GENERATIONAL WEALTH: Do you worry about your kids?

Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes

Over the last decade or so, my wife and I have put together a nice little rental portfolio, we've really grown as landlords and property managers, and we have a nice little life that's just getting nicer. Net rental income has almost completely replaced what we used to make in our jobs. We can see the finish line, when we call it quits, sell and put out money into more stable assets, retire to a nice sunny place far from Pittsburgh, and enjoy our lives.

Our one regret is that we didn't have children. It just wasn't in the cards for us. In the beginning, we didn't really know what we were missing, but later, as the assets started to grow in place, we both realized that if we did have children, and we left them what we had, we would more or less be inviting destruction and misery on their heads in most cases. Raising kids when rich is a hard, thankless job, and most rich parents fail miserably at it. I can only imagine in stark terror the mistakes I would have made as a young man if I had had the money to make them.

For those of you who have met with some success and have children, what's the end plan? I know there are some guys here who stay up nights figuring out how to pass generational wealth to their children successfully, looking at you, @Steve Vaughan.

What are the rest of you doing?

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Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

Ha @Jim K.. Nobody is supposed to know I stay up nights thinking about generational wealth.😎

Interesting enough, my wife and I just did some basic estate planning for the first time recently.

So our 2 young adults (now) grew up around landlording and have been members of our main commercial apts LLC since they were babes. 2%. We used to joke that 50-cent's got nothing on their 2%. They'd rap while they picked up the parking lots. Some things you just do as owners.

Yard work, cleaning, painting, mowing, etc though were paid. They always knew where a dollar came from and they grew with us.

I never use the term 'rich' and honestly don't feel we are. We have had freedom from day jobs for a long time, but mostly because we have so few payments. They don't have payments either and when their car or motorbike needs something, their first action is to get out their own tools and pull up a YT video.

So I think the answer to prevent large sums from wrecking kids is that they are grounded. They have worked for money and appreciate it. They understand money comes in 3 forms- labor, business equity/LLC membership and investment earnings.

One fuels the other, which fuels the other- but the source and foundation is work.

We also enjoy playing 401 Uncle. We seed Roths for our motivated nieces and nephews and plan to establish college and 1st home purchase funds for our future grandkids and grand nieces and nephews. Won't be such a 'burden' on our kids.

Another great source would be @Arlen Chou. I know of him especially on other platforms and his young adult kids are actively buying RE and DiYing like you and I do so much. If anyone can mention him, he would be an awesome resource.

I'll also mention @Jerry W. @Bjorn Ahlblad @Scott Price. and @Bill F.. @JD Martin as excellent candidates for great kids and wealth advice👍

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
2y
Ha @Jim K.. Nobody is supposed to know I stay up nights thinking about generational wealth.😎

Interesting enough, my wife and I just did some basic estate planning for the first time recently.

So our 2 young adults (now) grew up around landlording and have been members of our main commercial apts LLC since they were babes. 2%. We used to joke that 50-cent's got nothing on their 2%. They'd rap while they picked up the parking lots. Some things you just do as owners.

Yard work, cleaning, painting, mowing, etc though were paid. They always knew where a dollar came from and they grew with us.

I never use the term 'rich' and honestly don't feel we are. We have had freedom from day jobs for a long time, but mostly because we have so few payments. They don't have payments either and when their car or motorbike needs something, their first action is to get out their own tools and pull up a YT video.

So I think the answer to prevent large sums from wrecking kids is that they are grounded. They have worked for money and appreciate it. They understand money comes in 3 forms- labor, business equity/LLC membership and investment earnings.

One fuels the other, which fuels the other- but the source and foundation is work.

We also enjoy playing 401 Uncle. We seed Roths for our motivated nieces and nephews and plan to establish college and 1st home purchase funds for our future grandkids and grand nieces and nephews. Won't be such a 'burden' on our kids.

Another great source would be @Arlen Chou. I know of him especially on other platforms and his young adult kids are actively buying RE and DiYing like you and I do so much. If anyone can mention him, he would be an awesome resource.

I'll also mention @Jerry W. @Bjorn Ahlblad @Scott Price. and @Bill F.. @JD Martin as excellent candidates for great kids and wealth advice👍
20 Reply
Chris John
Member since 2020 · 671 posts · 937 votes
2y
@Jim K.
Interesting question that I've been confronting a lot lately. My kids are 20, 18, and 18. They've known their entire life that I would not be paying for their college, but would allow them to stay home for free (I'm even giving up my office so they can have their own rooms, which is a bummer! haha).
They've all been working since 16 and between work, birthday gifts, and mutual fund growth, they've got about 40k, 20k, and 20k and paid off cars. I will say that I did manage to turn a couple grand of birthday gifts from grandparents, aunts, uncles, etc. into around 10k for them. So, I didn't really give them any money, but I did help their money grow pretty effectively and I'm giving them the gift of free room and board through college as mentioned.
This has always been my plan for my children and I've taken a lot of guff for it over the years. I could easily afford to pay for college and most people don't understand why I won't. It's hard watching them burn both ends of the candle and knowing that they could've gone to "better" schools, but I wouldn't change it as I am so proud of who they are.
In the end, they should inherit a lot more than I did. I don't think leaving them money is my job though. I think teaching them to get their own money is...
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Jim K.
OP
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
2y
Quote from @Chris John:

@Jim K.
Interesting question that I've been confronting a lot lately. My kids are 20, 18, and 18. They've known their entire life that I would not be paying for their college, but would allow them to stay home for free (I'm even giving up my office so they can have their own rooms, which is a bummer! haha).
They've all been working since 16 and between work, birthday gifts, and mutual fund growth, they've got about 40k, 20k, and 20k and paid off cars. I will say that I did manage to turn a couple grand of birthday gifts from grandparents, aunts, uncles, etc. into around 10k for them. So, I didn't really give them any money, but I did help their money grow pretty effectively and I'm giving them the gift of free room and board through college as mentioned.
This has always been my plan for my children and I've taken a lot of guff for it over the years. I could easily afford to pay for college and most people don't understand why I won't. It's hard watching them burn both ends of the candle and knowing that they could've gone to "better" schools, but I wouldn't change it as I am so proud of who they are.
In the end, they should inherit a lot more than I did. I don't think leaving them money is my job though. I think teaching them to get their own money is...

Chris, I graduated from a state school summa cum laude and landed a full fellowship for my PhD at an Ivy League school. About four hundred people applied, eight were accepted and funded. It could be done twenty-five years ago, it can be done now. If your kids really want to go to a top-ranked school in whatever field they choose for advanced study, they can earn their way in.

I also found myself on a therapist's couch a year into grad school having a panic attack about my absolute lack of money. My parents really had zero financial literacy. It took me many years to get some, and it was one of the main reasons I had to drop out of grad school. So I would say from my experience that you could have picked a worse path, and "better schools" aren't all they're cracked up to be.

6 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
2y
I'll start by saying I don't have kids. Most of what I have will probably be left to my sister's kids, however, I plan on enjoying my retirement and slowly selling off my properties.
Like you, I worked hard for what I have (after grad school other than a rental I bought and a small retirement savings, I had barely anything in the bank). I also paid for all my schooling (my parents were like others mentioned here-pay your own way as it will mean more), including grad school (thankfully I had a scholarship for my PhD). I think hard work is important. I don't think anyone should expect to get anything and I may change my mind as her kids grow up. Currently they are young-10-12 and have unfortunately learned their parents' spending habitat (their motto is why save when you can spend and then complain that you have no money).
2 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Jim K.:

Over the last decade or so, my wife and I have put together a nice little rental portfolio, we've really grown as landlords and property managers, and we have a nice little life that's just getting nicer. Net rental income has almost completely replaced what we used to make in our jobs. We can see the finish line, when we call it quits, sell and put out money into more stable assets, retire to a nice sunny place far from Pittsburgh, and enjoy our lives.

Our one regret is that we didn't have children. It just wasn't in the cards for us. In the beginning, we didn't really know what we were missing, but later, as the assets started to grow in place, we both realized that if we did have children, and we left them what we had, we would more or less be inviting destruction and misery on their heads in most cases. Raising kids when rich is a hard, thankless job, and most rich parents fail miserably at it. I can only imagine in stark terror the mistakes I would have made as a young man if I had had the money to make them.

For those of you who have met with some success and have children, what's the end plan? I know there are some guys here who stay up nights figuring out how to pass generational wealth to their children successfully, looking at you, @Steve Vaughan.
What are the rest of you doing?

First thing we did is plan early (but never plan early enough). We have a trust that outlines what we think is every scenario (but who knows right). What we included in that was language that if something were to happen to my wife and I that there is someone third party to handle the finances until the kids reach a specific age. But that is not really the biggest impact. You can have any plan in place.
Where it matters is how you raise your kids. If you raise them with a silver spoon and give them everything they want, they will feel entitled and it does not matter what is in the docs. It boils down to teaching them about grit, hard work and that they need to earn it. Also teach them money is just another tool, but devalue its importance. Happiness, time and family are considerably more valuable than money. Never heard anyone on their death bed say they wish they had more time to make money, but how many wish they had more time with their family.
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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
2y
I'd also add that I think generational wealth is about more than money-it is the values you teach others that matters the most.
12 Reply
Kristine Ann
Investor · WNY/CNY/Adirondacks, New York State · Member since 2024 · 151 posts · 133 votes
2y
@Jim K. First of all, the definition of rich is fluid and depends on the person and who you are comparing them to. Second, the idea that poor parents succeed at parenting and the rich fail due to the availability of money is hilarious. Since parenting is one imperfect human raising another imperfect little human, it isn't a pass/fail kind of thing anyway.

My kids have been told that there is no inheritance and that every asset has a debt attached it, which isn't far from reality. The kids (and their friends) are repeatedly told that many people who look rich are actually poor and vice versa. The lessons from "The Millionaire Next Door" are constant themes in our house. Ultimate respect is given to the school janitor, the fast food worker, and the residents of the mobile home park because they are probably better with their money than mom and dad.

My kids are given a lot of advantages, including nice vacations, a large house, and a good public school education. They are offered trade school or state college debt-free. They are reluctantly loaned an old family car as a teenager and young adult that we "happen to have extra". As young adults, aside from the car and a degree in their cap, they aren't given any lump of money. They work, pay rent, and have to budget their $1-over-minimum-wage job just like everyone else. We'll help each of them with a down payment when they are ready to buy a house as a single or married couple. A good start into adulthood with a debt-free degree, an old car and down payment on a small SFH...that is the cycle of generational wealth.

Even though they are given so much help starting out, there is never access to a large lump sum of money to make mistakes with. I don't know any parent in my circle who just gives their kid money to burn. Hopefully we live into old age and our kids will be well into into their 40' or 50's before they inherit anything.
7 Reply
Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y
I have a 19 month old. We already have an estate plan in place and have taken steps to fund college. My parents funded college for me and that is the one major gift I know I will fund through the next generation.
However, how to teach great money habits? How much to give later in life, if anything? Whether to grow money she receives? These are hard questions with no right answer. I’ve seen folks spoiled by the optionality, and I’ve seen folks who have been given a lot maximize their potential with it.
I look forward to learning from the people on this thread. A lot of wisdom, and a lot of right answers here. Thank you for sharing on such a personal subject.

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Denis PonderPro Member
New to Real Estate · Yuma, AZ · Member since 2023 · 280 posts · 246 votes
2y
There are people from all walks of life that turn out all kids of different ways. As @Chris Seveney said, it's all in how the kids are raised. Love them, discipline them, put expectations on them, and follow through when consequences are necessary. Make them work for things and don't knock down obstacles they face, just help them learn how to attack them.

I plan to leave everything to my kids (18 & 20 y/o) and they know it; we talk about the importance of properly managing what you have so the people behind you have better chances and better opportunities. We teach them about being good stewards of what God has blessed us with and the importance of having plans and doing things with intention.
8 Reply
Peter W.
Member since 2020 · 351 posts · 329 votes
2y
I don’t really worry about it. If no disasters happens I will end up with a large chunk of money to pass on, but the reality is they won’t see it until they are in their 40s or 50s at which point they will have already learned most of their lessons about money and work ethic. And whatever habits they have will be ingrained. I will help them some along the way but they will have to figure out how to support themselves because even if I could (which is debatable if I will be able to) I won’t.
5 Reply
Dan Thomas
Rental Property Investor · Bow, NH · Member since 2016 · 216 posts · 185 votes
2y
Quote from @Jim K.:

Over the last decade or so, my wife and I have put together a nice little rental portfolio, we've really grown as landlords and property managers, and we have a nice little life that's just getting nicer. Net rental income has almost completely replaced what we used to make in our jobs. We can see the finish line, when we call it quits, sell and put out money into more stable assets, retire to a nice sunny place far from Pittsburgh, and enjoy our lives.

Our one regret is that we didn't have children. It just wasn't in the cards for us. In the beginning, we didn't really know what we were missing, but later, as the assets started to grow in place, we both realized that if we did have children, and we left them what we had, we would more or less be inviting destruction and misery on their heads in most cases. Raising kids when rich is a hard, thankless job, and most rich parents fail miserably at it. I can only imagine in stark terror the mistakes I would have made as a young man if I had had the money to make them.

For those of you who have met with some success and have children, what's the end plan? I know there are some guys here who stay up nights figuring out how to pass generational wealth to their children successfully, looking at you, @Steve Vaughan.
What are the rest of you doing?

This is a great post. I am very interested in the responses so far. I am very conflicted on this topic. I have a 6 year old and a 4 year old. In an ideal world I want to leave them with everything I have built and will build through out my life. We have a handful of rentals and 2 small businesses. In the perfect world we would leave those to our children so they can do what they want in life, not what they need to do to pay their bills.
On the other hand....I was raised in a middle class family who raised me with love and through learning from my mistakes. I have had a steady job since I was 13. I learned how to be successful by working for it. I did not get fancy vacations, or allowances or extravagant gifts (outside of my parents gifting me 4 years of college). If I wanted to go somewhere or buy something I worked for it. I believe that this is what led me to develop the work ethic I have and develop an appreciation for financial security. It takes hard work to build a solid financial footing and if you didn't build it how can you appreciate it and not destroy it?
Hopefully I have some time to figure out our plan. For now our trusts have everything going to our children but my mind is continually thinking wheter or not that is the best thing for THEM. I think it will depend how and who they grow up into.
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Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
2y
@Jim K. I have a step-daughter that is grown who doesn’t have the financial sense God gave a goose. I have tried influencing both through financial advice and business consulting as this child has a business in addition to a W-2. It has all fallen on deaf ears in the 6 years I have known her.
I am just starting to investigate estate planning which will primarily focus on my spouse, and following that my niece and nephew who are still minors but take active interest in financial things. I will include my step-daughter as well.
I intend to set up a Revocable Trust with specific instructions on how my real estate is to continue being held because I know everyone’s first instinct will be to sell it and take the money.
My plan is for the real estate to keep operating as it does now and putting management in place so it continues to generate passive income for everyone for a long time.
I know if there is a sale and a onetime cash occurrence it will be gone within 3 years or less. I do not want this to happen.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Scott Trench:

I have a 19 month old. We already have an estate plan in place and have taken steps to fund college. My parents funded college for me and that is the one major gift I know I will fund through the next generation.
However, how to teach great money habits? How much to give later in life, if anything? Whether to grow money she receives? These are hard questions with no right answer. I’ve seen folks spoiled by the optionality, and I’ve seen folks who have been given a lot maximize their potential with it.
I look forward to learning from the people on this thread. A lot of wisdom, and a lot of right answers here. Thank you for sharing on such a personal subject.

My kids were the first in the family to go to collage and like your parents they got a full ride from Dad and Mom.. I did not want to saddle them with student debt and as a parent and businessman this was one of my proudest moments that I could afford to do that. I had never saved for Collage so I just paid for it out of pocket each quarter so we sacrificed during the Collage years... My kids are basically Dave Ramsey disciples and have done very well for themselves.

As for inheritance we are like most family trust and what ever is in there will go to the kids.. But we wont sacrifice our retirement years just to have a larger nest Egg for the kids.. :)
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Chris John
Member since 2020 · 671 posts · 937 votes
2y
My buddy that's very successful told all of his children that if they don't need his money, he'll leave it to them. If they do, he won't. I think it's solved a lot of potential problems for him. haha.
9 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
2y
Quote from @Peter W.:

I don’t really worry about it. If no disasters happens I will end up with a large chunk of money to pass on, but the reality is they won’t see it until they are in their 40s or 50s at which point they will have already learned most of their lessons about money and work ethic.

Most people do this. 'Kids' inherit in their 60s.

A book that resonated with me regarding wealth transfer was Die With Zero. It does our kids the most good, placed strategically, especially if it helps reduce or eliminate debt, up until about age 34.

Bill Perkins, the author, mentioned giving his 80 yo grandma $10k. Go enjoy yourself he said. All she wanted or needed was a sweater. Extreme example of gifting to those that don't need it.

I still remember $1000 given us when my wife's grandma died 22 years ago. It lasted us for months and was so helpful. We were a young family of 3 kinda just starting over.

My parents gifted me something for the 1st time when I was 34. $5k to help with our home purchase. It wasn't easy for them and meant so much to us. We still have the house and paid it off a few years ago. A seed that grew and honestly meant more than $200k would today.

The point is- if we have the means and the kids are humble and worthy, gifting a bit at their big younger milestones will have a 20x-40x+ the impact vs a pile in their 60s.

10 Reply
Rob K.
Encinitas, CA · Member since 2011 · 192 posts · 252 votes
2y
Quote from @Alecia Loveless:

I have a step-daughter that is grown who doesn’t have the financial sense God gave a goose. I have tried influencing both through financial advice and business consulting as this child has a business in addition to a W-2. It has all fallen on deaf ears in the 6 years I have known her.
I have similar issues with my kids. Someone recently told me, and I think there is a lot of truth to this, if they hear the same information from a trusted person who is not you, they will take it to heart, become interested and listen and learn.
2 Reply
Peter W.
Member since 2020 · 351 posts · 329 votes
2y
Quote from @Steve Vaughan:

Quote from @Peter W.:

I don’t really worry about it. If no disasters happens I will end up with a large chunk of money to pass on, but the reality is they won’t see it until they are in their 40s or 50s at which point they will have already learned most of their lessons about money and work ethic.

Most people do this. 'Kids' inherit in their 60s.

A book that resonated with me regarding wealth transfer was Die With Zero. It does our kids the most good, placed strategically, especially if it helps reduce or eliminate debt, up until about age 34.

Bill Perkins, the author, mentioned giving his 80 yo grandma $10k. Go enjoy yourself he said. All she wanted or needed was a sweater. Extreme example of gifting to those that don't need it.

I still remember $1000 given us when my wife's grandma died 22 years ago. It lasted us for months and was so helpful. We were a young family of 3 kinda just starting over.

My parents gifted me something for the 1st time when I was 34. $5k to help with our home purchase. It wasn't easy for them and meant so much to us. We still have the house and paid it off a few years ago. A seed that grew and honestly meant more than $200k would today.

The point is- if we have the means and the kids are humble and worthy, gifting a bit at their big younger milestones will have a 20x-40x+ the impact vs a pile in their 60s.

My grandma left me 50k when I was in middle school, ended up being part of college, my wedding and honeymoon, downpayment on primary, down payment on my first and second rental properties, and I still have 50k left over.
I’ll probably help them with down payments for their first houses, college, I will probably even find their retirement accounts in their early 20s. I’ll have enough to retire when I am 50 but will likely work to 65 to give them more. But even then they will probably end up with the bulk of it when I pass.
6 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Jim K.:

Over the last decade or so, my wife and I have put together a nice little rental portfolio, we've really grown as landlords and property managers, and we have a nice little life that's just getting nicer. Net rental income has almost completely replaced what we used to make in our jobs. We can see the finish line, when we call it quits, sell and put out money into more stable assets, retire to a nice sunny place far from Pittsburgh, and enjoy our lives.

Our one regret is that we didn't have children. It just wasn't in the cards for us. In the beginning, we didn't really know what we were missing, but later, as the assets started to grow in place, we both realized that if we did have children, and we left them what we had, we would more or less be inviting destruction and misery on their heads in most cases. Raising kids when rich is a hard, thankless job, and most rich parents fail miserably at it. I can only imagine in stark terror the mistakes I would have made as a young man if I had had the money to make them.

For those of you who have met with some success and have children, what's the end plan? I know there are some guys here who stay up nights figuring out how to pass generational wealth to their children successfully, looking at you, @Steve Vaughan.
What are the rest of you doing?

In our culture housing is generational wealth, my grand-dad gave a house to my mom/dad , my mom/pop gave me houses and some inheritance, and I bought it over here and will give it to kids too....
it has been in tradition for 101 years lol....some cultures not just passing a house but also passing a business/company too, look at South Korea.
if you think about in 2023 you are late hundred years.
2 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
I grew up poor. Grandparents never finished highschool. Mom barely made it through highschool, my dad died when I was six, and we lived below the poverty line until I was 14 and she remarried.
The truth is, my kids are spoiled compared to how I grew up. They have to work and buy their own clothes, shampoos, snacks, etc. When my oldest turned 18, he had to start paying rent. When they want a car, they pay 50% and I pay 50%. But even though they are paying their way, they still live a very luxurious life compared to what I had. And the truth is, my childhood was much better.
Long story short, I'm not leaving them much money. There are two reasons:
1. I expect Jesus to return within my lifetime, and passing salvation to my kids is far more important than money; and
2. Most people don't respect money they haven't earned.
My personal goal is to earn $300,000 annually, live off $100,000, and give away at least 33% per year. If I die and the world is still turning, I will leave my children enough to buy a home. After that, everything goes to charity and we close up shop. I could continue earning in perpetuity and giving to charity, but charities tend to weaken and I don't want my money going to something that isn't what it originally was.
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Jim K.
OP
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
2y
Quote from @Kristine Ann:

@Jim K. First of all, the definition of rich is fluid and depends on the person and who you are comparing them to. Second, the idea that poor parents succeed at parenting and the rich fail due to the availability of money is hilarious. Since parenting is one imperfect human raising another imperfect little human, it isn't a pass/fail kind of thing anyway.

My kids have been told that there is no inheritance and that every asset has a debt attached it, which isn't far from reality. The kids (and their friends) are repeatedly told that many people who look rich are actually poor and vice versa. The lessons from "The Millionaire Next Door" are constant themes in our house. Ultimate respect is given to the school janitor, the fast food worker, and the residents of the mobile home park because they are probably better with their money than mom and dad.

My kids are given a lot of advantages, including nice vacations, a large house, and a good public school education. They are offered trade school or state college debt-free. They are reluctantly loaned an old family car as a teenager and young adult that we "happen to have extra". As young adults, aside from the car and a degree in their cap, they aren't given any lump of money. They work, pay rent, and have to budget their $1-over-minimum-wage job just like everyone else. We'll help each of them with a down payment when they are ready to buy a house as a single or married couple. A good start into adulthood with a debt-free degree, an old car and down payment on a small SFH...that is the cycle of generational wealth.

Even though they are given so much help starting out, there is never access to a large lump sum of money to make mistakes with. I don't know any parent in my circle who just gives their kid money to burn. Hopefully we live into old age and our kids will be well into into their 40' or 50's before they inherit anything.
One thing I think I need to make clearer: I thoroughly believe abundance in childhood doesn't make it easier to raise a kid with good money habits. I certain don't believe poverty in childhood makes it easier to raise that kid either. Both have their challenges, as I see things.

A fundamental reality of money is that all personal wealth is created in the gap between what you spend and what you make. A state of artificial scarcity must be created through the use of a budget to hold that gap steady or make it wider. It's a lot harder to repeatedly tell your child NO, NO, NO when you can easily afford things versus when you really can't.
I've never experienced this difficulty of prosperity personally. As I've said many times on the website, I was raised three blocks and a bus ride past broke-a$$-broke. But in my past life as a high-stakes language exam tutor, I walked into a lot of households with very nice art on the walls where the kid being raised was thoroughly worthless, a complete waste of skin. So I do have some personal experience with affluenza, and I'm curious to see how the folks on this website are avoiding this common outcome.
1 Reply
Jim K.
OP
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
2y
Quote from @Denis Ponder:

There are people from all walks of life that turn out all kids of different ways. As @Chris Seveney said, it's all in how the kids are raised. Love them, discipline them, put expectations on them, and follow through when consequences are necessary. Make them work for things and don't knock down obstacles they face, just help them learn how to attack them.

I plan to leave everything to my kids (18 & 20 y/o) and they know it; we talk about the importance of properly managing what you have so the people behind you have better chances and better opportunities. We teach them about being good stewards of what God has blessed us with and the importance of having plans and doing things with intention.

Yes, Denis, this is what I want to know more about. What are the specific techniques and mechanisms you're using to teach your children?
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Jim K.
OP
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
2y
Quote from @Peter W.:

I don’t really worry about it. If no disasters happens I will end up with a large chunk of money to pass on, but the reality is they won’t see it until they are in their 40s or 50s at which point they will have already learned most of their lessons about money and work ethic. And whatever habits they have will be ingrained. I will help them some along the way but they will have to figure out how to support themselves because even if I could (which is debatable if I will be able to) I won’t.
So you've never seen a 40-something man inherit a good chunk of change, promptly have his mid-life crisis, and squander his inheritance and what little he had?
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Jim K.
OP
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
2y
Quote from @Carlos Ptriawan:

Quote from @Jim K.:

Over the last decade or so, my wife and I have put together a nice little rental portfolio, we've really grown as landlords and property managers, and we have a nice little life that's just getting nicer. Net rental income has almost completely replaced what we used to make in our jobs. We can see the finish line, when we call it quits, sell and put out money into more stable assets, retire to a nice sunny place far from Pittsburgh, and enjoy our lives.

Our one regret is that we didn't have children. It just wasn't in the cards for us. In the beginning, we didn't really know what we were missing, but later, as the assets started to grow in place, we both realized that if we did have children, and we left them what we had, we would more or less be inviting destruction and misery on their heads in most cases. Raising kids when rich is a hard, thankless job, and most rich parents fail miserably at it. I can only imagine in stark terror the mistakes I would have made as a young man if I had had the money to make them.

For those of you who have met with some success and have children, what's the end plan? I know there are some guys here who stay up nights figuring out how to pass generational wealth to their children successfully, looking at you, @Steve Vaughan.
What are the rest of you doing?

In our culture housing is generational wealth, my grand-dad gave a house to my mom/dad , my mom/pop gave me houses and some inheritance, and I bought it over here and will give it to kids too....
it has been in tradition for 101 years lol....some cultures not just passing a house but also passing a business/company too, look at South Korea.
if you think about in 2023 you are late hundred years.

Oh, wow. Well, you see, Carlos, yours is not the only culture where housing is generational wealth. We Greeks do it, too, they even made a movie about how that works with us.

And my people were writing philosophy when yours were---

(SORRY, GOTTA STOP THAT!!!)
3 Reply
Jim K.
OP
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
2y
Quote from @Nathan Gesner:

I grew up poor. Grandparents never finished highschool. Mom barely made it through highschool, my dad died when I was six, and we lived below the poverty line until I was 14 and she remarried.
The truth is, my kids are spoiled compared to how I grew up. They have to work and buy their own clothes, shampoos, snacks, etc. When my oldest turned 18, he had to start paying rent. When they want a car, they pay 50% and I pay 50%. But even though they are paying their way, they still live a very luxurious life compared to what I had. And the truth is, my childhood was much better.
Long story short, I'm not leaving them much money. There are two reasons:
1. I expect Jesus to return within my lifetime, and passing salvation to my kids is far more important than money; and
2. Most people don't respect money they haven't earned.
My personal goal is to earn $300,000 annually, live off $100,000, and give away at least 33% per year. If I die and the world is still turning, I will leave my children enough to buy a home. After that, everything goes to charity and we close up shop. I could continue earning in perpetuity and giving to charity, but charities tend to weaken and I don't want my money going to something that isn't what it originally was.

You sound a lot like my closest friend and mentor, Nathan. He's in the same boat and make the same moves. I'm just glad he takes the time to talk to me about it.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2y
Quote from @Jim K.:

Quote from @Peter W.:

I don’t really worry about it. If no disasters happens I will end up with a large chunk of money to pass on, but the reality is they won’t see it until they are in their 40s or 50s at which point they will have already learned most of their lessons about money and work ethic. And whatever habits they have will be ingrained. I will help them some along the way but they will have to figure out how to support themselves because even if I could (which is debatable if I will be able to) I won’t.
So you've never seen a 40-something man inherit a good chunk of change, promptly have his mid-life crisis, and squander his inheritance and what little he had?

Jim I have seen many kids inherit very valuable real estate as their parents pass.. this mainly when I was doing Ranch and Timber or the subdivision land I bought. I am sure though same holds true when they inherit a MF or office complex or shopping center.. the thing with the deals I was involved in there was no debt on the land grandparnets parents owned it for decades.
So like the last one i bought for 7.3 million ( for my latest housing development) 5 kids there was no tax planning and no 1031 they just each grabbed the cash.. others that have inherited the land then sold.. same thing cashed out and who knows what they bought but for sure they did not want to continue to own the RE they wanted to get their hands on the cash as quick as humanly possible.
AS I am thinking about this I did buy from someone who did a charitable remainder trust I had never heard of that before. So I learned something there..
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