My friend and colleague, Marvin Blum, is an estate planning attorney in Texas. He is a really good guy and has a wonderful and creative blog – The Family Legacy Planning Series. Marvin’s May 9th, 2023, post inspired the idea for this one.
Warren Buffett is famous for saying “I want to leave my children enough so that they can do anything, but not so much that they can do nothing.” You may have heard this quote. At a Berkshire Hathaway Annual Meeting Marvin had the “chutzpah” to ask Warren Buffet himself, “How much exactly is that”?
Great question Marvin!
“I think that more of our kids are ruined by the behavior of their parents than by amount of the inheritance. Your children are learning about the world through you and more through your actions than they are through your words. From the moment they’re born, you’re their natural teacher. And it is a very important and serious job, and I don’t actually think that the amount of money that a rich person leaves to their children is the determining factor at all. In terms of how children turn out, I think that the atmosphere, and what they see about them and how their parents behave are more important.”
I was unfamiliar, until recently, with Marvin’s question to Buffett and the reply. Fantastic response! So glad to hear this kind of wisdom from someone known mostly for investing acumen.
I work with wealthy families and the professionals who serve them, to prepare the next generation. Much of what I say boils down to “walk-the-walk and start early.” Way before children even understand what money is, or even have language, they see and take in the world around them. Too often parents have expectations for their children, yet behave hypocritically.
When I educate and coach wealthy families, I heavily focus on the powerful opportunities before having kids and during the first five years of a child’s life. See my April 23, 2023, post for more discussion on this. Often, professionals and family members alike will ask me, “what if we missed those opportunities? Our kids are in middle school or high school and act entitled to have things handed to them and/or are unmotivated.”
There is more to this than a simple blog post can address, yet my best answer remains “Start early!” There are so many powerful and fun things parents can do with a child under five years of age that instill values (and that sixteen- or seventeen-year-olds will fight tooth and nail to avoid!) I hope for a day when many wealthy parents will start early, and not need to ask me, “What if we missed that boat?”
However, if the ship has indeed sailed, here are some of the basics. One of the best things a parent can do in this situation is to fall on their sword. Sit with their kids and let them know they made mistakes. Do it with humility. Discuss how a parent’s job is to make sure children are challenged and set expectations for them to contribute productively to the family and their personal lives.
Explain that there are negative consequences for making life too easy for kids. Parents need to let their kids know they have fallen short in these respects and open up discussion about this. It is important not to blame the kids as this was the parents’ responsibility. Rather than drown in guilt over their past missteps, parents need to put energy into repairing them productively. This kind of intervention almost always requires a professional hand as it is highly emotional and kids often feel punished by the parents’ newfound insights and resent requests by parents to change behaviors that have previously gone unchecked.
I agree with Buffett, it is not the amount of money parents give to their kids, but how parents behave along the way that determines how the child turns out. To avoid selfish, entitled and unmotivated kids in the context of family wealth my recommendation remains – “Walk-the-walk and start early.” Do the little things with two-, three-, four-year-olds so they will understand how the world works (as parents define that) and internalize lifelong values and sense of stewardship relating to family assets.