Focus Less on the Money And More on the People

RichPoor“From shirtsleeves to shirtsleeves in 3 generations” refers to the process of building wealth, passing it down and exhausting it within 3 generations.  This concept is steeped in history and crosses cultures.  In fact, different cultures have created expressions that explain the same dynamic. “Rice paddy to rice paddy” and “clogs to clogs” are just two of them.

Of course wealth doesn’t always follow the same timeline in families.  Sometimes wealth is more fleeting and other times there is enough of it to reach beyond G3 (the third generation).  But the cause remains consistent: the mindset of individual members changes with each generation.  And within these shifts come behavioral changes.    Once the wealth has been created, the attention typically shifts from building wealth to protecting it.  Here is the cycle, in its most basic form:

  • G1 makes the money. They often create their wealth through hard work and determination.
  • G2 inherits and manages the money. They watched as their parents created the wealth, and they often work alongside their parents in the family business.  They absorb the work ethic and values by watching their parents and hearing the stories they tell about their struggles and sacrifices.
  • G3 spends the money. They are often detached from the hard work that generated the wealth.  They were raised with it.  And the values may be conveyed, but they are often not reinforced and modeled by working side by side with their parents or grandparents.

Those families who are able to extend the cycle beyond G3 may have greater financial assets which they can share with future generations.  Or they have recognized something far more powerful.  They key to extending the cycle is to focus on the family’s greatest assets: the individuals.

Families with multigenerational wealth identify, celebrate and sustain their values.  They have a common shared vision, which they revisit and reaffirm regularly; they mentor and train their youth, using family lore and shared experiences to reinforce their values.  And they provide opportunities for learning and education.  This approach helps sustain family unity and reinforces a sense of belonging.

In fact, this is the same methodology that many tribal cultures have used to sustain their customs and traditions over generations.  The tribe’s rules, norms, expectations, customs and lessons are passed down through storytelling and reinforced with shared experiences among the tribe.

We believe that identifying the tribal culture of your family, confirming and reaffirming it regularly and using traditions that reinforce the culture is the best way to extend the 3 generation cycle.

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