Courtesy of George Appling
This as-told-to essay is based on a conversation with George Appling. It has been edited for length and clarity.
I met my now-husband Brian when I was 28, but we didn't have kids until I was 39 and Brian was 34. That was very intentional. I wanted to have financial security before taking on the financial obligations of kids.
When I met Brian, I was working as a business consultant. I later became an executive, but I always lived well below my means. Because of that, I had $1 million in the bank by the time I was 36. That allowed me to take the leap into my passion project: running a medieval fair.
Brian and I decided to have children with a surrogate. Now, my kids are 16, 14, and 14. They know I have no plans to leave them a substantial inheritance. Here's what I'm doing instead, and how I talk with them about money and wealth.
Courtesy of George Appling
I don't want to leave my children money because I believe it's bad to make your children wealthy. If money comes too easily, it has a very good chance of ruining your ambition. I want my children to have the motivation to interact with the world.
I went to Harvard Business School and attended a reunion about a decade ago. There, I attended a lecture on generational wealth. The professor asked who had heard the saying, "It takes one generation to build it, one generation to run it, and one generation to ruin it," a common refrain about wealth. He then showed us the same saying in dozens of languages.
If cultures all over the globe share this warning about the dangers of generational wealth, I think it's worth heralding. I'm also a history buff, and believe history shows that leaving tremendous wealth is harmful.
The kids know that I'll pay for their college (up to about $100,000 each), a down payment on their first home, and their first car. All of these amounts need to be reasonable and practical, not flashy or to show off.
My daughter turned 16 in April, so Brian and I took her car shopping. We set a budget of $25,000. She bought a nine-year-old Nissan Pathfinder for $23,000. The car was top-of-the-line when it was made, so it has some nice bells and whistles, but it's also very practical.
I have established a trust that will also pay for college, a car, and a down payment for my descendants in future generations. The trust, which I based on the Rockefeller family trust, will also make business loans to my descendants.
To get a loan, they must present a business plan that's evaluated by a third party. Each descendent will only get one loan in their lifetime, unless they pay the loan back in full.
Each of my kids gets an allowance of $25 a week if they do basic chores, like cleaning up after dinner and emptying the trash. The allowance covers wants — like Starbucks, which they all love.
Brian and I pay for all needs. Of course, the lines between wants and needs aren't hard and fast. If the kids need $20 to go to the trampoline park with friends, I'll usually pay. If they need sunglasses, I'm happy to buy them a $25 pair, but if they want $200 brand-name sunglasses, they're on their own.
One of the most important habits a human can make is to spend less than you earn. There's a huge comfort in having money in the bank. Living below my means helped me build financial security that let me start a family, so I demonstrate it for my kids. For example, I drive a 2016 Ford F250. It's not flashy, but it's practical for hauling horses and hay, so it's a perfect fit for my life.
All my kids work during the summer, and saved about $1,000 each last year. When the summer ended they were spending quickly (again, on Starbucks). I warned them they were going to blow through their money. They didn't listen, and I let them make the mistake.
No amount of words from me could have the same emotional impact as realizing that the money they'd spent all summer earning had been blown on sugary drinks. In the future, I'll give the kids my opinion if I see them making mistakes, but ultimately they'll need to live with the consequences.
