A few years back, while reading an article on the internet about retirement plan, I came across a line that read “the key to early retirement lies in grooming independent and confident kids”.
As I embark on my journey towards retirement this sentence has resonated with me. A recent statistic shows that 90 per cent of present day millionaires in this country are first generation ones and did not inherit any money from their parents. On the contrary, two thirds of the children who have received constant monetary support from their millionaire parents have more often than not ended up with lower net asset value as compared to their previous generation. Aren’t these two statistics counterintuitive? How someone who gets a head start falters in life while the other with no financial support grows his net asset value from 0 to a million dollars in a lifetime?
Let’s call the self-made millionaires Type A and the others as Type B. A little probing will show you the effect parents have on the individual success of these two types. Let me tell you a story to make my point clear and then I will get into the reasons why the two types have different degrees of success.
Mr Adams is a very successful businessman who by the dint of his strong work ethic has a net asset value exceeding $2 million. He has brought up his two daughters, Ella and Mia with the hope that they will carry forward his legacy. Of the two kids, the elder one Ella is more submissive and lets herself being dictated by her father. Mia on the other hand has a mind of her own. From the very outset the difference in personalities was evident to Adams and he had made it clear to his daughters that if their lives didn’t follow the trajectory that he had decided for them then they would not be a beneficiary to his estate post his death. Ella listened to her father, went to the school that he had chosen, majored in the subject that her father wanted and even married the boy her dad selected for her.
However, with her father’s spectre looming over at every step in her life she didn’t grow up into a confident individual. Mia, true to her nature followed her heart. As was expected, the lives of the two sisters took two completely different paths. Ella lived a subsidised life funded by her father. Mr Adams created a position for her husband, Mark in his own company which was way higher than his credentials.
Ella’s kids went to private school which was again funded by their grandfather. Such an expensive lifestyle surely wasn’t affordable for Ella and Mark on their own.
On the other end of the canvas, Mia slowly progresses through an ad agency, marries the guy who shares the same vision as her, starts her family and most importantly lives her life within her means. But things change when Mr Adams dies in a car wreck and Ella is paralyzed for life. With Mr. Adams gone, it does not take long for his partners to boot Mark out of the company since in the first place he is a total misfit in the organisation. With no income to pay for their affluent lifestyle, Ella and Mark had to file for bankruptcy and her kids had to be unenrolled from the private school. Within a heartbeat, this becomes a riches-to-rags story. Mia on hearing of her sister’s misery starts helping Ella’s family but with her limited resources it is a long haul even on her part to pull her sister from the hole that their father had left them in.
The moral of the above story is that Mr Adams strengthened the strong but weakened the weak. He never let Ella live her own life which resulted in her downfall once he was dead. On the other hand by disapproving of Mia’s personality he let her grow into a supremely independent and confident individual who not only took charge of her own life but also hauled her sister up post her father’s death.
People like Ella are the Type B personalities that I mentioned above and never take charge of their lives. They lack initiative and cannot face any storms in their lives. But we as parents are responsible for creating type B personalities. I can tell you from my own experiences there are lot of Mr Adams around us.
Money can buy new cars, lavish houses and expensive suits but it cannot buy discipline and doesn’t teach you skills to be successful in life. Never underestimate the role hard work and failures play in life. Being a parent I understand what parents think when they try prop up the lives of their kids. I myself have been guilty on many occasions. When my son gets frustrated in not building the desired structure from his lego blocks and throws a fit, I try to comfort him instead of explaining to him how he can succeed next time.
But what we don’t realise is that in life we need to develop courage, need to take calculated risks and stand our ground in moments of adversity. By building the lego tower for my son or finishing his homework, I am setting him up for failure later on his life. We should always explain the kids that success is always proportional to the efforts we put in. Many times I hear parents complaining of millennials living in their basement way past they have graduated.
But my question to the parents is why have you been an enabler to your kids throughout their life and why are they not getting the kids out from their house right away. While I am setting aside money for kids’ college I am not letting them get any of my money or making them a beneficiary to my wealth unless they have demonstrated mature, responsible disciplined behavior and are well established in their profession. My request to all the parents out there, do not be an enabler to your kids, please teach them the virtues of frugality and live a life not out of borrowed or gifted money. Let’s teach our own to live their own life.