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The superrich are selfmade. So if you’re broke, it’s not your parents’ fault. It’s your own.
Sorry to break it to you, but only one fifth of millionaires were handed wealth by their parents.
As for billionaires, a study by the American Economic Association looked into the Forbes 400 list to discover that only 32% belonged to very rich families.
That means if you’re under 30 and have a billion in the bank, then you definitely got it from mum and dad.
But either way it doesn’t matter, because by the time your grandkids get hold of the daily fortune, your gene pool will have gone from rags to riches and back again.
Or at least that’s the proverb.
“Clogs to clogs is three generations”.
Maybe you’ve heard a version with ‘shortsleeves’ or something similar, but if not, don’t worry. You probably know an example in your own life of a time when a family became wealthy only to lose it all by the third generation.
The idea is the first generation works hard to gain wealth, the second generation works hard to maintain wealth, and the third generation works hard to spend wealth.
But some versions have it that the reason the grandkids end up with nothing is because it was their parents the original heirs to the fortune who didn’t share the same values as their entrepreneurial forebears..
Surely the proverb isn’t true though?
Surely we just want it to be true because it feeds into our natural sense of jealousy and inequality?
After all, business dynasties like Trump and Rockefeller aren’t going away anytime soon. If anything, they’re getting richer.
And the nepobabies of Hollywood prove you don’t need looks or talent to become a successful model or actor, just a dad who was once in a rock band.
Before, a business could only survive on its name if it was a law firm, accountancy office, or funeral directors.
Nowadays, the family is kept off the branding and locked in the boardroom.
Rupert Murdoch’s vast media empire recently lined up his son to take over, and the makers of M&M and Snickers are making sure the levers of power are in the hands of the Mars family.
Look at Goldman Sachs and the Lehman Brothers; both started as family run before growing into towering behemoths. They certainly survived past the third generation.
Granted, Lehman Brothers went down in the 2008 financial collapse, but their ‘clogs to clogs’ journey took 174 years!
So is there a strategy to sustain family wealth or is this just survivorship bias?
How do some families ride out economic forces and shifts in society to ensure that future generations?
Who were the families that first jumped the gap between the have and have nots?
They were the merchants of Florence and they made Silicon Valley look like a lemonade stand.