Avoid This Cycle When Building A Legacy
Have you ever worked so hard for something only to see it get destroyed by someone? It's heartbreaking and can leave you feeling devastated. Now imagine that you have worked your whole life to build wealth for future generations. All the late nights you stayed up completing projects, the long weeks with no weekends or breaks from the daily grind. You have sacrificed so much to build your wealth and legacy for future generations and break free from the norms your family may have known for generations before you. Now imagine that it will all be for nothing within the next couple of generations.
This is known as the three-generation cycle.
This happens when the first generation builds wealth. They have done the hard work, made the necessary sacrifices with sleepless nights, taken on the risk of the deals and had them pay off. They gain an appreciation for the wealth they have built and work to preserve it.
Then comes the second generation. They may have seen the sacrifices from the first generation. They have a second hand account of the sacrifices the first generation made, but the experience is somewhat degraded because they did not make those sacrifices themselves. Regardless, they still get to enjoy the wealth that the first generation leaves to them.
In comes the third generation. Having no experience of the sacrifices the first made, they have no appreciation for the wealth they had inherited and they waste and destroy it.
Why Does the Three Generation Cycle Happen?
A NASDAQ article in 2018 stated that 70% of wealthy families will lose their wealth by the second generation and a whopping 90% of them will lose it by the third generation. They site these three reasons why:
People are taught to not talk about money
Prior generations worry that the next generation will become entitled and lazy (justified in my opinion)
Many have no clue about the value of money or how to handle large amounts of it, let alone, small amounts of it.
So how do you avoid the Three-Generation Cycle?
A while back, I did a podcast on why you need a charitable plan. When developing this plan, you hold family councils and discuss the issues listed above.
You not only talk about money, but make plans to teach it's value
You teach your family about hard work and plan to prevent entitlement and laziness
You plan how to make money, keep it and multiply it.
It's also important to know that you do not need to be a millionaire now to start this planning. In fact, it's best when you start where you are at the moment and get ahead on this type of planning.
There are a lot of details that can go into this type of plan. That is why it is good to get outside help and training with people who do this type of generational planning with families on a regular basis.
Schedule a free call with me right now to get started. The setup is free and easy.
Break the cycle and start planning for the future.