A few weeks ago, David, one of our regular readers and contributors in the comments section, inquired about how Old Money families raise their children. I responded, and David suggested that the response might make a good blog post. Rereading what I’d written, I think he has a point.
So, below is the response in full. Thank you, David, for the excellent suggestion. I hope it’s beneficial.
Hi David, thank you for your kind words about the book and for recommending it to your friends. Even though I briefly cover the subject of raising children in “The Old Money Guide To Marriage”, I am reluctant to write about the subject in depth. The reason is that I don’t have any children, and I’d prefer not to be an ‘armchair quarterback’ on the subject.
That said, Old Money families do have some common practices that I think warrant mentioning.
First, there’s love. When you marry and have children that you’ve (probably) planned for and prepared for (as much as is possible), you welcome them into your life and love them. When you develop that bond, it’s possible to guide, educate, and inspire them to live fully, do well, and be good people. If you don’t love them, it’s tough sledding all around.
Second, there’s discipline and structure. Children need boundaries and definition, even if they don’t always welcome them. This has to start early and be maintained. It’s work, but it’s an investment that pays off. I’m not talking about squashing a child’s natural joy and curiosity, but it is necessary for them to learn manners and understand that they’re part of a family unit and a larger social structure.
Third, there’s education. This starts at home with reading to a child, limiting the TV and internet time, and exposing them to the vast wealth of knowledge that resides in libraries and museums. A lot of emphasis is put on private schools, but the priorities set at home may be an even larger influence on a child’s educational development than getting into Choate.
Those are the fundamentals. The reasons New Money drops the ball are legion. As I’ve said before, New Money parents may be so focused on giving their children what they never had that they forget to give their children what they did have: namely, a challenge, motivation, and an opportunity to success and fail. It’s also important that the parents get a firm grip and new perspective on what role money plays in the life of the family. You have to know what money can and can’t do for you. And you have to have a sense of who you are outside your financial net worth. Tricky business when you’ve gone from rags to riches, or, more likely, working class to rich in a matter of just a few years.
To preserve wealth, my opinion is that you’ve got to first drill into your children’s heads the Core Values I detail in The Old Money Book. Not a delicate way to put it, but perhaps the imagery will help with the execution. (Wink, nod.) Second, you’ve got to structure you finances with wills, trusts, insurance, etc. to ensure the smooth transfer of wealth from one generation to the next (minimizing taxes and family feuds is key). Third, you’ve got to clearly articulate, while you are alive and healthy, what you expect your heirs to do with the money once you’re gone. That is, they are to preserve it and make it grow in order to provide security, health, education, and opportunity for themselves and generations to come. This is the long view, and they need to adopt it early on. Finally, it helps to have a CPA, family attorney, and perhaps an investment advisor who can ‘circle the wagons’ when the time comes and keep things on an even keel.
I hope this provides an overview of Old Money’s attitudes and protocols for the preservation of family wealth. It’s been suggested that I provide a consulting service for New Money, but I’m sure I’d get too angry when I gave advice and people didn’t listen.
So I’ll just stick to writing.