#FinLit #Monday What are you teaching your children about money, investment, and wealth?
Parent’s Fault. Unless you totally liquidated, squandered the family trust, and continue to refuse your father’s offer to live off the returns on his legacy investments, your financial situation is your parent’s fault. I want to get that understood because you owe it to the next generation, your kids, not to continue the cycle.
Parent’s Legacy. The next step, after getting that 10% blame out of the way, is to understand the WHY. What were the circumstances that resulted in your parents refusing to learn and pass down growth-oriented financial lessons to you? If you can figure out just a few of the resources they were missing, you can ensure that your children are not left wanting.
Goals for You. The goal for you is to build a solution that is generationally replicable. It begins with a mindset. It includes a valuing of money as one of 4 important resources. It extends to management, including investment, and through ownership. But, wealth building requires an assessment of your unique generational role. Else, you risk discarding the lessons and foundation needed for sustained generational success.
Explanation of Generations. Consider that wealth creation is a set of generational measures complete with their own narratives. This truth is sometimes used to discriminate between “old money” and “new money.” The difference is not only the time of possession, but the lessons learned in the process across generations of wealth. You can exploit a knowledge of these lessons to support your ability to build wealth.
Keep in mind that the generational role described here is beyond the distinction of survival versus thriving. Survival focuses only on the moment while thriving includes assessment of the outcomes and impact over time. The generational role is most sustainably applied to thriving.
0 Gen: Generation zero (0) is characterized by parents who are primarily focused on ensuring that the bills are paid in order to provide a stable home environment for their children. They continually encourage their children to “Get a good job.” Into their old age, these parents are gratified or horrified by their children’s job choice and experience.
1st Gen: First Generation parents are themselves focused on gainful employment. They want their children to get a “good education.” These parents see education as a ticket to anywhere socially, politically, and financially. In their old age, they brag on the degrees achieved by their children.
2nd Gen: The Second Generation focuses on career advancement of themselves. They see building a solid resume as a means to stability. These parents push their children to be independent thinkers, inventors, and entrepreneurs. Into their old age, they reminisce on the exposure and continued viability of their child’s contribution to social interaction.
3rd Gen: The Third Generation looks to public investment as their goal. Their investments are generalized and diversified. They desire focused, more purposeful investments for their children. They know the value of investment and planning for the future. They want their children to intentionally direct those investments instead of relying on a broker. In their old age, the focus has moved away from work toward management of money as a job.
4th Gen: Generation Four is characterized by parents who see investments as growth centers themselves. This could also be considered as multiple businesses. They want their children to diversify the investment beyond the business and financial sectors to include civic projects and community trusts. In their old age, they speak often of their child’s influence in the public sphere.
The generational focus and aspirations represent a progression in influence. Generation 0 has more of a work ethic focused on hands and sell of labor. Generation 1 evolves to use mental acuity to secure better price for the sell of labor. Generation 2 sells ideas that the individual can build and demonstrate. Generation 3 trades on the value of any ideas even if they don’t own the idea or are not involved in production. Generation 4 recognizes the capacity-sustaining benefit to influencing the community at large.
Most people live with Generation 1 goals because they don’t know any better. Some are tenuously in Generation 2, but cannot sustain their gains within their generation, let alone pass them to the next generation. What they need to understand is that the focus and desires for their children do not presuppose the lessons that need to be learned for sustainability. Without the successful passing down of the lessons even stability can be threatened.
Let’s discuss that next week [Update!: Next Article]. We will have a training available by the end of October to help you chart out a plan. For now, determine which generation you and your parents identify with from the descriptions above.