Do you know that much of the wealth made by the first generation of rich people hardly goes into the third generation in families? If you doubt this, see this study by an expert that, out of 483 billionaires examined, 321, representing about 66.5 percent were first generation. Only 20 percent were second generation, and less than 10 percent were third generation.

About 2.7 percent or 13 families made it to the fourth generation, 1.4 percent or seven made it to the fifth generation and less than one percent or two made it to the sixth generation.  

In another research carried out by the Williams Group wealth consultancy, 70 percent of wealthy families lose their wealth by the second generation, and a stunning 90 percent by the third.

Why the high wealth attrition rate? Why do most of the families, as high as 90 percent, lose their wealth by the 3rd generation? A number of factors are responsible for this, and they include: ill-preparation and reluctance of the younger generation to accept responsibility for wealth stewardship; drugs; not understudying the wealthy parents, financial wastefulness through parties, gambles; over-pampering of children by rich parents, and so on.

How then can we build wealth that will not only last but will also keep growing for several generations?  These are the sure-fire secrets.

(1) Build a family culture of financial discipline early in life: Often, the first generation - parents - learn financial discipline through difficulties, hardship and deprivations. They’re focused, work quite hard, are prudent with money, and begin to build wealth through savings and investment.

They must teach this to the children. Parents must make their children understand the meaning of money, the sacrifices they must make, and the conditions that must be met in building wealth.

(2) Lead your family in the fear of God: We had earlier seen that one of the major factors that make future generations lose the wealth their predecessors had built up is indulgence in excesses, drugs, and wastefulness. When they fear God, they’ll receive the wisdom to manage and grow resources. With God, wisdom and wealth go together.

God told Solomon, “wisdom and knowledge are granted to you; and I will give you riches and wealth and honor, such as none of the kings have had who were before you, nor shall any after you have the like" (2 Chronicles 1:12).

God’s programme and agenda for families is for the children or descendants to be improvements financially and otherwise upon their parents. Abraham was great (Genesis 18:18), Isaac was very great or greater (Genesis 26:12-14), and Jacob or Israel and his children waxed exceeding mighty or were greatest (Exodus 1:7). We must grow more wealth than our parents and must also get our children to understand that they must grow more wealth than us.

(3) Teach your children financial education: Wealth education is the ability to convert cash or labour into assets that provide cash flow. Its components include business skillsmoney skills and investment skills.

Financial education or financial literacy will take us and the younger generations from a place of working for money to a place we engage our money to work for us. Without financial education, the younger generations can’t grow their inheritance into greater wealth.

(4) Children should take their financially successful parents as mentors also: Apart from being parents, we should also serve as mentors to our children and younger generations. Mentoring is serving as an adviser, guide, teacher, and source of inspiration to a less-experienced and perhaps younger person or persons.

As parents, our children may see us as love givers and care providers for their survival; as mentors they’ll see us as experienced advisers, trainers, and suppliers of support for their career, business, and financial success.

(5) Build up the entrepreneurship spirit in the family: Wealthy parents lay a solid foundation of building wealth through clear goals, professional or career focus, and determined pursuits in entrepreneurship.

Let’s get the family story alive by letting the younger generations understand the discipline, work, energy, and commitment that went into the wealth they came to see, and how they should build upon that foundation. Let’s get them to read constantly, acquire new skill sets that the 21st century business environment demands, as well as bring them on board our businesses to gain practical experience in sustaining and multiplying wealth.

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