In an interview many, many years ago, iconic American investor Warren Buffett said something that has by now become sage parenting advice: “I want to leave my children enough money so that they would feel they could do anything, but not so much that they could do nothing."
I first chanced on the quote when my son was about five years old. He’s nearly 11 now. Although I don’t have billions or even millions to leave him yet, Buffett’s sentiment transports well to other resources parents invest: love, attention and feel-good affirmations. Modern parenting hails this trifecta as the way to build self-worth in their children. But, it can as easily, have diminishing returns when overdone.
In the context of wealth, Buffett’s advice is acutely perceptive of the parental anxieties I encountered while writing my book, The Wealth Wallahs: The Story Of India’s New Wealthy And The Company That Built Itself On Managing Their Riches, for which I had spoken to a cross-section of India’s new wealth creators and wealth managers. What I discovered is that children feature prominently in every conversation with a wealthy individual.
Most first-generation rich entrepreneurs and professionals take great pride in the middle-class environments they grew up in, and from which they imbibed the ethos of hard work and discipline that they credit for their success.
A large number then constantly worried that their success would end up curbing their children’s hunger for growth as well as their entrepreneurial instincts. The belief that there were some advantages to adversity that privileges could never match was a concern shared by several first-generation entrepreneurs, especially those who had come from the least economically well-off backgrounds.
The gulf between their own childhood and the upbringing they were giving their children was so dramatically wide that they wondered if the eventual outcome would be as divergent as well.
More crucially, they want them to understand the value of money because these children have grown up in homes where the true luxury money affords is that they have never had to think about it. How could they ensure their children inherited wealth and ambition?
Quite possibly, the children in focus in this issue come from families where inheritance mechanisms have been fine-tuned through generations. Maybe, their parents aren’t as angsty as the first-generation wealth creators about how to make their children financially savvy. Multi-generational wealth has the benefit of the family’s lived wisdom of what works—or doesn’t. Or what has—and didn’t. This can be a crucial predictor of success.
Steve Siebold, the author of How Rich People Think, has interviewed more than 1,200 of the world’s wealthiest people. In his interviews, he has found that an average family unconsciously passes down the same limiting beliefs they were taught about money.
He advocates trying to be as objective as possible with children about having wealth or wanting it. It’s important to help children understand that right or wrong, wealth offers those who have it immense privileges. And that money’s biggest abundance is that it fosters freedom, possibility and opportunity.
Children are curious about money because they rightfully sense its power early on, writes Ron Lieber, author of the book, The Opposite Of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money. In an article after the book was released in 2015, Lieber recommends that parents begin “talking about money" with children as young as 5-6 with the help of tools such as the grocery bill, vacation spending or home renovation budgets, so they can start understanding concepts such as wants and needs.
His advice for the wealthy was the same: That even in the case of plenty, children must know what sustains their standard of living.
If I dip into my experience of interviewing wealth-wallahs, I find that people are divided down the middle on whether their children should have details about the family’s wealth or not. Several feel money isn’t something to be discussed with children till they are at least young adults, while others believe it is somewhat delusional to think that children do not understand the family’s economic situation. And, that it would be worse if they made the wrong assumptions. Much like any other important issue children face while growing up, then, it is best that they get an accurate picture at home from their parents.
Are India’s billionaire parents up to this task? How many of our billionaire inheritors have had these conversations with their parents—with honesty and mindful reflection?
How many were shown examples of billionaires who chose not to leave their inheritance to their children, as Buffett advocated, because it could actually limit their potential and corrode their abilities? Most importantly, do our billionaire inheritors have an objective reality of their wealth? And, the privileges and opportunities it affords them?
Shreyasi Singh is the author of The Wealth Wallahs: The Story Of India’s New Wealthy And the Company That Built Itself On Managing Their Riches (Bloomsbury 2016).