Have you ever wondered why there is so much angst and anxiety from some high-income earning households that seem to have it all? Based on my years of research, the three main reasons are: 1) never-ending comparison, 2) a lack of generational wealth, and 3) having children.
Generational wealth is next-level wealth. If you have generational wealth, you don't have to stress as much about the future of your children. Great colleges and well-paying companies can shut your kids out. But it doesn't really matter because your children are already set for life.
The problem lies in accumulating the vast sums of money needed to be considered truly rich. You also don’t want to just give your kids a lot of money either.
In Search For How Much Money Is Enough
Since 2009, I've been writing about the angst of the upwardly-mobile middle class in big cities such as New York and San Francisco. After all, I've been grinding away in these two expensive cities since 1999.
My first 13 years after college were about figuring out a way to save and invest enough money to escape the rat race. The next 11 years were about trying to maintain a comfortable lifestyle without being sucked back into work due to the desire for money, prestige, status, and fame.
During these time periods, I encountered many wealthy individuals who often seemed stressed out of their minds. Despite their obvious wealth, they didn't seem to be content, let alone happy. I found this puzzling.
Today, I've come to realize the key to happiness is to quit the pursuit of maximum money and stop the comparisons. And if you decide to have kids, know you will inevitably feel more stressed. Here are the top 10 financial moves I recommend to help reduce stress and anxiety.
The Desire For Generational Wealth
For five years after I left work in 2012, I felt relatively at peace about having given up the pursuit of making maximum money. We even moved to a less dense and cheaper part of San Francisco in 2014 to get away from the hyper-competition.
However, after my son was born in April 2017, my feelings about money changed again. Once you have children, unless you're a deadbeat parent, you will naturally want to make more money to provide more care for your family.
I couldn't escape this biological pull. As a result, I shifted more towards entrepreneurship and focussed less on retirement in 2018. Then, when the pandemic began in 2020, I decided I might as well write a book given I was stuck at home for who knew how long.
The desire for generational wealth comes about when you have children. Every parent wants the best for their children. But given the world is ultra-competitive now thanks to technology and globalization, there's a constant fear by parents their kids won't be able to replicate their financial and lifestyle success.
Therefore, one solution to lessen this angst is to provide them with enough money to never go hungry should they be shutout from one too many opportunities. With the emergence of AI, there is an existential crisis going on for us all!
Unfortunately, creating generational wealth is hard. It means accumulating enough assets, not active income, to provide for everlasting financial security. After all, once you retire or die, your active income will cease to exist.
The Easiest Way To Create Generational Wealth
Once you have affordable housing, life gets much easier. If you can bring your housing expense as a percentage of income down to 10% or less, financial freedom is an inevitability. Food, clothing, shelter are relatively inexpensive when compared to housing costs.
Therefore, the easiest way to start creating generational wealth is to buy a rental property for each child you have. Ideally, you buy one when they are born to give yourself more time to pay down the mortgage and let the asset appreciate while your child matures into adulthood.
Imagine buying a property when your baby is born.
For the next 18 years, you diligently pay down their mortgages and manage their properties for rental income.
By the time each child is officially an adult, the property should be able to spit out enough rental income to provide for their basic living expenses. The property can also provide shelter for your child. Finally, the property can be sold and reinvested for whatever else your child desires.
Letting the powers of inflation and compound growth work their magic while your costs largely stay fixed is wonderful. Real estate is the easiest way for the common person to build generational wealth.
If your child ends up attending a great university and landing a high-paying job, they might have their own living ideas. In this case, then excellent! The median income earned by Ivy League graduates is significantly higher 20 years after graduation. According to PayScale, the median pay is roughly 59% higher at $160,888.
You no longer need career insurance for your children. The property you earmarked for them can continue generating semi-passive rental income for your retirement.
With a paid off rental property portfolio, you've started your path to creating generational wealth. You're not crazy rich, as some might imagine the definition of generational wealth to be. But you've got housing security for your children, if needed, which provides enormous stress relief.
The Not Rich Enough Class = HENRYs
If you live in an expensive big city, you will regularly encounter households that make $300,000, $400,000, $500,000, and even $1,000,000+ a year. To most Americans, such household incomes are considered rich.
Curiously, many such income earners don't feel rich due to the high cost of living, constant competition, and the responsibility of raising children. These are the High Earners Not Yet Rich (HENRYs) with kids.
Most HENRYs are highly educated people who don't have a high net worth yet. Their jobs pay well, but they also require long hours and cause enormous stress. They might still be paying off student loans while trying to figure out how to save for their children's college education.
If HENRYs can just hold onto their uninspiring jobs for the next 20 years, they'll be rich! Alas, 20 years is a long time to grind. Why not do some YOLOing instead?
Be careful about wanting everything: a high-paying job with lots of status, kids, a loving partner, and lots of freedom. The desire to have it all will lead to misery.
Needing To Trade Time For Money Is Not Rich
We've discussed how households earning over $400,000 will face potential tax hikes under President Biden. If you're already working long hours at a job you don't love, you're not going to feel great about paying more taxes as you struggle to save and invest more for retirement.
However, the main reason why some $400,000+ households don't feel rich is because they are still trading their time for money. So long as you need to trade time for money, it's hard to feel rich because you will never be free.
There are many ways to feel rich. But one of the most fundamental ways to feel rich is to not have to work for money anymore. With enough passive income, you get to work on things because you want to, not because you need to.
The problem I constantly witness is the inability of people to forecast their misery. As a result, people spend too much today without thinking enough about tomorrow. By the time they are miserable at their jobs, they are trapped because they do not have enough money freedom fighters.
Too Much Competition And Comparison
The angst and anxiety of the not rich-enough class yet comes from too much comparison.
Now that my son is in kindergarten, I've had to inject myself back into normal working society. And inevitably, at every gathering, parents will discuss their vacations, businesses, work achievements, child achievements and more.
What else are parents going to talk about if we spend the majority of our week working? These topics are totally natural and not to be dismissed.
However, the more people discuss their days, the more you will question whether you're doing enough for your family. You may also question your own career and wealth trajectory. Therefore, the constant comparisons may make you feel less rich or even poor and maybe even a bad parent!
Here are some examples that may cause anxiety and stress:
- A parent who puts their kid in soccer, basketball, ski camp, and karate, at the same time. You might question whether you're providing enough opportunities for your kid. Even though the kid has less than a 1% chance of getting a sports scholarship, what if?
- A parent mentioning they got a raise and a promotion. If you're working in a similar industry, you will naturally compare their career trajectory to yours.
- A couple who mentions they plan to live overseas for two months this summer so their kid can experience full language immersion. As a result, you might want to find a job with more flexibility.
- A friend mentions they hired a private SAT/ACT tutor and college admissions consultant for their high-schooler. Now you've got FOMO and heightened anxiety that your kid may not get into a good university.
One of the reasons why I like to talk about pickleball and tennis during parent gatherings is because it's a way NOT to talk about career, business, and kids. These are fun sports many people can do that don't elicit envy.
After being away from regular society for so long, it is so clear to me how too much comparison creates unhappiness. If you live in a city that attracts the best college graduates who work in the most lucrative industries, you can't help feel like you always need to grind just to keep up.
Minimum Net Worth Needed To Have Generational Wealth
Now that we understand how comparison and kids can create more anxiety and angst, let's define generational wealth.
Based on a previous survey of roughly 10,000 Financial Samurai readers, achieving a $10 million net worth is the ideal amount to retire with as an individual or couple. Therefore, we could say $10 million is also the minimum net worth needed to have generational wealth.
If you have two children, you can leave $5 million to each and they'll be set for life. Even if you have five children, you could give each of them $2 million, enough to live well for decades.
But as the saying goes, “from rice paddies fields to rice paddies fields in three generations.” Those generations that didn't work hard to make their own wealth tend to squander it. It's hard to appreciate what we didn't earn.
If you're a high-income earner who wants to feel less anxious, increase your patience. Run some numbers through a retirement calculator to give yourself an idea of how much money you'll have if you stay the course.
If you live long enough, you will eventually get to this $10 million minimal generational wealth figure. Alas, most will not live to see that day.
A More Dynamic Generational Wealth Amount
Thanks to inflation and changes in government laws, let me introduce a more dynamic generational wealth amount to help reduce the anxiety you have for your kids.
Given the government is astute with a tremendous amount of data, the ideal generational wealth amount is the estate tax threshold. This amount is $13.61 million if you are an individual or $27.22 million if you are a couple in 2024. As the estate tax threshold increases, so does your target generational wealth amount figure and vice versa.
What's the point of accumulating more than the estate tax threshold each year if the government is simply going to tax you 40% on every dollar over? Instead, it's best to spend all your money above the estimated estate tax threshold to enjoy life more and take care of your children while living!
If you're feeling even more anxiety due to a higher generational wealth amount target, feel comfort knowing we can consider this the maximum, not the minimum threshold to shoot for.
Loading ...Ways To Feel Richer And Less Anxious About Your Kids
The implosion of Credit Suisse, my old employer, reminded me of the importance of legacy. As you get older, you will wistfully review all the things you did in your life. And if you spent decades working at a company that went under, you may feel terrible about your life choices.
Hence, to feel more rich and less anxious about your kids' futures, consider two things:
- Spend more time with your kids so you minimize regret if they turn bad
- Start a family-run business so you are more in control of its destiny
You don't need generational wealth to do these two things. You just need effort. And whenever you make an effort, you will gain satisfaction knowing that you tried.
I doubt you'll ever regret spending more time with your kids before they leave the house. You will also likely not regret starting something of your own and teaching your kids about how your business works.
The combination of owning a rental property free-and-clear for each child plus owning a family business will reduce your anxiety about your children's future. Generational wealth is not needed because you've plowed a clear path for them, if needed.
With a family business, your child will always have a job in case they can't get a good one on their own. You don't need to worry about them getting into a good college either. By the time they're 22, you will have taught them everything there is to know about the business.
Downward Mobility Is Still A Good Life
Every parent wants upward mobility for their children. However, the more parents make, the lower the chances their children will make an equal or greater amount. Downward mobility for children of rich parents is more likely!
A $400,000 household income is a top 2% income. A $500,000 household income is the start of a top 1% income. Therefore, by definition, 98% – 99% of new households and existing households won't make those amounts.
You might look at the downward mobility chart below by Brookings Institute and fret about your child's future. However, I challenge you to think differently.
Instead, think about downward mobility as the result of upward mobility by households earning higher incomes. Not only are households earning more, our standard of living is higher thanks to technology and medical breakthroughs.
A Positive Generational Wealth Transfer
Let's say your child earns $50,000 a year for the rest of their life while you average $100,000 a year for your career. A 50% drop is significant. However, so long as you gave them love and support, as well as named them in your inheritance, they should be good to go!
After all, a middle-class person today lives much better than a king from the year 1800. Perhaps we just need to be reminded how good we really have it.
Since we can't go back in time, we can simply travel to see how 99% of the population that doesn't make over $38,000 a year lives. Then, perhaps, we'll appreciate more of what we have and not need generational wealth to feel less stressed.
Finally, if you don't want to feel as much anxiety, don't have children. You won't experience the joys of parenthood, but you won't experience the sorrows and angst either. No amount of money will ever completely stop you from worrying about the well-being of your children.
Reader Questions
Why do you think many households that earn multiple-six figures are year are not happy? How much do you think is enough to have generational wealth? Is generational wealth necessary if you don't have kids?
Suggestions To Accumulate Generational Wealth
1) Sign up with Empower, the best free tool to help you build generational wealth. With Empower, you can track your investments, see your asset allocation, x-ray your portfolios for excessive fees, and more. As your wealth gets more complicated, you need to track it more carefully.
2) Invest in private growth companies to find the next Apple or Google. Private growth companies are staying private for longer, thereby making private investors more wealthy. Check out the Fundrise Innovation Fund, an open-ended venture capital fund investing in artificial intelligence, fintech, proptech, and more. I'm very bullish on AI over the next 20 years.
3) Pick up a copy of Buy This, Not That, my instant Wall Street Journal bestseller. The book helps you make more optimal investment decisions so you can live a better, more fulfilling life.
Join 60,000+ others and sign up for the free Financial Samurai newsletter and posts via e-mail. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.
This article contains references to products and services from one or more of our advertisers. Fundrise is a sponsor of Financial Samurai and Financial Samurai is an investor in Fundrise. We are also an Amazon Associate. When you sign up or purchase through links on our site, we may earn a commission at no additional cost to you. Thanks for your readership and support.
For generational wealth and buying property when you have children do you still recommend physical real estate or going with Fundrise and etc if you were starting over?
Thanks for sharing this blog. Insightful reflections on ‘Generational Wealth And The Angst Of The Not Rich Enough Class.’ The complexities of navigating financial legacies and societal expectations are thoughtfully explored. But I have a question, How can one bridge the gap towards prosperity while addressing the challenges of the ‘Not Rich Enough’ class? I hope you will share your thoughts soon.
With the lifetime giving exclusion as high as it has ever been, many UHNW families (often flush with cash from selling their companies during the PE boom over the last few years) are simply gifting away their money to irrevocable dynasty trusts, that way they never get estate taxed, ever. It’s wild. We won’t see the results of this massive wealth transfer outside of the estate tax regimen for another generation or two, but there are going to be hundreds, if not thousands, more dynastically wealthy families in the US. This is the result of the confluence of the high lifetime giving exclusion, the PE boom in middle market companies, and irrevocable trust planning.
Thanks for mentioning irrevocable dynasty trusts. I will look more into this and write a post about it!
The key ones currently are Spousal Lifetime Access Trusts
Generational wealth is a mindset, not money. You mentioned it, “from rice paddies fields to rice paddies fields in three generations.” If you are taught financial principles, you could inherit $50,000 and turn it into 1 million over a lifetime. All the while, you were teaching your children the power of a dollar, so they take that 1 million and turn it into 5-10 over their lifetime, and so on and so forth. If there is no understanding or respect for financial principles, it doesn’t matter how much money you pass down, it’ll be burned through as soon as they receive it.
You mentioned the extremely high rejection rates for elite colleges. Give the number of college applicants overall is down, I wonder if the real dynamic is that more students today are applying to more colleges than in decades past. It is so much easier today, with the common app and such, to apply. So today, many students are applying to a much higher number of colleges, vs. in the past when each college required a separate application package. Colleges love the common app, it allows them to publish a very high rejection rate when in reality many of the applicants were only marginally interested, i.e. they had 20+ safe schools.
My parents helped me graduate college with minimal debt and I’m extremely grateful for that. I’ll do the same for my son. Anything inheritance is a bonus for him. He needs to be independent and fight for himself. He can have our house if he can’t handle the real world.
My friend got a rental house for each of his kids. That’s a great idea. It can help pay for college.
To me generational wealth isn’t having enough to pass along so the generation does not need to work, but enough to give them a meaningful safety net and some freedom – not freedom from work. So 1mill per child is plenty to help them pay debts and change careers if unhappy in current career. Stuff like that.
Good post – I’m going to share it with a 30 something in our family who is on the HENRY track and dealing with some of the challenges you outline here. fwiw I think it may be easier to come from an actual middle class family and work your way to success vs. come from the top 5% world and deal with all the expectations and hedonic adaption – if you grow up with money the world you grew up in is hard to replicate.
This article on generational wealth is the best article I have ever read in the subject !
I have written you before, but to review context, I am 74, not one of your young bucks!
I went to dental school in your area and graduated in 1974. Presently I am a voluntary professor at the school, teaching a seminar on finance and tax, which means wealth creation.
I fully and totally endorse your financial acumen.
Instead of buying a rental property, you can also just max out their UTMA each year.
For me generational wealth it’s not about putting your kids on easy street. It is the recognition of how cruel and arbitrary life can sometimes be. If you don’t have money as a resource a loved one can go in the ditch and stay there for the rest of their life. As somebody who grew up poor I understand how many opportunities and resources are withheld if you do not have money. Personally myself or my family has experience the death of a spouse, a handicapped child that will need assistance for the rest of her life, expensive high stakes litigation being tortured by our legal system, and two grandkids with genetic issues that may lead to blindness. Bad luck can and does happen. I could care less about a Rolex or a Lambo in the driveway. What I do care about is being a firewall so that myself and my family have the economic resources to recover and eventually thrive. I’m actually a very optimistic person and feel incredibly blessed that I was fortunate enough to be born in this country and have the opportunities to prosper. I’ve seized those opportunities and have built a firewall. It’s just a recognition that bad things can happen unfairly and trying to be as prepared as possible to perform admirably.
Not counting the value of my business, I have 10M net worth with 50% real estate and 50% stocks. I also make a bit over 1M per year so I technically have more than I will ever need. Having 1 kid and just turning 50 recently, my main challenge is to make sure my child grows up to be normal and understands the value of money. So far, I am thinking of selling my real estate assets at discount to my child when he grows up at a steep discount so he has to work for it. And if I manage to live a longer life then set up a family trust where the trust will match whatever income he makes 1X or 2X up to 3% of the fund. That way, the incentive to stay productive will always be there and I can have some peace that all the work I have put it will not be wasted away. Ideally, in 30 or 40 years, the family fund will be large enough that dividends alone will pay for trust distributions and the fund can continue for future generations with the same formula.
I think it is psychological.
If things feel “tight”-ish at 400k. Bc almost no one feels like they have crap tons of money they don’t know what to do with.
Then You think “man, I wonder if my kids will be able to land a job(s) like I/we have”
you then think “oh shit! If they don’t, how will they live?!?” And you jump on the hamster wheel. Bc you can’t imagine the math working at a different level.
I have this where I wonder how we legit paid our bills ten years ago with a fraction of our current income. The higher the income the more I feel like I need to squirrel away. What if?!? Are we saving enough?!? How would we replace these jobs?!?
And I worry that we are setting our kids up with expectations and a life style that may be out of their reach. But, I bet They will start out broke and happy, just like we did.
This exactly my thoughts and my irrational fear and why I basically still work with more NW than I ever will spend. It’s fear that they won’t have I now have and in supposed to ensure in the family patriarch. Growing up poor and becoming what most considered rich is a blessing, but scarcity mindset and wanting to protect your kids can be a huge curse…
High income and rich are not one and the same to me. They often coincide, but not necessarily. To me rich is about accumulated wealth not income.
There’s plenty of rich people who have very little income because they inherited or cut back on working, etc. And there’s also a lot of very high income people who have almost no accumulated wealth because they either just started earning well, have massive debt (including student loans) or live beyond their means.
There are a lot of families making multiple six figures and while they are way more fortunate than average a lot of them are living a lifestyle not so dissimilar to most other working Americans. They take nicer vacations, sure, but probably don’t fly first class. They pay out of pocket for their kid’s college and don’t get any aid. They have a bigger house but likely still have a 30 year mortgage. They usually can’t got more than a few months without work before things look grim.
Of course it’s all relative. 150k/yr sounded rich to me when we brought home 30k/yr. To a median earner $500,000 probably sounds rich, but it’s also hard to see when you make 50k that someone making $500,000 pays $190,000 in taxes in a place like CA, and that’s not including any local taxes. They’re also funding retirement with mostly post tax dollars. I’m not saying they’re struggling- they’re not- but not struggling doesn’t equal rich to me.
I can really see both sides. We’re just under $400k, and thats with me being a SAHM and DH working 80% time. We are hella privileged. But simultaneously, it feels like there should be more disposable cash. That’s not private school money, or cash flowing college money, although it sounds like it should be.
I agree with others that healthcare is a MAJOR factor. If DH couldn’t work, boom, no more income that high. He has disability insurance, but for way less than his salary. We’re one cancer diagnosis from potentially losing this lifestyle if DH couldn’t work. No universal healthcare means $$$$ COBRA. All kinds of co pays and deductibles. Covering things insurance doesn’t cover. We have ample savings that could EASILY be wiped out in a couple of years with the wrong diagnosis.
Even now, a ton of money is sucked up on healthcare. Over a thousand dollars a month on weekly therapy for both kids, thousands of dollars out of pocket when 1 kid needed in patient mental health care, thousands out of pocket when both kids needed to see the pulmonologist and have ongoing treatment to get their asthma under control, a couple hundred on Rx copays a month, etc. And we have good insurance. I know people making less than us have similar expenses, and I really feel for them. I guess my kids wouldn’t get acupuncture or art therapy if we had half the income. They’d have to take whatever services are offered on a sliding scale or do without. And that’s really scary because even with having plenty of resources, I have struggled and been on endless waitlists to get my kids help. Medical care shouldn’t be a privilege, but that’s really the biggest place where our disposable income goes.
My kids are in public school, but I have a lawyer on retainer to assist with one child’s IEP. Cheaper than private school, but a big expense. It sucks that kids whose parents can’t afford it just get screwed by the system.
I guess our income doesn’t feel excessively high because so much of it seems to go towards things that really don’t feel like luxuries. Those things just wouldn’t be attainable sadly on a regular income.
I also think loss of benefits/ job security over time has worsened this.
My parents were both teachers in NY, so they made more than an US average salary, probably over 200k when they both retired as administrators.
They both qualified for large pensions and retiree healthcare to supplement Medicare. Most younger workers are getting none of that.
DH and I make around 300k. We save 20% of our income, 60k a year for retirement. This was disposable income for my parents.
Also higher earners tend to have had more education. This at times requires moving for school, traning and niche jobs.
My parents were paying $16,000 a year for daycare, or $20 an hour for a date night sitter. My grandparents watched us when we were little and then we would stay overnight occasionally as we got older. Our families now live 2 states away, that’s not something we have.
Do I think people over exaggerate being “poor” at higher incomes. Yes. Lots of times it’s just bad choices.
But the changes in retirement/ pensions, healthcare (people didn’t used to have 10k a year deductibles), family support to child care, etc, has reduced the percentage of truest disposable income. The ridiculous increase in housing and college costs are a huge part of this too.
We’re above $400,000 and have been for the past several years. Husband drives a Ford sedan and I drive a Volkswagen SUV. Is it because we can’t technically afford more? No. It’s due to the fact that as this income level we feel a greater responsibility to be smart with our money. That means saving extensively for retirement, having a large emergency fund for a rainy day, shoveling money into 529’s x4, and so on.
Does it feel like we should feel “richer” than we do? Yes. Especially given the immense wealth we are exposed to through DH’s line of work, the country club a mile over, peers in the area, etc. Taxes are huge at this income level – we pay a significant amount and it feels like there’s a new tax that pops up every year (see no longer being able to itemize state taxes due to the most recent measure).
That said, we fully recognize we have *choices* at this level of income that we did not have before. We are choosing to save and not buy expensive cars, the biggest house, or new gadgets. The fact that we can choose to do those things is at its very essence rich.
Part of it I think is a disconnect from the lines we heard growing up – $100k meant you were set! A $1m house meant you were swimming in money ala Scrooge McDuck! And then you graduate college, get a real job, get hit with the expenses of living in a big city, and reality sets in. $400k+ certainly doesn’t feel like we imagined, but that’s, again, because we choose for it not to.
We are very aware that we are high income and do not complain. I do have to say that it doesn’t go as far as someone might think because you are sharing a higher and higher percentage of the income with taxing agencies.
Not everyone falls into the trap of private school, competitive colleges, home in best school district, high end cars, etc. If someone is uber concerned about that to the point it is stressing them out, that is on them. hey have more than enough for a comfortable life, but might find more happiness living with less lofty goals.
We lived very happily on our income in a lower income area, sending our kids to Title 1 schools, driving “Camry” level cars, and not pushing highly competitive colleges. Our kids are all adults now and happily living their average lives.
We make almost $500,000 a year and don’t feel rich as I perceive rich should feel.
I feel very comfortable and I have a lot of things – we almost have our house paid off, we have a paid off rental, paid off cars, a kid we put through college and another on the cusp with savings for him too.
We live in a nice area and have a nice house. We eat out and eat well. We can go on a couple of vacations a year. We pay $400 vet bills and aren’t worried that we’ll have to dip into savings. We can absorb inflationary costs without giving up something else.
Rich to me feels like you never worry about money, that you can afford things without thinking/saving/working toward it, that you don’t have to be selective about where your kid goes to college, that you can drive whatever you want and live where ever you want.
At $450,000+, we still think about every dollar. We have tons of insurance to make sure we aren’t devastated by a major incident, we save and save to put our kid through college, our cars range from 2013 to 2017. We don’t ever buy new cars.
The family business is a good idea until you end up forcing your kids to work in it to keep it going (which is the situation I’m in). Lack of freedom is one of the most stifling feelings that money can’t fix.
In terms of your kids’ education, maybe you need to consider countries other than the US. Education in many parts of Europe is almost-free, even for foreigners. I studied my Masters at ETH Zurich for a tuition fee of 1500USD/year and moved there with zero knowledge of any German. Cost of living then was 20,000USD/year and inflation has been under control so I don’t think it will cost a lot more today. For extra spending money, I tutored international school kids for 100USD/hour!
Sending your kids to German or French language classes will increase their options of unis that don’t cost a million bucks – a good investment i think!
Hi CH, are you the parent with the family business or the kid forced to work at the family business. Sorry, I can’t tell. If you are the kid forced to work, can you just tell your parents no and do something else?
They are learning Mandarin, so hopefully that will help.
Really? Everyone depends on their parents to set them up? My parents told me early on that they weren’t paying for my college so I made sure I had a way to pay for it by getting good grades and then getting an Air Force scholarship. My four kids all went to community college, and then to top University of California schools via the honors transfer program. They all graduated, paid off their college debt, and have good jobs now. There is a lot of satisfaction and freedom in making your own way in life. I’m glad my parents gave me unconditional love and spent a lot of time with me but that we were never financially intertwined. Also, people who think they have family money coming their way often make a lot of bad decisions.
Not at all. But as a parent, I just plan for the worst and hope for the best. This way, there is an insurance policy in case the worst does happen. Life really is about managing expectations.
Congrats on your success and your kids’ successes! The way I see it, if they can go to community college and public school route like your kids, then they or I will have a surprise $+ million financial windfall per child to do whatever we want.
I think it’s a good challenge to save and invest for the future.
I’m also impressed you didn’t have much, if any anxiety or worry about your kids’ futures. What would you attribute that to and any tips for parents to feel the same way? Thanks!
Thanks, Sam. You’ve thought a lot recently about the future cost of college for your kids. Do you have a way that you estimate the costs of kids in their pre college years? Or if you’re open to sharing, how much more would you estimate you spend v. if you did not have kids?
I ask as someone in the market for kids, so to speak.
I think stress and competition have such a huge impact on a decrease in happiness even with a lot of money. More money, more responsibilities, more stuff, more problems if you don’t actively manage stress and work life balance. Planning and prioritizing what really matters to yourself and your family is so important to happiness. And also really appreciating what you have.
Editing my own comment.
You did say you were planning on setting up a substantial 529 fund for your kids’ education. So that indicates you are advocating the point of my previous comment.
Again, I think this effort to pass on a debt free education is the best way to pass “generational wealth” on for most of us who are not wildly rich.
Yes, I agree. However, there is this other anxiety that no matter how good of a student you are, you won’t get into a good enough school to land a well-paying job.
Paying for school is one thing. But actually being able to show a solid return on all that education is another.
May I ask whether your children are gainfully employed after receiving their degrees? How did you pay for their colleges and how much did it cost?
Perhaps the anxiety from parents dies down once their kids graduate college, no matter what type of job they do since they are 4+ years into adulthood now?
Thanks for your insights!
So I’m not Steve, but I do have a PhD in biomedical engineering. I’ve now been working 17 years post PhD, 5 before that. My parents had saved $50k for my undergrad, which was at an out of my Virginia state private school, and with scholarships, there was $18k left over. I majored an engineering, and minored in communication, the latter being a major lift in my career. Graduate school had a stipend, no tuition. Throughout my working career, 2 jobs before grad school, 3rd job since graduate school), i I feel very positive about the accomplishments I had in each job, the work life balance (except current job right now, but it’s all things that I’ll be proud of later on), and had plenty of money..
in fact, I’d have a hard time NOT working, because I’ve invested so much into skills that help at work. But I’d love more time off.
For my three kids, I’m targeting 200k in the 529 for when they reach college (7 – 14 years from now)
It makes sense to feel like you need to work or want to work longer the more education you get. You want to maximize the return on that education.
$200,000 per kid for 529 plan right?
I did not see in your article what I consider the primary (and most attainable) way of passing on generational wealth.
The ability to provide your kids with a good education without leaving them with student debts. Both of our kids have recently graduated – one with a law school degree and one with a bio-medical engineering degree. Both now have a solid foundation to succeed without the burden of college debt. I guess an alternative to this would be ensuring the kids have a strong background in a trade or family business (I know several people who have very lucrative small businesses as plumbers or electricians).
I hope we have also provided them with the mindset to be successful and not squander their opportunities. But as you say, each generation must work, simply spending the parents’ money is not a model for success.
Both my wife and I received the same debt free educational opportunity from our own parents- neither of whom anyone would have considered “rich.” And that gift has definitely been the springboard to our own success.
Best wishes to all.