From parents’ checkbooks to children’s pockets – that’s the way money has typically flowed. But according to a new nationwide survey that flow may be slowing down when it comes to inheritance. A study by U.S. Trust Insights on Wealth and Worth found that only 49% of wealthy parents feel it is important to leave their inheritance to their children. The Wall Street Journal’s Robert Frank discussed these results today on Varney & Co.
The survey comes at an appropriate time. Frank says over the past decade millions of new millionaires have been created and with them, an entire generation of kids expecting to inherit some of their parents’ hard-earned cash.
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“These are kids who have grown up thinking they deserve life, liberty and a Mercedes on their 16th birthday,” said Frank, “They really haven’t learned the value of a dollar.”
So what has changed?
It seems to be the mentality of parents. According to Frank, “When the baby boomers were growing up they saw how screwed up rich kids could be, and they don’t want their kids to do the same thing.”
Instead, wealthy parents have adopted the belief if they leave their children millions of dollars they simply will not be able to handle it. In fact, Frank says many of the parents surveyed felt their kids are “not going to be ready for money until they are at least 35 years old.”
“[Parents] know the key to success is to make it yourself,” said Frank. So to teach their children the lesson, Frank says the secret is to ignore the money and try to live as simply as you can. Parents must create a living environment consistent with what you are telling your kids. That way, Frank says, “If you say you cannot afford it they will believe you.”
While according to Frank the wealthy are entitled to their large homes and vacations, the solution is “setting your priorities and teaching your kids about how you made the money, where it really comes from and the sacrifices they will have to make as kids if they ever want to reach the same success.”