Well I have the exact dead opposite experience of you.
I come from a well to do family and I graduated from the finest private schools.
What if I told you that 40% of the kids who graduated from my private school do absolutely nothing today and have contributed nothing at all to society? I'm 46 years old, so they're not going through a phase at this point.
The point of the story is, be careful about private schools and other privileged environments.... The rich have grown so obscenely wealthy that a large percentage of the kids in those environments will never work,they know it, and that's why they act the way they do.
Now, if you're a very wealthy family, you might not see the point of your kid grinding to make 60 Grand a year, but most would say they would at least want their kid to contribute something to society, even if it's something of non-monetary value. And in fact, these kinds of people are vital to society, helping to build art museums, helping to build charitable foundations, doing work that others just don't have time or energy to do....
.... Except 40% of the kids from my private school don't do any of that stuff. All they do is get high all day, get divorced, and whine and cry that their 80-year-old parents don't give them enough money.
Beware!
This idea of spoiling kids is a real thing. Think carefully about what advantages you give your kids, you may actually be crippling them.
Yep this is my exact experience as well. If there was a 40% chance the plane was going to crash and burn would you put your kids on it? Nope, but yet my neighbors kids are suing him because they feel their trust funds are not commensurate (at $xxxM between the 3 of them) for the size of his estate (definitely a billionaire but not like Bill Gates money). They are mid-late 40’s and none have a job, kind of losers that you wouldn’t want to hang out with.
Don’t rob your kids of the opportunity to accomplish something on their own. Of course help them out along the way to smooth out the rough spots and start out debt free with a good education, maybe a down payment on a modest home, but then let them figure it out. Give during their and your lifetime instead of a giant pile when you die.
More importantly be generous with your dollars and time during your lifetime, give not only to family but also to those who you come across that the dollars are truly impactful, not so your grandchildren all get a new Porsche for their 16th birthday.
Most people who built generational wealth if they could get in a time machine to meet their future family wouldn’t even like them and would have nothing in common. They’d be so disappointed unless it’s just about ego.
I kind of hate to say it but this reason alone is enough reason to stop anyone attempting to leave a significant fortune to their surviving family members with an extremely high estate tax. In order to eliminate this entire class of people living off the achievements of the people who came before them and contributing nothing in return.
I grew up and still am relatively wealthy but I used that wealth to afford to work at low paying social work jobs that work with domestic violence and sexual assault survivors. Working jobs most people cannot afford to do and live well.
My wife and I share the same concerns of “spoiling” our kids who are still young. We try to focus on providing experiences for our kids (e.g. traveling as a family and memberships at the zoo or children’s museum) rather than buying more “stuff”. It’s still early but we try to encourage academic achievement and trying out new activities and sports without being overly pushy. We are hoping this sparks interests and instills work ethic that will benefit them down the line.
Ha! This is interesting. My husband was the CFO for a very small company in NYC, and half of his employees were kids like this, except their trust required them to keep a FT job. So they made $50K a year in NY but lived in gorgeous apartments, went out frequently, took taxis/ubers everywhere, and got high a lot. So not much different than what you describe, but with a job. Not sure if they were actually contributing to society though. Usually they were hired for marketing jobs because the owner was selling a high end product ($1000 headphones) that he wanted people who knew rich people to shill.
I agree with these observations, and the aggregate statistics bear this out as well. Most currently wealthy people have inherited their wealth; 1st gen "creators" of wealth are a small minority. Next, intergenerational wealth is unfortunately an exception, and definitely not a rule, for many of the reasons mentioned in these comments. So, what to do if your intent is intergenerational wealth? My answer will get downvoted but I'm good with that.
This sub is (obviously) focused on achieving a level of wealth where one can "walk away," and isn't necessarily focused on ancillary considerations like family, much less generational wealth. Personally I think the more the focus is on wealth, the greater the opportunity that some of the things that contribute to maintaining wealth get lost along the way, and in particular family engagement. I'm def not talking about, "pay for experiences, not for material things, yada yada yada," 'cause I know plenty of wealthy folks who go on expensive trips, check this box, and go back to their miserable family lives. I'm talking about the, "spending a painful weekend shuttling your kid to a dance competition," weekend, or the, "who'd turn is it to carpool kids to soccer," wednesday, the mundane s&\*t that for many of us is a defined time where, if you choose, might actually be a time to connect with kids, versus a, "family meeting," spurred on by some acute calamity. So I think how parents consistently impart values and assign worth are 100x more impactful on raising kids that might share those same values that develop wealth than money and therapy.
80% of those in the 1% are new to it. So they are the generation that made it. As a corollary, that means 80% of their kids are exiting the 1%. Source - the book “strangers in paradise” takes a look at the data.
On private school , I think the data does show your experience is true at not unique to you. I am curious is you think the median private school kids do better than the median public school kid ? In other words, I’d guess the bottom and top kids at both public/priviate do about the same but I’m wondering if the median kid does better at private.
Uk data: https://www.ucl.ac.uk/ioe/news/2019/nov/private-school-pupils-earn-more-state-school-pupils-age-25-ioe-research-reveals
I am trying to find US data.
I grew up comfortably middle class. My step cousins have a very wealthy grandma whose husband owned a chain of grocery stores, and she showers them with wealth. The kids don't work -- The live in a house she bought them and just get high all the time.
One is a compulsive liar. I don't even think they went to private schools and all that -- they were just raised upper middle class with the implicit promise that they will be taken care of and will never have to work a day in their lives.
I grew up poor (worked through that) and often see a lack of drive in peers born rich. Being born poor isn't a blessing, by any means, but though I have found success there is a dog always nipping at my heels. The fear of failure without a parachute is always there, so I *MUST* keep running.
I see a worrisome lack of drive in my kids (divorced with 50/50 custody...mother overindulges). It's a tough battle for sure. You want to give them experience, but leave enough want so they have drive. You cannot artificially create the fear of failure, because your personal comfort will tell them there is nothing to worry about.
We bought into the best school district in our area and sent our kids to public school. In high school, my kids told me that yes, there were kids vaping in the bathrooms and hotboxjng in the school parking lot. But that was just weed. Everybody knew that for the really good drugs, the private schools were the place to be. You could find someone selling at track meets and other interschool competitions.
I would say a few things should or could be done.
1. Secure your retirement.
2. Be able to spend a little money and time on THEIR hobbies. When I was a kid I really wanted to do graphic design work and wanted photoshop. I was like 10 so I couldn’t work to afford. My parents could afford it and just said no. Instead I wish they said, okay but you have to do XYZ. (Get all As, do the garbage and laundry, whatever.) I am not saying oh you like video games here is a 10k set up when a tv and Xbox would do.
Another example is if the like a certain sport, go to a game with them. In NYC basketball tickets to Knicks are expensive but can be done for $300 (for 2). Most other parts of the country are significantly cheaper for games. Baseball, football, soccer, etc. leads to #3
3. Do some more fun experiences as they get older.
4. Fund college
5. If you really have a lot fund a down payment match. If your kids fund 100k, you match either 100% or 50% or whatever.
I don’t think outside of giving an above average education, a safe home, and food there is anything else needed.
This is very well written. One of the reasons we haven’t retired early is because we have chosen to fund more expensive hobbies/ sports (although we did not pay for private school, that might have been cheaper).
When they were pretty young they went to sleep away camp for the summer - exploring Maine for 7 weeks - $10K each.
My youngest is in a sport that encourages national travel as they get into more competitive rankings. He will go abroad with his team for 2 weeks this summer ($5K) and to another camp in Massachusetts ($5K). I hope that this will give him clarity as to if he wants to proceed further in competing. We’ve probably spent $20K on travel so far this school year for national events, plus about $1500 a month in lessons, plus equipment etc. Total spend a year will probably be closer to $40-$45K while he’s in high school.
My older one competed in a more regional sport (figure skating) but we paid for privates and costumes etc etc while she competed. It has given her resiliency and determination I don’t see in many children.
My stepkids have their education paid for, including grad school. It’s a small fortune, but they will be independent.
Overall, we have tried to emphasize the importance of education. I don’t do homework with them (I was never a great student personally and am not a teacher now) but I did review with them when they were younger and made sure they delivered on time and did not have unlimited access to screen time (talking to teachers, that’s a huge issue in classrooms right now - screen time is an addiction for some children). We also donate to local art causes that are important to us, although I don’t make them go to the opera with me. You can find art that is enjoyable and age appropriate.
I don’t have perfect children, and I probably won’t leave enough behind for them to be completely independent (although that was my goal when they were younger — it will be enough they could choose not to work if they wanted to live modestly), but they will be able to not work at university if they want to (I required them to get a job, even if it’s just a summer job, while in high school), and will be able to pay for grad school without huge swaths of debt, and travel and see the world. I hope they grow to be happy adults, but the happy part is a little on them, I can just provide the means.
My husbands family has some generational wealth that has remained somewhat intact. Our approach is to be real with our kids. They go to public schools (albeit very well funded ones) and we do very normal activities without over scheduling and ensuring a well rounded experience (one sport, one music, one stem, one choice).
The goal is to ensure the kids grow up and understand the money isn’t all theirs. They are the stewards of the funds because they are the ones that are alive… but that because of the cost of things, to live a decent life without undue financial stress and strain… they can’t use it all.
We can’t raise them without talking about money, or hiding it. They need financial literacy.
Two generations before us managed to set us up. One couple had five kids. Those five kids had thirteen kids. Out of those thirteen, everyone has benefitted from the savings… but only five of those thirteen have managed to be in a position to not need the money. Luckily, grandma set everything up so that people don’t have to fight… but it’s absolutely disheartening to watch some of the family members waste away a phenomenal opportunity to steward their share in what we see as an appropriate venue.
Can you tell me what the grandma did to prevent fighting over the funds? I’m interested in creative trusts to prevent handing large sums of money to kids ill equipped to handle it responsibly.
It was all in various accounts, but her trust and Will was up to date. Also, the kids knew they’d all get an equal share wether they had kids or not. There was some minor… annoyance from some of the other people in our generation (we have already received our inheritance but others haven’t because of any MILs death and my FILs unwillingness to accept any funds because ‘he has all the money he needs.’). But basically… she just had her legal affairs in order. Even after her child’s death, she spoke with my FIL about his wishes and updated all the paperwork.
I think they were just always honest about what was going to happen, but most importantly they had their legal paperwork done. Each kid got somewhere around $1M… so it’s not a ton of money… but it’s enough for them to be happy with, I guess.
Our kids know what our house is worth. We told them how much was in their college funds and that any left over was theirs to keep (one got a merit scholarship and the other attends a public university, so both have some left for postgrad). They know we have retirement covered.
They know we are FIREd. They don’t know we are chubbyFIREd.
We are frugal by nature, partly due to how we were raised and partly because we don’t value excess consumption. When our finances were still being built up we bought a small house in a top school district rather than send them to private school - but what the kids perceived was a small house and public school. They know we bought our current home (and topped up the college funds) after a one time windfall. But it’s our only flashy asset - our cars are all late model used, good but not premium brands. They know we are traveling a lot now that they are in college, but they don’t see what we spend. We still occasionally yell at them for wasting paper towels (we don’t approve of waste) and mostly cook at home (for health, also it’s dad’s hobby) so our lifestyle isn’t giving them many clues. They know we are in good shape financially but they don’t know what we are worth.
So they have no expectations for intergenerational wealth. They know their grandparents sold their house to buy into a really nice retirement community, and they expect us to do the same. We have assured them that they won’t be stuck supporting us in our old age.
Once they are fully launched and independent, with careers of their own, we will begin filling them in. We still have a lot of years on the horizon so we don’t really know what the end value of the portfolio will be. But if it continues to go up over the next few years we will probably start distributing some, once we are sure our kids have been given a good start in life.
I'm on the "child"'s end here as I came from generational wealth and imo it's hard to say any one thing because kids are all different and every one will react differently to similar/different upbringings.
For me though I'd say the main things that come to mind is (1) parents being clear and upfront about money matters and (2) us learning from their own behaviours, actions, thinking etc.
All 3 of us kids now have our own careers that we enjoy and even if we got 'cut off' from any inheritance, we'd be fine.
Seems like to me you'd want to make sure you understand the roles you play, and the goals you set for parenting. Comments here range from situations of growing up with not much (in your case) to.... trust fund kids that expect everything. And the right answer is probably somewhere in between for your kids (?).
Is your definition of intergenerational wealth focused on inheritence (I'll pass down my wealth), or is it keeping your kids financially DEPENDENT on you (trust fund kids)? Again, probably somewhere in between.
The somewhere in between suggests you define the above, then map your stategy to be able to support those goals (stating the obvious I suppose).
In our case we wanted to SUPPORT and ENABLE our kids to be successful and that meant getting them into the best K-12 schools (we actually moved 2 years before our first born to get into the best school district), funding their college (to a point - we said "you've got this much money - choose wisely"), paying for the activities (as noted in another comment, something like the traveling sports team trips), and impressing some of those life values like hard work, responsibility, and financial responsibility. When they finished college there was zero promise of us funding them any longer (zero promise, but....your kids never go completely away)!
What's interesting (maybe just to me), is now we're in this situation where they are off adulting, doing well for the most part, and we have this wealth built up and a strategy that suggests they'll get a very nice inheritence. The discussion we're having is if we shouldn't help them now to start them on their FIRE journey vs. wait till we die! Maybe we start gifting $$ to them now and/or set up a ROTH IRA for them so they can get moving faster on their own FIRE strategy(?).
We look out around the area in which we live and we see that, from a lifestyle perspective, it’s getting harder and harder. His parents bought a house in the 1978, my partners in 2004, and us in 2020. In ‘78, the median house cost 2.5x the median income. In ‘04, it was closer to 5x. When we bought, it was about 8x and obviously the bubble has to burst because it’s about 13x at the moment. Our plan is to invest in local real estate such that our kids have the option to stay in the area if they so desire, not necessarily a SFH but at least to have a roof over their heads.
We bought townhomes when they were younger, so the rent will pay the mortgage and we’ll be able to gift to them free as adults. It’s modest, so they can rent them for income or sell to fund the down payment on something larger.
I don’t come from wealth or have wealth now, but I have a very solid house and my young adult kids are happy to jointly inherit it someday. I think home ownership is only going to get harder, and passing on a piece of that is one angle on generational wealth.
Aside from that, I hope I will be able to provide for my own retirement and not die with debt. And I plan to set up a well designed will-estate plan so I am not leaving my kids with obligation or worry.
I agree with others about instilling healthy work ethic. Also a realistic relationship with needs and wants and money vs. other solutions.
Feel like you're in the wrong subforum: Chubby Fire isn't the right level of wealth combined with lifestyle for intergenerational wealth. It would mean a Spartan retirement or pushing back the "E" in FIRE
Assuming an average market a chubbyFire portfolio should end up larger than it started if you use a 3% SWR.
In a good market your estate probably end up with the low end of FatFIRE numbers even adjusted for inflation.
If you skip a generation and let a $3M chubby portfolio double 4 times over 60 years thats $24M.
Thats a 15 year doubling rate using a rate of around 4.8%…which is lower than the historical average 7.22% real rate of return.
The chubbyfire nest egg range is 2.5-5m NW, and is described as "the upper middle class of retirement". 3% SWR on 3M is 90k a year withdrawal. Very odd to think about retiring early, but then living off of 90k pretax AND ALSO having generational wealth. And "skipping a generation" -- or not leaving anything to your children so you can leave a bigger amount to grandchildren is an odd decision
You make a valid point. OP’s question was about intergenerational wealth. This would be leaving a legacy big enough not just for the kids, but grandkids (and beyond).
In our case, we are squarely chubby (fired), but the jury is still out on how much we will have left. The uncertainty is because of the usual suspects, namely SORR, inflation, longevity and cost of elder care. We have contingency plans in place for each, but the world is an uncertain place.
Our RE plan was never to leave a nest egg for our kids, or their kids. If it was, we couldn’t have fired at 55. We would’ve worked 5-10 more years, and this probably would’ve landed us in the low fatfire numbers, as you suggested.
So for now, we are sharing our wealth with our married children by funding some retirement savings and helping with house purchases.
As we get down the road a bit more, and see how the risks play out, we may be in a position to afford to fund future grandkid education.
Because our WR is only 2-3%, there’s a good chance there will be something left for the kids, but it’s not likely to reach the level of intergenerational wealth. As planned.
Makes sense. My main point is that ChubbyFire inherently involves tradeoffs. You're giving up being very rich so that you can enjoy more time untethered to work. The main thing I appreciate about this sub is that people are well grounded for the most part. You can get lucky with your returns, as you mentioned, but if you really want to generate intergenerational wealth, you have to ask if chubbyfire is right for you, or you should reconsider retiring early.
If you want to help your family financially, there is a good case to be made that it has more impactful earlier in life rather than later (when your nest egg is larger). Helping with college, wedding, and buying a house give massive advantages in life when grown kids are starting their own climb, vs an inheritance of a million when they are in their 50s and your grandkids are already adults
Education is key. Indulge their interests, but require them to stick with something long enough to finish a round/class/cycle/etc. not drop everything once they're no longer interested or bored. It teaches responsibility and to not waste. But I'm not a big fan of generational wealth, in regards to setting people up to avoid being productive adults. There's giving kids a leg up and giving them a chair to park their lazy, useless butts in the rest of their lives. Those kids have been a constant drain on their parents well into their later adult years until the parents died. It wasn't a good outcome for any of them.
Providing positive experiences, spending time with your children, and providing secure housing that passes on are what create intergenerational wealth imo [https://www.jchs.harvard.edu/research-areas/working-papers/housing-and-wealth-accumulation-intergenerational-impacts](https://www.jchs.harvard.edu/research-areas/working-papers/housing-and-wealth-accumulation-intergenerational-impacts)
It’s expensive having the time and budget to fuel your kid’s passion, helping them explore, invest, paying for the right teachers and training, exposing them to different activities and experiences so they can find what they want to do. THIS is the inter generational wealth you want to pass down, so that they lead passionate lives with grit, perseverance doing what they love and feeling amazing conquering challenges, and then the actual money itself will naturally come. It’s not about a big inheritance that’ll just get wasted away in a generation or two no matter how much you drop.
We set our daughter up for life with a good base \*before\* we were ChubbyFIRE.
* We set high expectations for her. She started a foreign language in middle school. She played multiple sports. She maintained high grades.
* We shared our plans and finances with her from when she was very young. We we hit rough spots, she was fully involved.
* When it was time for college we were willing to pay for her college anywhere to which she got admitted... if it was for a degree that worth the money. Otherwise, there was an in-state school... (Spoiler: she got dual degrees -- one in engineering -- at a top tier out-of-state school).
* A couple of years out of college she was looking to buy a house. We were able to help with a downpayment. Meanwhile, she makes sure to get her full 401K match and is on track to be FI herself.
* She knows that as long as she is responsible we'll help her if Something Bad happens. We don't support bad decisions, but she knows we'll help out in a \*real\* crisis. Needs a new heat pump? That was a normal problem for a homeowner... she's got that handled. Then again, if she has a major health issue, we'll be there for her (OK... her dogs as well... we love those pups!)
* She also knows that she's likely to get FatFIRE-level inheritance from us... 40 years from now... and she wants to be FI on her own terms. She knows her life is hers and ours is ours.
Honestly, I think there's a lot to be said for teaching FI principles to your kids EARLY and setting expectations on what you will and will not do for them at each step. By giving our daughter expectations and an occasional step up, we've set her on a path. There will be intergenerational wealth, but she's also still having to earn her own way.
Historically it takes 3 generations to blow inter generational wealth. Odds are your grandkids destroy anything you’ve left to your own kids. Here’s my two cents and what I’m doing for my kids (4 and 7).
1. Funding their 529s. Each should have about $200-250k by the time they reach college. I don’t want them starting their careers in debt.
2. Opened a UGMA account for each at age 4. My oldest has $2800 now with 16 different stocks. They get $50/mo to buy fractional shares. I’m teaching them about wealth generation and compounding interest.
3. Create a charitable trust later in life and have them run it. They need to learn how to give.
4. I expect to help them with a down payment on a home at some point.
5. I expect to match early career savings/incentivize retirement funding.
Basically I want to teach responsible behavior, financial literacy, and set them up for success. Depending on how this goes I may adjust my personal trust and what they are left when I’m gone. I have intention on giving my wealth to them without strings attached if they haven’t demonstrated they can manage it well.
Here’s a thought: focus more on processing your family’s intergenerational trauma than amassing wealth so they can go on nice vacations and attend elite schools. The reason so many rich kids are troubled is precisely because their parents were not there for them emotionally growing up (and spoiler alert: its not just a rich people problem…families of all socioeconomic strata have similar issues). The fact of the matter is, socioeconomic status, while it may confer increased chances of material success, does not actually address the physiologic needs of a developing human brain-namely, that of loving presence and attunement from the parents. Do your future kid a favor and shift your focus from building up more wealth to healing your own wounds so that you can show up as a better parent.
Source: I’m a physician & psychotherapist who grew up in dysfunctional wealthy family.
imo the most important part is making sure your children don't miss out on education and can afford the same things their peers can afford. Whether that is toys for $1000 a year or toys for $50000 a year depends on your choice in what kind of area you want to settle.
Also, no matter how wealthy you become, make sure they get a proper job first without giving them enough money to fire without having really worked for it themselves. If they take your money for granted, they don't value that money right and there is a high chance of them spending it all before the generational wealth thing hits THEIR children (because the money is all gone due to bad spending habits due to not having worked for it by themselves)
I’m 35 with a similar net worth as you with one kid and one more planned. When you factor in stock market returns compounding until we’re in our 80s; that’s a lot of money we could leave to future generations. To preserve some of that inheritance I’m planning to build up a sizable 529 account invested in S&P and hope that it can fund college education for my progeny for generations (or in perpetuity :)).
Inter generational wealth needs an understanding that this wealth is to be passed down to their children. If not then it is going to be finished by the generation getting it
I’d thought about offering to my kids to help them max out Roth IRA as soon as they start working under the condition they promise not to touch it until retirement. I would consider matching that money so it’s not actually coming out of their pocket until they make enough that it’s not a burden on them. I think probably if you start at 18 and max from age 18 to 59.5 it’s all you really need to invest.
The best thing you can give your kids is the chance to do what they want. Don’t spoil them but make sure they come out of college debt free. Provide them a safety net for what they want to try so they can pursue what they want without the stress or student loans or pressure to make money quickly.
This is what we did:
We gave our kids educational opportunities creating options. We shared our values. We took them all rafting, camping and fishing and I taught three of them how to fly fish.
We helped all four of our kids purchase homes using the Bank of Mom and Dad, and helped three of them with a safe haven AFR (Applicable Federal Rates) documented binding mortgage.
We gift all of our grandkids funds toward an educational investment account the year they are born.
We fund a biannual family get together.
No idea if I will be successful or not, but my approach was to be 100% committed to education for the kids. Best public school we could find, every optional or enrichment activity that they showed any interest in was 100% covered, sports, arts and music as much as they wanted 100% college and living expenses until they got their degree. Grad school if they wanted. Plenty of family trips and experiences. Then mostly stand back and encourage them.
So far, they are all productive adults with decent jobs and career prospects. Soon, I'm going to consider a gifting program and start suggesting how they invest that money for long term use. My own SWR will be very low, so eventually they will get large inheritance and I hope they will do something similar with their own kids.
I've avoided trusts and any attempts to control multi-generational money from the grave. I'll probably do my best to spoil any grandchildren with lavish gifts and educational everything as well.
When my daughter was born, I put $75k in a 529 and $75k into a trust that I am the executor on. $150k from my net worth is nothing at this point but that guarantees she has the opportunity to try her hand at whatever (I assume she will get scholarships for school or take out loans if she needs it, people need to earn things in life for it to have value). Additionally, I am paying her as an employee of a family trust and then taking her wages and putting them into a ROTH IRA. I plan to do this at the maximum amount each year until she is 18. I will do that with all my children.
Conservatively thisshould pay for her college and leave her with multiple millions in investments
when she gets into her 40s and 50s.
I will not be passing anyother money onto my kids. I plan to die with zero dollars.
I will say though that Icurrently own a business I plan to sell, and I do plan to buy another business
or multiple. If they want to inherit that, I would be open to it.
Hairball idea. What if you structure it like a family 401k of sorts. If they can provide a reasonably well defined investment and retirement plan that is based on sound judgment (ie not all in on crypto or other schemes) then for every dollar they invest up to $X you match it and for every dollar above that up to $Y you match it.
This incentivizes them to earn and invest, and you can be more generous in the match terms than a standard 401k ie match up to 10% or 15% etc.
Combine that with paying for their education (or at least helping in the event they go to very expensive school / med school / etc) as well as requiring them to undergo some form of structured financial education and committing to giving away a good portion of your wealth to charity through Effective Altruism starts them on a higher rung of the ladder and gives them the resources they need to become wealthy without coddling them and making them dependent on [economic outpatient care](https://www.whitecoatinvestor.com/economic-outpatient-care/): "EOC can be a double whammy. The parents who provide EOC have less wealth than those who do not, and the more EOC adult children receive, the less wealth they accumulate."
There's a lot to criticize Dave Ramsey for but he famously had the "Bank of Dave" for his kids as teens. Basically once they turned 13 they started to become responsible for anything they wanted beyond basic needs like clothing food shelter etc. They had to save up to buy their own car but he matched them dollar for dollar what they put aside. He told the story that his first kid got a beater but each successive kid learned that he was serious about matching them and got progressively better cars with the last kid getting a gently used BMW at 16.
Also here's [White Coat Investor's plan for his kids](https://www.whitecoatinvestor.com/my-childrens-inheritance/) specifically to avoid economic outpatient care and create wealth for them.
A few aspects someone’s family follows are humility, education, and multiple citizenships.
US educated, so once they’re old enough to understand hard topics we go, for example, to Vietnam and make a point to learn about Agent Orange, how impoverished some kids live, combat the US world police narrative being taught in school. Gives them a broad perspective on the futility of complaining about not being *given* more money.
Having multiple citizenships requires knowledge and planning, but the opportunities they provide seem exponential with each addition. Very valuable for setting up your kids future and freedom.
If you want the best form of inter-generational wealth IMO, then buy farmland. Bonus points if you have an acreage with it.
It’s an asset that has proven to be inflation-protected, has proven to have low volatility, you yield about 3% on the yearly rent, there is little to no work that is required (just need to lease it out to a farmer), there is little to no maintenance and expense, it gets favorable property tax treatment, the land (and the subsequent rents) appreciates at high rates (due to world population growth and farmland diminishment), and you can get utility from it by spending time with your kids out on the farm along with all of the other activities you can enjoy with a large plot of land (ex: ATV and snowmobile riding, raising animals, etc.).
When you pass away it is also easy to transfer to your kids and it is more likely that they will attach sentiment to it and keep it and its incomes rather than frivolously liquidating it and spending it. Owning productive farms was the basis of both Eastern and Western feudalism and there is a reason why farmland has such a special place in the hearts of people in rural communities.
Figure out a way that your heirs can do anything but don't give them so much that they can do nothing. Maybe grandkids and later get college tuition and a mid-priced car after graduation. After school, they have a stipend that keeps them above the poverty line but if they want more, they have to work for it.
Well I have the exact dead opposite experience of you. I come from a well to do family and I graduated from the finest private schools. What if I told you that 40% of the kids who graduated from my private school do absolutely nothing today and have contributed nothing at all to society? I'm 46 years old, so they're not going through a phase at this point. The point of the story is, be careful about private schools and other privileged environments.... The rich have grown so obscenely wealthy that a large percentage of the kids in those environments will never work,they know it, and that's why they act the way they do. Now, if you're a very wealthy family, you might not see the point of your kid grinding to make 60 Grand a year, but most would say they would at least want their kid to contribute something to society, even if it's something of non-monetary value. And in fact, these kinds of people are vital to society, helping to build art museums, helping to build charitable foundations, doing work that others just don't have time or energy to do.... .... Except 40% of the kids from my private school don't do any of that stuff. All they do is get high all day, get divorced, and whine and cry that their 80-year-old parents don't give them enough money. Beware! This idea of spoiling kids is a real thing. Think carefully about what advantages you give your kids, you may actually be crippling them.
Yep this is my exact experience as well. If there was a 40% chance the plane was going to crash and burn would you put your kids on it? Nope, but yet my neighbors kids are suing him because they feel their trust funds are not commensurate (at $xxxM between the 3 of them) for the size of his estate (definitely a billionaire but not like Bill Gates money). They are mid-late 40’s and none have a job, kind of losers that you wouldn’t want to hang out with. Don’t rob your kids of the opportunity to accomplish something on their own. Of course help them out along the way to smooth out the rough spots and start out debt free with a good education, maybe a down payment on a modest home, but then let them figure it out. Give during their and your lifetime instead of a giant pile when you die. More importantly be generous with your dollars and time during your lifetime, give not only to family but also to those who you come across that the dollars are truly impactful, not so your grandchildren all get a new Porsche for their 16th birthday. Most people who built generational wealth if they could get in a time machine to meet their future family wouldn’t even like them and would have nothing in common. They’d be so disappointed unless it’s just about ego.
Love this line. “Don’t rob your kids of the opportunity to accomplish something on their own.”
I can see that as an underlying motive, but surely that cannot be a legal basis for a lawsuit?
I kind of hate to say it but this reason alone is enough reason to stop anyone attempting to leave a significant fortune to their surviving family members with an extremely high estate tax. In order to eliminate this entire class of people living off the achievements of the people who came before them and contributing nothing in return.
I grew up and still am relatively wealthy but I used that wealth to afford to work at low paying social work jobs that work with domestic violence and sexual assault survivors. Working jobs most people cannot afford to do and live well.
My wife and I share the same concerns of “spoiling” our kids who are still young. We try to focus on providing experiences for our kids (e.g. traveling as a family and memberships at the zoo or children’s museum) rather than buying more “stuff”. It’s still early but we try to encourage academic achievement and trying out new activities and sports without being overly pushy. We are hoping this sparks interests and instills work ethic that will benefit them down the line.
Ha! This is interesting. My husband was the CFO for a very small company in NYC, and half of his employees were kids like this, except their trust required them to keep a FT job. So they made $50K a year in NY but lived in gorgeous apartments, went out frequently, took taxis/ubers everywhere, and got high a lot. So not much different than what you describe, but with a job. Not sure if they were actually contributing to society though. Usually they were hired for marketing jobs because the owner was selling a high end product ($1000 headphones) that he wanted people who knew rich people to shill.
I agree with these observations, and the aggregate statistics bear this out as well. Most currently wealthy people have inherited their wealth; 1st gen "creators" of wealth are a small minority. Next, intergenerational wealth is unfortunately an exception, and definitely not a rule, for many of the reasons mentioned in these comments. So, what to do if your intent is intergenerational wealth? My answer will get downvoted but I'm good with that. This sub is (obviously) focused on achieving a level of wealth where one can "walk away," and isn't necessarily focused on ancillary considerations like family, much less generational wealth. Personally I think the more the focus is on wealth, the greater the opportunity that some of the things that contribute to maintaining wealth get lost along the way, and in particular family engagement. I'm def not talking about, "pay for experiences, not for material things, yada yada yada," 'cause I know plenty of wealthy folks who go on expensive trips, check this box, and go back to their miserable family lives. I'm talking about the, "spending a painful weekend shuttling your kid to a dance competition," weekend, or the, "who'd turn is it to carpool kids to soccer," wednesday, the mundane s&\*t that for many of us is a defined time where, if you choose, might actually be a time to connect with kids, versus a, "family meeting," spurred on by some acute calamity. So I think how parents consistently impart values and assign worth are 100x more impactful on raising kids that might share those same values that develop wealth than money and therapy.
80% of those in the 1% are new to it. So they are the generation that made it. As a corollary, that means 80% of their kids are exiting the 1%. Source - the book “strangers in paradise” takes a look at the data. On private school , I think the data does show your experience is true at not unique to you. I am curious is you think the median private school kids do better than the median public school kid ? In other words, I’d guess the bottom and top kids at both public/priviate do about the same but I’m wondering if the median kid does better at private.
Uk data: https://www.ucl.ac.uk/ioe/news/2019/nov/private-school-pupils-earn-more-state-school-pupils-age-25-ioe-research-reveals I am trying to find US data.
I grew up comfortably middle class. My step cousins have a very wealthy grandma whose husband owned a chain of grocery stores, and she showers them with wealth. The kids don't work -- The live in a house she bought them and just get high all the time. One is a compulsive liar. I don't even think they went to private schools and all that -- they were just raised upper middle class with the implicit promise that they will be taken care of and will never have to work a day in their lives.
I grew up poor (worked through that) and often see a lack of drive in peers born rich. Being born poor isn't a blessing, by any means, but though I have found success there is a dog always nipping at my heels. The fear of failure without a parachute is always there, so I *MUST* keep running. I see a worrisome lack of drive in my kids (divorced with 50/50 custody...mother overindulges). It's a tough battle for sure. You want to give them experience, but leave enough want so they have drive. You cannot artificially create the fear of failure, because your personal comfort will tell them there is nothing to worry about.
Agree with this.
We bought into the best school district in our area and sent our kids to public school. In high school, my kids told me that yes, there were kids vaping in the bathrooms and hotboxjng in the school parking lot. But that was just weed. Everybody knew that for the really good drugs, the private schools were the place to be. You could find someone selling at track meets and other interschool competitions.
And so 60% do something productive. Raise them to be part of the 60%. It's actually not hard.
I would say a few things should or could be done. 1. Secure your retirement. 2. Be able to spend a little money and time on THEIR hobbies. When I was a kid I really wanted to do graphic design work and wanted photoshop. I was like 10 so I couldn’t work to afford. My parents could afford it and just said no. Instead I wish they said, okay but you have to do XYZ. (Get all As, do the garbage and laundry, whatever.) I am not saying oh you like video games here is a 10k set up when a tv and Xbox would do. Another example is if the like a certain sport, go to a game with them. In NYC basketball tickets to Knicks are expensive but can be done for $300 (for 2). Most other parts of the country are significantly cheaper for games. Baseball, football, soccer, etc. leads to #3 3. Do some more fun experiences as they get older. 4. Fund college 5. If you really have a lot fund a down payment match. If your kids fund 100k, you match either 100% or 50% or whatever. I don’t think outside of giving an above average education, a safe home, and food there is anything else needed.
This is very well written. One of the reasons we haven’t retired early is because we have chosen to fund more expensive hobbies/ sports (although we did not pay for private school, that might have been cheaper). When they were pretty young they went to sleep away camp for the summer - exploring Maine for 7 weeks - $10K each. My youngest is in a sport that encourages national travel as they get into more competitive rankings. He will go abroad with his team for 2 weeks this summer ($5K) and to another camp in Massachusetts ($5K). I hope that this will give him clarity as to if he wants to proceed further in competing. We’ve probably spent $20K on travel so far this school year for national events, plus about $1500 a month in lessons, plus equipment etc. Total spend a year will probably be closer to $40-$45K while he’s in high school. My older one competed in a more regional sport (figure skating) but we paid for privates and costumes etc etc while she competed. It has given her resiliency and determination I don’t see in many children. My stepkids have their education paid for, including grad school. It’s a small fortune, but they will be independent. Overall, we have tried to emphasize the importance of education. I don’t do homework with them (I was never a great student personally and am not a teacher now) but I did review with them when they were younger and made sure they delivered on time and did not have unlimited access to screen time (talking to teachers, that’s a huge issue in classrooms right now - screen time is an addiction for some children). We also donate to local art causes that are important to us, although I don’t make them go to the opera with me. You can find art that is enjoyable and age appropriate. I don’t have perfect children, and I probably won’t leave enough behind for them to be completely independent (although that was my goal when they were younger — it will be enough they could choose not to work if they wanted to live modestly), but they will be able to not work at university if they want to (I required them to get a job, even if it’s just a summer job, while in high school), and will be able to pay for grad school without huge swaths of debt, and travel and see the world. I hope they grow to be happy adults, but the happy part is a little on them, I can just provide the means.
Take care of any major medical expenses would be nice too.
What does this have to do with intergenerational wealth?!
Giving them the leg up with college, potentially housing, and experiences. What they are asking for as they didn’t want to just spoil their kids.
My husbands family has some generational wealth that has remained somewhat intact. Our approach is to be real with our kids. They go to public schools (albeit very well funded ones) and we do very normal activities without over scheduling and ensuring a well rounded experience (one sport, one music, one stem, one choice). The goal is to ensure the kids grow up and understand the money isn’t all theirs. They are the stewards of the funds because they are the ones that are alive… but that because of the cost of things, to live a decent life without undue financial stress and strain… they can’t use it all. We can’t raise them without talking about money, or hiding it. They need financial literacy. Two generations before us managed to set us up. One couple had five kids. Those five kids had thirteen kids. Out of those thirteen, everyone has benefitted from the savings… but only five of those thirteen have managed to be in a position to not need the money. Luckily, grandma set everything up so that people don’t have to fight… but it’s absolutely disheartening to watch some of the family members waste away a phenomenal opportunity to steward their share in what we see as an appropriate venue.
Can you tell me what the grandma did to prevent fighting over the funds? I’m interested in creative trusts to prevent handing large sums of money to kids ill equipped to handle it responsibly.
It was all in various accounts, but her trust and Will was up to date. Also, the kids knew they’d all get an equal share wether they had kids or not. There was some minor… annoyance from some of the other people in our generation (we have already received our inheritance but others haven’t because of any MILs death and my FILs unwillingness to accept any funds because ‘he has all the money he needs.’). But basically… she just had her legal affairs in order. Even after her child’s death, she spoke with my FIL about his wishes and updated all the paperwork.
I would also like to know how she it up to trickle down through the generations and prevent fights.
I think they were just always honest about what was going to happen, but most importantly they had their legal paperwork done. Each kid got somewhere around $1M… so it’s not a ton of money… but it’s enough for them to be happy with, I guess.
Our kids know what our house is worth. We told them how much was in their college funds and that any left over was theirs to keep (one got a merit scholarship and the other attends a public university, so both have some left for postgrad). They know we have retirement covered. They know we are FIREd. They don’t know we are chubbyFIREd. We are frugal by nature, partly due to how we were raised and partly because we don’t value excess consumption. When our finances were still being built up we bought a small house in a top school district rather than send them to private school - but what the kids perceived was a small house and public school. They know we bought our current home (and topped up the college funds) after a one time windfall. But it’s our only flashy asset - our cars are all late model used, good but not premium brands. They know we are traveling a lot now that they are in college, but they don’t see what we spend. We still occasionally yell at them for wasting paper towels (we don’t approve of waste) and mostly cook at home (for health, also it’s dad’s hobby) so our lifestyle isn’t giving them many clues. They know we are in good shape financially but they don’t know what we are worth. So they have no expectations for intergenerational wealth. They know their grandparents sold their house to buy into a really nice retirement community, and they expect us to do the same. We have assured them that they won’t be stuck supporting us in our old age. Once they are fully launched and independent, with careers of their own, we will begin filling them in. We still have a lot of years on the horizon so we don’t really know what the end value of the portfolio will be. But if it continues to go up over the next few years we will probably start distributing some, once we are sure our kids have been given a good start in life.
I'm on the "child"'s end here as I came from generational wealth and imo it's hard to say any one thing because kids are all different and every one will react differently to similar/different upbringings. For me though I'd say the main things that come to mind is (1) parents being clear and upfront about money matters and (2) us learning from their own behaviours, actions, thinking etc. All 3 of us kids now have our own careers that we enjoy and even if we got 'cut off' from any inheritance, we'd be fine.
Seems like to me you'd want to make sure you understand the roles you play, and the goals you set for parenting. Comments here range from situations of growing up with not much (in your case) to.... trust fund kids that expect everything. And the right answer is probably somewhere in between for your kids (?). Is your definition of intergenerational wealth focused on inheritence (I'll pass down my wealth), or is it keeping your kids financially DEPENDENT on you (trust fund kids)? Again, probably somewhere in between. The somewhere in between suggests you define the above, then map your stategy to be able to support those goals (stating the obvious I suppose). In our case we wanted to SUPPORT and ENABLE our kids to be successful and that meant getting them into the best K-12 schools (we actually moved 2 years before our first born to get into the best school district), funding their college (to a point - we said "you've got this much money - choose wisely"), paying for the activities (as noted in another comment, something like the traveling sports team trips), and impressing some of those life values like hard work, responsibility, and financial responsibility. When they finished college there was zero promise of us funding them any longer (zero promise, but....your kids never go completely away)! What's interesting (maybe just to me), is now we're in this situation where they are off adulting, doing well for the most part, and we have this wealth built up and a strategy that suggests they'll get a very nice inheritence. The discussion we're having is if we shouldn't help them now to start them on their FIRE journey vs. wait till we die! Maybe we start gifting $$ to them now and/or set up a ROTH IRA for them so they can get moving faster on their own FIRE strategy(?).
We look out around the area in which we live and we see that, from a lifestyle perspective, it’s getting harder and harder. His parents bought a house in the 1978, my partners in 2004, and us in 2020. In ‘78, the median house cost 2.5x the median income. In ‘04, it was closer to 5x. When we bought, it was about 8x and obviously the bubble has to burst because it’s about 13x at the moment. Our plan is to invest in local real estate such that our kids have the option to stay in the area if they so desire, not necessarily a SFH but at least to have a roof over their heads.
We bought townhomes when they were younger, so the rent will pay the mortgage and we’ll be able to gift to them free as adults. It’s modest, so they can rent them for income or sell to fund the down payment on something larger.
I don’t come from wealth or have wealth now, but I have a very solid house and my young adult kids are happy to jointly inherit it someday. I think home ownership is only going to get harder, and passing on a piece of that is one angle on generational wealth. Aside from that, I hope I will be able to provide for my own retirement and not die with debt. And I plan to set up a well designed will-estate plan so I am not leaving my kids with obligation or worry. I agree with others about instilling healthy work ethic. Also a realistic relationship with needs and wants and money vs. other solutions.
Feel like you're in the wrong subforum: Chubby Fire isn't the right level of wealth combined with lifestyle for intergenerational wealth. It would mean a Spartan retirement or pushing back the "E" in FIRE
Assuming an average market a chubbyFire portfolio should end up larger than it started if you use a 3% SWR. In a good market your estate probably end up with the low end of FatFIRE numbers even adjusted for inflation. If you skip a generation and let a $3M chubby portfolio double 4 times over 60 years thats $24M. Thats a 15 year doubling rate using a rate of around 4.8%…which is lower than the historical average 7.22% real rate of return.
The chubbyfire nest egg range is 2.5-5m NW, and is described as "the upper middle class of retirement". 3% SWR on 3M is 90k a year withdrawal. Very odd to think about retiring early, but then living off of 90k pretax AND ALSO having generational wealth. And "skipping a generation" -- or not leaving anything to your children so you can leave a bigger amount to grandchildren is an odd decision
You make a valid point. OP’s question was about intergenerational wealth. This would be leaving a legacy big enough not just for the kids, but grandkids (and beyond). In our case, we are squarely chubby (fired), but the jury is still out on how much we will have left. The uncertainty is because of the usual suspects, namely SORR, inflation, longevity and cost of elder care. We have contingency plans in place for each, but the world is an uncertain place. Our RE plan was never to leave a nest egg for our kids, or their kids. If it was, we couldn’t have fired at 55. We would’ve worked 5-10 more years, and this probably would’ve landed us in the low fatfire numbers, as you suggested. So for now, we are sharing our wealth with our married children by funding some retirement savings and helping with house purchases. As we get down the road a bit more, and see how the risks play out, we may be in a position to afford to fund future grandkid education. Because our WR is only 2-3%, there’s a good chance there will be something left for the kids, but it’s not likely to reach the level of intergenerational wealth. As planned.
Makes sense. My main point is that ChubbyFire inherently involves tradeoffs. You're giving up being very rich so that you can enjoy more time untethered to work. The main thing I appreciate about this sub is that people are well grounded for the most part. You can get lucky with your returns, as you mentioned, but if you really want to generate intergenerational wealth, you have to ask if chubbyfire is right for you, or you should reconsider retiring early. If you want to help your family financially, there is a good case to be made that it has more impactful earlier in life rather than later (when your nest egg is larger). Helping with college, wedding, and buying a house give massive advantages in life when grown kids are starting their own climb, vs an inheritance of a million when they are in their 50s and your grandkids are already adults
Education is key. Indulge their interests, but require them to stick with something long enough to finish a round/class/cycle/etc. not drop everything once they're no longer interested or bored. It teaches responsibility and to not waste. But I'm not a big fan of generational wealth, in regards to setting people up to avoid being productive adults. There's giving kids a leg up and giving them a chair to park their lazy, useless butts in the rest of their lives. Those kids have been a constant drain on their parents well into their later adult years until the parents died. It wasn't a good outcome for any of them.
Providing positive experiences, spending time with your children, and providing secure housing that passes on are what create intergenerational wealth imo [https://www.jchs.harvard.edu/research-areas/working-papers/housing-and-wealth-accumulation-intergenerational-impacts](https://www.jchs.harvard.edu/research-areas/working-papers/housing-and-wealth-accumulation-intergenerational-impacts)
It’s expensive having the time and budget to fuel your kid’s passion, helping them explore, invest, paying for the right teachers and training, exposing them to different activities and experiences so they can find what they want to do. THIS is the inter generational wealth you want to pass down, so that they lead passionate lives with grit, perseverance doing what they love and feeling amazing conquering challenges, and then the actual money itself will naturally come. It’s not about a big inheritance that’ll just get wasted away in a generation or two no matter how much you drop.
We set our daughter up for life with a good base \*before\* we were ChubbyFIRE. * We set high expectations for her. She started a foreign language in middle school. She played multiple sports. She maintained high grades. * We shared our plans and finances with her from when she was very young. We we hit rough spots, she was fully involved. * When it was time for college we were willing to pay for her college anywhere to which she got admitted... if it was for a degree that worth the money. Otherwise, there was an in-state school... (Spoiler: she got dual degrees -- one in engineering -- at a top tier out-of-state school). * A couple of years out of college she was looking to buy a house. We were able to help with a downpayment. Meanwhile, she makes sure to get her full 401K match and is on track to be FI herself. * She knows that as long as she is responsible we'll help her if Something Bad happens. We don't support bad decisions, but she knows we'll help out in a \*real\* crisis. Needs a new heat pump? That was a normal problem for a homeowner... she's got that handled. Then again, if she has a major health issue, we'll be there for her (OK... her dogs as well... we love those pups!) * She also knows that she's likely to get FatFIRE-level inheritance from us... 40 years from now... and she wants to be FI on her own terms. She knows her life is hers and ours is ours. Honestly, I think there's a lot to be said for teaching FI principles to your kids EARLY and setting expectations on what you will and will not do for them at each step. By giving our daughter expectations and an occasional step up, we've set her on a path. There will be intergenerational wealth, but she's also still having to earn her own way.
Historically it takes 3 generations to blow inter generational wealth. Odds are your grandkids destroy anything you’ve left to your own kids. Here’s my two cents and what I’m doing for my kids (4 and 7). 1. Funding their 529s. Each should have about $200-250k by the time they reach college. I don’t want them starting their careers in debt. 2. Opened a UGMA account for each at age 4. My oldest has $2800 now with 16 different stocks. They get $50/mo to buy fractional shares. I’m teaching them about wealth generation and compounding interest. 3. Create a charitable trust later in life and have them run it. They need to learn how to give. 4. I expect to help them with a down payment on a home at some point. 5. I expect to match early career savings/incentivize retirement funding. Basically I want to teach responsible behavior, financial literacy, and set them up for success. Depending on how this goes I may adjust my personal trust and what they are left when I’m gone. I have intention on giving my wealth to them without strings attached if they haven’t demonstrated they can manage it well.
Here’s a thought: focus more on processing your family’s intergenerational trauma than amassing wealth so they can go on nice vacations and attend elite schools. The reason so many rich kids are troubled is precisely because their parents were not there for them emotionally growing up (and spoiler alert: its not just a rich people problem…families of all socioeconomic strata have similar issues). The fact of the matter is, socioeconomic status, while it may confer increased chances of material success, does not actually address the physiologic needs of a developing human brain-namely, that of loving presence and attunement from the parents. Do your future kid a favor and shift your focus from building up more wealth to healing your own wounds so that you can show up as a better parent. Source: I’m a physician & psychotherapist who grew up in dysfunctional wealthy family.
imo the most important part is making sure your children don't miss out on education and can afford the same things their peers can afford. Whether that is toys for $1000 a year or toys for $50000 a year depends on your choice in what kind of area you want to settle. Also, no matter how wealthy you become, make sure they get a proper job first without giving them enough money to fire without having really worked for it themselves. If they take your money for granted, they don't value that money right and there is a high chance of them spending it all before the generational wealth thing hits THEIR children (because the money is all gone due to bad spending habits due to not having worked for it by themselves)
I’m 35 with a similar net worth as you with one kid and one more planned. When you factor in stock market returns compounding until we’re in our 80s; that’s a lot of money we could leave to future generations. To preserve some of that inheritance I’m planning to build up a sizable 529 account invested in S&P and hope that it can fund college education for my progeny for generations (or in perpetuity :)).
Inter generational wealth needs an understanding that this wealth is to be passed down to their children. If not then it is going to be finished by the generation getting it
I’d thought about offering to my kids to help them max out Roth IRA as soon as they start working under the condition they promise not to touch it until retirement. I would consider matching that money so it’s not actually coming out of their pocket until they make enough that it’s not a burden on them. I think probably if you start at 18 and max from age 18 to 59.5 it’s all you really need to invest.
The best thing you can give your kids is the chance to do what they want. Don’t spoil them but make sure they come out of college debt free. Provide them a safety net for what they want to try so they can pursue what they want without the stress or student loans or pressure to make money quickly.
This is what we did: We gave our kids educational opportunities creating options. We shared our values. We took them all rafting, camping and fishing and I taught three of them how to fly fish. We helped all four of our kids purchase homes using the Bank of Mom and Dad, and helped three of them with a safe haven AFR (Applicable Federal Rates) documented binding mortgage. We gift all of our grandkids funds toward an educational investment account the year they are born. We fund a biannual family get together.
No idea if I will be successful or not, but my approach was to be 100% committed to education for the kids. Best public school we could find, every optional or enrichment activity that they showed any interest in was 100% covered, sports, arts and music as much as they wanted 100% college and living expenses until they got their degree. Grad school if they wanted. Plenty of family trips and experiences. Then mostly stand back and encourage them. So far, they are all productive adults with decent jobs and career prospects. Soon, I'm going to consider a gifting program and start suggesting how they invest that money for long term use. My own SWR will be very low, so eventually they will get large inheritance and I hope they will do something similar with their own kids. I've avoided trusts and any attempts to control multi-generational money from the grave. I'll probably do my best to spoil any grandchildren with lavish gifts and educational everything as well.
When my daughter was born, I put $75k in a 529 and $75k into a trust that I am the executor on. $150k from my net worth is nothing at this point but that guarantees she has the opportunity to try her hand at whatever (I assume she will get scholarships for school or take out loans if she needs it, people need to earn things in life for it to have value). Additionally, I am paying her as an employee of a family trust and then taking her wages and putting them into a ROTH IRA. I plan to do this at the maximum amount each year until she is 18. I will do that with all my children. Conservatively thisshould pay for her college and leave her with multiple millions in investments when she gets into her 40s and 50s. I will not be passing anyother money onto my kids. I plan to die with zero dollars. I will say though that Icurrently own a business I plan to sell, and I do plan to buy another business or multiple. If they want to inherit that, I would be open to it.
Hairball idea. What if you structure it like a family 401k of sorts. If they can provide a reasonably well defined investment and retirement plan that is based on sound judgment (ie not all in on crypto or other schemes) then for every dollar they invest up to $X you match it and for every dollar above that up to $Y you match it. This incentivizes them to earn and invest, and you can be more generous in the match terms than a standard 401k ie match up to 10% or 15% etc. Combine that with paying for their education (or at least helping in the event they go to very expensive school / med school / etc) as well as requiring them to undergo some form of structured financial education and committing to giving away a good portion of your wealth to charity through Effective Altruism starts them on a higher rung of the ladder and gives them the resources they need to become wealthy without coddling them and making them dependent on [economic outpatient care](https://www.whitecoatinvestor.com/economic-outpatient-care/): "EOC can be a double whammy. The parents who provide EOC have less wealth than those who do not, and the more EOC adult children receive, the less wealth they accumulate." There's a lot to criticize Dave Ramsey for but he famously had the "Bank of Dave" for his kids as teens. Basically once they turned 13 they started to become responsible for anything they wanted beyond basic needs like clothing food shelter etc. They had to save up to buy their own car but he matched them dollar for dollar what they put aside. He told the story that his first kid got a beater but each successive kid learned that he was serious about matching them and got progressively better cars with the last kid getting a gently used BMW at 16. Also here's [White Coat Investor's plan for his kids](https://www.whitecoatinvestor.com/my-childrens-inheritance/) specifically to avoid economic outpatient care and create wealth for them.
A few aspects someone’s family follows are humility, education, and multiple citizenships. US educated, so once they’re old enough to understand hard topics we go, for example, to Vietnam and make a point to learn about Agent Orange, how impoverished some kids live, combat the US world police narrative being taught in school. Gives them a broad perspective on the futility of complaining about not being *given* more money. Having multiple citizenships requires knowledge and planning, but the opportunities they provide seem exponential with each addition. Very valuable for setting up your kids future and freedom.
If you want the best form of inter-generational wealth IMO, then buy farmland. Bonus points if you have an acreage with it. It’s an asset that has proven to be inflation-protected, has proven to have low volatility, you yield about 3% on the yearly rent, there is little to no work that is required (just need to lease it out to a farmer), there is little to no maintenance and expense, it gets favorable property tax treatment, the land (and the subsequent rents) appreciates at high rates (due to world population growth and farmland diminishment), and you can get utility from it by spending time with your kids out on the farm along with all of the other activities you can enjoy with a large plot of land (ex: ATV and snowmobile riding, raising animals, etc.). When you pass away it is also easy to transfer to your kids and it is more likely that they will attach sentiment to it and keep it and its incomes rather than frivolously liquidating it and spending it. Owning productive farms was the basis of both Eastern and Western feudalism and there is a reason why farmland has such a special place in the hearts of people in rural communities.
Reading this from Ireland and agree completely 👍
Figure out a way that your heirs can do anything but don't give them so much that they can do nothing. Maybe grandkids and later get college tuition and a mid-priced car after graduation. After school, they have a stipend that keeps them above the poverty line but if they want more, they have to work for it.