There's hardly anything more unnerving and fraught with indecision for the wealthy than how to bring up the next generation when they are surrounded by financial privilege. Shower them with their every heart's desire simply because it's financially possible? Deny them every nickel in the hope they'll learn to scrape together a living and learn the value of money?
The problem always seemed especially acute for parents who themselves worked to build their wealth from next to nothing. Without a reference in their own family history, there was no tradition for how to come to grips with wealth when it's not earned.
The most enlightened wealthy parents I've worked with found ways to instill in their children a deep respect for money -- for what it could bring them as well as for what it could bring others. Philanthropic parents would often begin employing their children in the family foundation as soon as they demonstrated responsibility. The children learned business principles and gained a wider understanding of the world's needs, and how money could be used to fill those needs.
There are plenty of examples of "silver-spoon" kids gone wrong because of too much money too soon. One example of someone who got it right is Peter Buffett, son of billionaire investor Warren Buffett. The younger Buffett has written a book, "Life Is What You Make it: Finding Your Own Path to Fulfillment," that describes how he avoided becoming a poster child for the problems associated with inherited money.
Peter Buffett, 52, says he received $90,000 in stock from his family when he was 19. He studied at Stanford University, and then moved to a studio apartment in San Francisco where he pursued a career in music. By the time he inherited from his mother in 2004, he says he had learned how to handle wealth. Now he says he works to give back to the world, partly through his father's NoVo charitable foundation.
His father's philosophy, Buffett explains in the book, is that aside from the modest sum they received at the age of 19, each of his children should expect no more money from Dad. In fact, in 2006, Warren Buffett gave $37 billion, the bulk of his fortune, to the Bill and Melinda Gates Foundation.
In his book, Buffett writes: "My dad, Warren Buffett, by dint of hard work, solid ethics, and steady wisdom, has become one of the richest and most respected men in the world. I say this with plenty of filial pride -- but also with the humble acknowledgment that those are his accomplishments, not mine. No matter who your parents are, you've still got your own life to figure out."
Wise words of advice for anyone.
What do you think are the best methods for teaching children to handle wealth?