Inherited Wealth – Don’t give it to your children

In my previous post “If You are Broke, Blame It on Your Ancestors“, I talked about generation leaving behind legacy of wealth and financial knowledge for the next generation.

Interestingly, the great man of science who established the Nobel Prize, Alfred Nobel had negative thinking about leaving behind great wealth for the next generation:

Alfred NobelI regard large inherited wealth as a misfortune, which merely serves to dull men’s faculties. A man who possesses great wealth should, therefore, allow only a small portion to descend to his relatives. Even if he has children, I consider it a mistake to hand over to them considerable sums of money beyond what is necessary for their education. To do so merely encourages laziness and impedes the healthy development of the individual’s capacity to make an independent position for himself.”

Alfred Nobel’s reasoning was that leaving behind great sum of money will encourage the next generation to be lazy, which I personally do not fully agreed with.

Yes, there are many cases where a generation inherited great amount of money and they became lazy and eventually lost the wealth.  There are also cases where the wealth continues for generations because each generations know how to perserve and even grow the legacy.  The main differentiating factor is their value towards money.  How they see money and how they manage money.

Those who inherited wealth and lost it later are likely cases where they made poor financial decisions due to their lack of knowledge or they did not understand and mis-managed their cashflow.  If they have the correct mindset towards money, the adequate financial knowledge and know how to manage their cashflow well, which are lessons that Robert Kiyosaki learnt from his Rich Dad, they are likely to remain wealthy.