According to Jayne Pearl and Richard Morris, co-authors of "Kids, Wealth, and Consequences: Ensuring a Responsible Financial Future for the Next Generation" (Bloomberg, a Wiley imprint, 2010), those folks who are wondering if the end is near, so to speak, are asking the wrong question.
The authors say that instead, we should be considering what lessons can be learned from the economic crisis.
"The crash has made people from all socio-economic strata rethink their connection with money, the skills their children need to be successful and survive any economic environment," the authors state. "Wealthy kids who grow up as if they need to make it on their own handle life and their future inheritance responsibly. Those who cannot lead productive lives and support themselves become addicted to the trust fund and often become drawn into dysfunctional, risky behaviors. Parents at all ends of the economic spectrum would be wise to think deeply about their choices: How they spend, save and invest, and how they communicate — consciously and unconsciously — with their children about their financial values."
They said the recent "bling ring" robbery case reported in by national media illustrates the potential consequences of failing to communicate financial values to children. It was determined that six teen pals, who robbed about $3 million in goods during a burglary spree at the homes of celebrities such as Paris Hilton, Lindsay Lohan and Orlando Bloom, were stealing for kicks - not because they needed the money.
"They almost begged to be caught," say Morris and Pearl. "Perhaps they wanted the one thing their parents and the public did may not have lavished on them: attention. This is just one example of the unintended consequences of living in a super-wealthy environment that breeds entitlements and ennui."
The authors laud celebrity couple Will Smith and Jada Pinkett Smith as parents who have helped their own children develop a sense of meaning and purpose. During a recent appearance on the Oprah Winfrey Show with his wife and three children, Smith said he tells his children, "Mommy and Daddy are rich. You all are broke.’ We don't allow them to just sit around. We talk about the concept of the group and the necessity of you adding to the family. Then you have to add to your neighborhood, and then you have to add to humanity."
The authors provide another example: Peter Buffett, son of one of the world’s wealthiest men, Warren Buffett. Peter, a musician, recently published a book, "Life is What You Make It" (Harmony 2010), in which he details how his parents lived remarkably modest lives. His father was present almost every night for dinner and emphasized the importance of values, of pursuing your dreams and informed him and his two siblings that they would not become trust-fund babies; he planned to give most of his fortune away and the children would have to make their own living and way in the world.
"Wealth, for all the wonders it can bring, has a dark side, especially on the next generation," conclude Morris and Pearl. "It takes enormous effort and thought for affluent parents to raise children who are capable of being productive and finding happiness within themselves, not just in the material trappings of their lifestyle."
"Kids, Wealth, and Consequences: Ensuring a Responsible Financial Future for the Next Generation" and the authors’ workshops for parents, their advisors, and teens, are devoted to helping wealthy parents guide children through the many pitfalls wealth can create.
To learn more, visit their website