Self-Made or Road Paved?
Memories are funny. The stories and experiences that leave a mark on us and shape us can sometimes seem silly, even trivial, while others can offer life lessons for us to reflect on and take to heart.
One story I feel compelled to share is of my childhood friend, Cindy. I often reflect on this story and how much it has shaped my philosophy on finance and even how I approach financial discussions with my children.
Now Cindy and I were your typical pre-teen girls. While we shared many interests: watching movies, reading magazines and (of course) talking about boys, we came from very different backgrounds. My father was a dentist and I grew up in the middle class, while Cindy's family name came with a large inheritance. Her great grandfather found early success in the industrial business and her last name was one of the first American companies that made machines.
At the time, I didn't realize the significance of her last name but years later I began to understand what that meant for her. From the outside looking in I saw a girl who lived in a lovely house, with many toys. I specifically remember the motorcycles they had, which were far more advanced than the hand-me-down road bike I used for transportation. It looked like Cindy had it all.
One day we were hanging out in her family room playing pool after school, and out of the blue she said:
"You don't realize how lucky you are because your family doesn't have money."
I thought to myself, "What?! That's crazy! Why would that be a good thing?"
I said, "What do you mean, what could be bad about money?"
She went on to say,
"You know, it doesn't matter what I do. It doesn't matter where I go to school or what I chose to do with my life. My future is already paved out and decided for me."
Until that moment, it never occurred to me that having money could prevent someone from possessing a desire to succeed, or simply finding their purpose in life. Without ambition to earn money or work ethic, she would never have to chase the proverbial carrot. Cindy would never experience the joys and woes of forging her own path.
She would never understand the desire and drive to succeed in order to provide for herself and her family. Cindy would never realize her dreams, and never feel the sense of adventure and the personal growth that goes along with it. Cindy's family wealth had robbed her of the opportunity to be self-made.
Cindy and I didn't stay close, but in high school I watched her struggle, get caught up in the party scene, and never graduate college. I wondered then, and still do, if Cindy was never told about her family wealth, or if they didn't have it, would her self-view and personal expectations be different? Would she make different choices? It seemed that instead of developing a work ethic, Cindy had become complacent with her privileged life and had developed a wealth ethic devoid of any desire to succeed and define her life on her own terms.
Cindy's story reminds me of the age-old adage "Money does not equate to happiness." The pursuit of money can lead to life experiences that can enrich the journey. The opportunity to have those experiences, think back on them and savor them is something that can help build someone's self-esteem and value of money. Simply put, money can shape your life in ways you might not imagine. For Cindy the money stopped her from realizing her dreams and developing a work ethic. For others I believe money can create a road map to success, showing us how to work hard, get to our destination and realize our dreams.
This realization makes me stop and think about the significance of what we do with our money and how we leave it to our children. Instead of paving the way for our kids and giving them too much, should we take a page out of Warren Buffet's or Bill Gates book and leave them with just a little? Warren Buffet and Bill Gates are publicly vocal about not wanting to leave their children large sums of money. Instead of leaving the money to their children they've decided to leave it to charitable causes as they feel the money can do their family a disservice rather than a benefit and I can get behind that.
Statistically we see that people who come into wealth without connecting it to the journey of earning it end up squandering it away. Typically, we see the first generation create wealth through hard work, determination and creativity, the second generation maintaining it (as they saw the sacrifice of their parents first-hand) and the third generation consumes it. If you aren't part of the journey, the meaning of money becomes inconsequential. We see this happen routinely through winning the lottery or a sudden inheritance because the recipient does not respect the money, where it comes from or how to handle it responsibly. It is easy to spend a million dollars; but not as easy to make it.
This leaves me with my last thought: leaving an inheritance or suddenly coming into wealth can create unintended consequences. Our best intentions for the transfer of wealth could create more damage than good. When it comes to parenting, it's our job to look out for our children:
- What if looking out for their best interest means leaving them with just a little and not a lot?
- What if we let them find the richness in the journey of the pursuit of wealth, and allow them to succeed and fail independently?
- What if we enable them to find their calling, chase their dreams and enjoy the ride?
- Instead of leaving them with millions, what if we left them with a million possibilities?
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Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.