Motivation and Wealth: Aligning Your Family’s Goals

In this update:

  • Wealthy parents may be tormented by the thought that their children don’t share their drive and motivation, and they worry about their kids becoming “trust fund babies.”
  • It’s important to understand that deprivation doesn’t always produce motivation; in fact, this plan may backfire as it can create a superficial sense of scarcity.
  • Creating and sharing family and individual goals, visions, and missions can go a long way toward helping your children develop their sense of worth.

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Wealthy parents may dread the idea that their children might become “trust fund babies,” never growing up and simply looking for bigger and more expensive toys. Successful and ambitious parents can be tormented by the thought that their children don’t share the parents’ drive and motivation. While the trust fund baby scenario may be extreme, children and grandchildren may be motivated by very different factors than their parents and grandparents, and these differences can create tension and misunderstanding.

Deprivation may not produce motivation

In order to create a trust fund baby, by definition, there must be a trust (or more specifically, funds in a trust). Parents may believe that removing or restricting access to wealth increases a child’s drive and ambition. Creating motivation in this manner may be easier said than done. It is hard to deprive children of luxuries that the parents want to enjoy, such as family vacations, dinners out, and club memberships. 

In addition, artificially creating a sense of scarcity is just that: artificial. Smart children, sooner or later, figure out when parents are trying to manipulate a situation in order to get the children to behave a certain way. When parents attempt this type of manipulation, it may produce the opposite effect: Children who are struggling to define their own sense of identity may very well use this as an opportunity to create a new (and possibly damaging) identity of defiance. 

Further, parents have to somehow convince their children that the parents’ wealth won’t necessarily end up being theirs. This challenge is made worse when those parents are lavishing them with expensive gifts or sending confusing messages.

Money versus materialism

When attempting to restrict access to wealth, what parents may be responding to is what author Madeline Levine refers to as the “paradox of privilege.”1 According to Levine, researchers are noting that “children of privilege are exhibiting unexpectedly high rates of emotional problems beginning in junior high school and accelerating throughout adolescence.” However, this is not because those children have money per se.

Rather, Levine notes that materialism (a value system emphasizing wealth, status, image, and consumption), rather than just having money, is predictive of a lack of happiness and satisfaction. Children have an inborn need for autonomy, competence, and interpersonal relationships. Developing these traits is “central to psychological health.” Healthy children have “authentic” selves, rather than the “false self” that develops when a child adopts views from outside (like the “stellar student, outstanding athlete, perfect kid” model that Levine notes is common among children of privilege).

In other words, need (or its mirror image, the drive for wealth) alone doesn’t create the right motivation. If it did, then all children from lower-income families would be highly motivated and all wealthy heirs would be lazy and lacking in direction. However, many “inheritors” are exceptionally motivated. For example, J.P. Morgan was the son of the already successful Junius Spencer Morgan, who left J.P. the present-day equivalent of $250 million.  J.P. Morgan then grew this already large estate to over $40 billion2 in today’s dollars. Authentic motivation might be the result of both the desire for a particular outcome and the anticipated chances of success. If this is true, then simply withholding access to luxuries in order to stimulate motivation may not work.

Plotting a different course 

Rather than using an artificial means of deprivation to create motivation, perhaps the better approach is to make sure that children are developing autonomy, competence, and interpersonal relationships. The hard part is determining how to do that and the role that wealth plays in that process. There are many resources to help determine an appropriate path. Madeline Levine recommends using “authoritative” (rather than “authoritarian” or “permissive”) parenting that emphasizes autonomy and warmth, together with clear boundaries. Jon and Eileen Gallo have specific techniques to orient children toward wealth, including encouraging work ethic and philanthropy (and thereby exposing children to a broader section of the population) and having the parents examining their own views toward money (and perhaps tempering their own “extreme money tendencies”).3

Regardless of the approach used, however, one common point of confusion is that the wealth creator in a family needs to be clear about his or her own motivations. The wealth creator may have originally been motivated to work as a means of quenching the physiological and security needs but over time has come to rely on the work as a means of self-expression and self-esteem. In other words, wealth is tied to the wealth creator’s authentic motivators and is not a goal for its own sake. 

Creating and sharing family and individual goals 

Help children understand the different roles that wealth can play, and help them define what roles they would like work and wealth to play in their lives. Parents should consider sharing what motivates them to create wealth in addition to providing for the family. While building their wealth, chances are that along the way they discovered their passion, built relationships, developed friendships, and experienced fulfillment. Sharing how those experiences and relationships shaped them into the people they are today can be important because wealth alone does not define a person. Helping children understand the many benefits of a career is an important part of this discussion.

Creating and sharing family and individual goals, visions, and missions can go a long way and can pave the way for generations to come to explore their full potential. Understanding that wealth may play a different role and fulfill a different need for parents than it does for their child, we recommend families take the time to have those vital discussions together and start to understand one another.

Understanding your child’s needs and motivators

Children of wealth have unique needs and opportunities and need a tailored approach to their broader education. This might include the following:

  • Understanding their personal goals, hopes, and visions (their motivators)
  • Establishing their roles and responsibilities in the family, community, and society at large
  • Clarifying the impact they would like to make and the purpose of their wealth
  • Learning to work collaboratively with others, including family members and external advisors
  • Creating a financial decision-making process that is clear, well-articulated, and consistent
  • Mastering basic financial education (such as investments, taxes, estate planning, and credit)
  • Working with a trusted team of advisors

Each of these needs should be age-appropriate. Working on such an approach can be hard for busy parents. Parents may want to consider developing a team of advisors that have the skills, knowledge, and interest to work with the next generation and shepherd that process. Most of all, it means that parents may have to let their children fail from time to time in order to allow them to experience their own independence and sense of self. None of this will come easy, but this approach may be the surest way to avoid creating trust fund babies.

1Levine, The Price of Privilege, Ch. 1 (2006)
3For a more detailed discussion, see Gallo & Gallo, Silver Spoon Kids (2002), and Gallo & Gallo, The Financially Intelligent Parent (2005).