The Paradoxes of Wealth Accumulation
“When you need it you don’t have it, and when you have it you don’t need it”. Of course this could apply to many other situations, but I have found that those who have become first generation wealthy build a great life for their children, but often times they are not in the right position in their life at the right time to enjoy the fruits of their labors.
What am I talking about? Here is the story of about every first generation wealthy individual. They typically grow up poor or lower middle class. By purpose and circumstance they are taught about frugality and the value of hard work. These individuals decide to take life by the horns and with extreme self-discipline they start their own company and put in heavy hours day in and day out. They shoestring their personal lives financially to make ends meet or pay for schooling for so long that when they when they finally climb out on the other side of upper middle class or upper class they are too old or spent to enjoy the luxuries they desired while young.
A teenager can enjoy, water-skiing, snowboarding, a basketball court, a pool table, big screen theater, four-wheelers, league sports, skill classes, etc. far better than a 40 year old. And at that time the successful individual has too many demands on his time participate in the above not to mention the older physical body will not recover as quickly.
So what am I saying? I guess what I am saying is that, those who are first generation wealthy must enjoy the luxuries of a teenage/young adult life vicariously through his or her children. His or her work and effort will secure the kind of childhood he or she wished he or she had for his or her own children and their friends. Admittedly not all of the luxuries are deprived of the accumulator, but the ideal time to enjoy them to their fullest will be.
I have come to the conclusion that your accumulation of wealth will not benefit you so much as it does your children and grandchildren. Another paradox is that if you simply allow them to eat the fruits of your labor freely they can fall into an attitude of entitlement that could ruin their character. Character that can be spoiled because they did not earn those luxuries and therefore do not value them.
Can there be a win/win? Many affluent parents are frustrated by their children’s lack of self-discipline and inability to manage money. The frustration is magnified because they have all this money and nothing to do with it. Those that can manage it wisely don’t need it and those who can’t manage it wisely need it the most.
If you find yourself in this situation there is a solution to this quandary. Detailed Legacy Planning allow those who earned the surplus to aid those who did not in a way that it empowers the beneficiaries and builds character.