One of the things laid bare by the recession is that all of us need some serious financial education. If people had a more clear understanding of how interest rates and markets work, it’s possible we might not have fallen for the idea that buying a $450,000 house on $50,000 worth of income is superterrific and what everyone else is doing.
And interestingly, that’s not just true for regular people, but also for the very, very rich. This Reuters story discusses how the very wealthy — those with more than $30 million in investable assets — are asking more pointed questions of their financial advisers and looking for help educating their children about the hard facts of money management.
One expert quoted in the story talked about a woman who walked up to him at a conference on wealth education. Her parents had told her nothing about her family’s wealth, not wanting her to feel entitled. But then a massive inheritance at age 40 caused trouble with relationships and hurt her self esteem (I know, I also hear the world’s smallest violin playing “My Heart Bleeds For You”). She’s told her own kids everything and now they aren’t remotely interested in pursuing an education because they know they’ll be rich no matter what. Yes, that’s likely a parenting fail that would have happened if she had $2 or $20 million. But still, having that kind of money raises some very interesting questions. How do you raise a kid who is able to be a good steward of your family’s legacy and use the huge “get out of jail free” card that family wealth gives them to pursue a passion that makes the world better, instead of a passion for Cristal and Jimy Choos?