livesvicariously through his well-educated adult children who occupy highstatus professions. Ask a self-made millionaire a simple question: “Mr. Ross, tell me about yourself.” A prototypical multimillionaire (a high school dropout) recently answered this way:
I was just a kid, a teenager, when we got married ... never finished high school. But I started a business.... Today I’m very successful, got dozens of college graduates, my managers, working for me.
By the way, did I mention that my daughter will graduate with honors from Barnard College?
This same millionaire never wanted any of his children to be entrepreneurs. And, in reality, most of the children of the affluent never do become business owners. Money is second or third on their list of goals and achievements.
8. Always remember that your children are individuals.
They differ from each other in motivation and achievement. Try as you may via economic outpatient care, inequalities will exist. Will economic outpatient care reduce these differences? It’s unlikely. Subsidizing underachievers tends to enhance differences in wealth, not reduce them. This, in turn, can cause discord, since high-achieving brothers and sisters may resent such gift giving.
9. Emphasize your children’s achievements, no matter how small, not their or your symbols of success.
Teach your children to achieve, not just to consume. Earming to enhance spending should not be one’s ultimate goal. This is what Ken’s father always taught him. Majoring in finance and marketing, Ken received an MBA with distinction. His father was a physician and a full-fledged member of the PAW group. He often told Ken:
I am not impressed with what people own. But I’m impressed with what they achieve. I’m proud to be a physician. Always strive to be the best in your field.... Don’t chase money. If you are the best in your field, money will find you.
Ken’s father lived by these beliefs. He lived well below his means and invested wisely. As Ken tells it:
My dad bought a new Buick every eight years. He lived in the same house for thirty-two years. Simple house, nice house, less than an acre. Four bedrooms for six people, two bathrooms ... one for Mom and Dad and the other shared by four children.
What was it that Ken’s father admired most about his son?
First, that I worked part time as a busboy in a pancake restaurant throughout my high school years. Second, that I never asked him for money. He volunteered to lend me a few thousand dollars to start a business—right out of undergraduate school. Third, I sold the business with enough profits to fund my graduate school education completely ...and never had to ask for a subsidy.
Ken’s focus today is on achievement. He is a key executive with a major communications and entertainment corporation. He is also an astute investor in both commercial real estate and quality public corporations. Also like his father, Ken is a prodigious accumulator of wealth. He lives in a modest home and drives used cars.
His dad was a great role model and mentor to his son. But Ken also believes
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that his early experience as a busboy had a big influence on him:
I got to see the masses ... how the other people lived. I saw how hard people had to work to support their families ... long, long hours at minimum wage just to get by. Money should not be wasted ... no matter how much I earn.
10. Tell your children that there are a lot of things more valuable than money.
Good health, longevity, happiness, a loving family, self-reliance, fine friends ... if you [have] five, you’re a rich man.... Reputation, respect, integrity, honesty, and a history of achievements!
Money [is] icing on the cake of life.... You don’t ever have to cheat or steal ... don’t have to break the law ... [or] cheat on your taxes.
It’s easier to make money honestly than [dishonestly] in this country. You will never exist in business if you rip people off! Life is the long run.
You can’t hide from adversity. You can’t hide your children from life’s ups and downs. The ones who achieve do so by experiencing and conquering obstacles, ... even from their childhood days. These are the ones who were never denied their right to face some struggle, some adversity. Others were, in reality, cheated. Those who attempted to shelter their children from every conceivable germ in our society ... never really inoculated them from fear, worry, and the feeling of dependency. Not at all.
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