Wealth Lost in 3 Generations #illumedati #wealth 8

Hey everyone, it’s Finance Fridays again. I’m going to discuss the proverb of “Wealth Lost in 3 Generations” and how I’m going to battle against it.

Wealth Lost in 3 Generations
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Wealth Lost in 3 Generations

Wealth Lost in 3 Generations?

Yea. It’s actually quite interesting. This proverb actually exists in multiple different cultures:

Shirtsleeves to shirtsleeves in three generations.”

In Japan, the expression goes, “Rice paddies to rice paddies in three generations.

The Scottish say “The father buys, the son builds, the grandchild sells, and his son begs.

In China, “Wealth never survives three generations.

A Sheikh in Dubai said ‘My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Lamborghini, his son will drive a Lamborghini, but his son will ride a camel’.

In this above example, it’s actually lost in 5 generations. However, the level of wealth implied is different because of Lamborghinis. As such, it probably takes a little longer to squander that level of wealth.

I’ve always found it to be an interesting saying. However, I’m more interested in my family being the exception and not the rule.

Can you explain the proverb in your own words?


First generation

My parents are the first generation. They came from Vietnam with very little. I could retell the stories my mother and father have told me. Someday I hope I can convince my dad to sit down and tell their story for a book. Perhaps Kylie could write it after interviewing my dad for awhile. It would be an interesting project for her. Although she probably isn’t quite old enough to understand all of it yet and would need help. Anyways, that’s a post for another day.

Continuing on, my parents worked very hard for what they had. I do remember them struggling a lot to make ends meet when I was a kid. However, by the time I was in middle school, all of their hard work had paid off and we were in a mostly middle class lifestyle. We weren’t ever comfortable, but we weren’t uncomfortable anymore.

Second generation

Now then, my sister and I are the second generation. My little brother is also second generation, but since he’s 10 years younger than me, he’s kind of like 2.5th generation. I’ll talk about him more later.

Growing up, my sister and I were very aware of the struggles my mother and father went through financially. Looking back on it now, it’s kind of amazing how much kids can pick up on when they’re still so young. Anyways, growing up like that I remember my sister and I never wanting to have to worry about money. In a sense, ever since we were kids we were striving to meet the level of being comfortable, that I’ve talked about before.

As such, we were very motivated to succeed, do well, and establish ourselves into our careers. Interestingly enough, we took very different routes toward where we wanted to go.

Sensei’s sister

My sister has a significant aversion to debt. I think the idea of going to medical school or professional school and taking on a ton of debt terrified her. As such, it took her a little longer to find where she wanted to be. Lucky for her, she has a great guy for a husband who has supported her and now is very happy as a school teacher.


As for me, I went the opposite route and attempted to reach the highest level of education possible. As you all know, that meant going to medical school and getting significant student loan debt that I am still trying to pay off. However, the education and training I received did enable me to secure a great job that pays reasonably well, despite my high cost of living.

2.5th generation

My little brother is ten years younger than me. However, by the time he could remember anything, when I was 13 and he was 3, our family was already pretty cemented as middle class. He never really saw our family struggle like when my sister and I grew up.

I think he found it difficult to relate to my sister and I because of the age difference. In this way, he is kind of like generation 2.5 — he was missing one of the external motivators that my sister and I had. The “hunger” or “want for stability” or something like that. As such, I think he kind of felt lost a bit when he went to college — trying to find his motivation.

I think he did eventual find what could motivate him — it was to be back home in California — and stay there. After going to Chicago for pharmacy school, his singular focus was to return home to California to be with his friends and family.

Third generation

My children won’t grow up in the same way that I did. While I have significant liabilities, which would include our student loans and our mortgage — my children won’t feel or understand any of that. In fact, I think it’s my job that they don’t understand any of that until they’re old enough. Unfortunately, this creates the problem of motivation, lack of responsibility, and free-spending which leads to Wealth Lost in 3 Generations.

How do you motivate someone who already has everything they want?

I think the answer is pretty simple in theory, but difficult in practice.

You don’t give them everything they want.

However, this is easier said than done. It’s hard not to give them everything they want — when you have the means to do so. This is especially difficult for the second generation because most likely they didn’t grow up with very much. You may recall those times as a child where you only had a few toys to play with. You may remember wanting all those toys your other friends had that you didn’t. That little boy or girl inside you yearns to give your child everything they want — that you didn’t have.

For that reason, we need to say no. Our children need to understand that everything they have is not from their own work, but from the hard work of their parents. The decision to buy a toy or not comes down to mom and dad, and is not their decision. That said, I want to instill a sense of pride in what they bring to the family and then be rewarded for it.

How do you do that?

I don’t know for sure.

Here’s the thing, you can’t “create” the same external motivators artificially. Like I can’t recreate the struggles my family had when I was kid for my kids. It just simply isn’t possible. However, I think we can create a similar type of motivation through other means.

I think it starts with giving them tasks to do that they realize is their own unique contribution. Hopefully it will be something that they can take pride in doing. It can be as simple as setting the table (for Kylie) or putting away toys (Lucas). It’s also why I try to reward my kids using my token economy for doing things that are their responsibility.

I must stress that this is not just “chores” to be done, but it’s their own unique job that they have a responsibility to do. It’s their contribution to the family and should be rewarded as such. Then after building up enough of their tokens, they can use the money they earned to buy what they want. I also realize that actually taking them to the store to let them pick out what they want is very valuable. It is better than having them “buy” things from us, which we had already bought for them and were waiting for them to earn. The whole “process of buying” and using “their money” that “they earned” helps to instill a sense of pride I think. My daughter can point toward the toys she bought herself and say “I bought those” — and she’s right.

My hope is that this will also help them value saving as well as learning to budget for things. In this way they can slowly understand their own Value Cost Ratio.

Currently, Kylie is slowly beginning to understand the value in buying a few smaller toys versus using all her tokens on one large toy. She is also learning not to just buy the first things she sees that she wants. Lucas, however, is too young to understand, but at least is beginning to understand how to save toward the item he wants.

What else?

My kids have difficulty understanding how much money we spend on food. They always want to order all these things and then never eat all of it. As such, I’m going to start explaining to them the prices of all the things they order in terms of tokens.

I’m not so cruel as to make them use their own tokens to eat. However, I want them to understand that ordering a certain item on the menu costs a certain amount of tokens. If they don’t eat it, those tokens are wasted —- tokens that daddy and mommy could have potentially used to buy them a toy. My hope is that they will begin to understand that things they have don’t just magically come from nowhere, but that daddy and mommy are paying for them.

As they get older, they will become more in tune with what all this actually means. However, I think understanding their contribution to the family is important. Then we can move to the more difficult concepts in finance, understanding investment, growing wealth, and planing for retirement (hopefully early retirement).

Do you think this will work?

I don’t think we give kids enough credit for what they understand or not. I think they understand a lot more than they put on. However, even if they understand, they don’t really care. Making them care is the hard part.

One of my most important jobs right now is to try to teach my kids The Value of a Dollar and motivate them to be Fulfilled. If I can’t do this, then any “wealth” that I have will be lost in their generation or the next.


Wealth Lost in 3 Generations

How do we prevent it?

I don’t know, but here is my plan so far.

What do you guys think?

Finance Fridays Sensei


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8 thoughts on “Wealth Lost in 3 Generations #illumedati #wealth

  • Refugee from Academia

    Why are you letting your kids order more food than they can eat? “You can order two things/ one thing.” If they leave the table hungry, that’s on them.

    • Sensei Post author

      Hi Refugee,

      The final decision still lies with my wife and I. However, I think it’s good to give them choices.

      In the event they were to order more than they can eat — we won’t just waste that food. It will come home and they will eat it as leftovers later. Perhaps this might be a somewhat expensive lesson, but I think sometimes you need to have your children make the wrong decision (within reason) to understand the consequences.

      If I make all their choices for them all the time, when will they learn to think for themselves?

      Thanks for your comment!

  • M

    My kids are teenagers, and I think its important that they work for their own spending money.

    Truthfully, for me, its a chore to drive them to and from work, and probably “costs” me more
    than they really earn. However, they value they get with a paycheck, and how they learn that
    their time = money, is incredibly important.

    I’m surprised how many other parents would rather only have their teens spend time on
    “enrichment” activities and then are constantly handing over money every time they kids
    head out with their friends.

    • Sensei Post author

      Hi M,

      “It’s not about the money, it’s about sending a message. ”


      While this quote is used somewhat maliciously by the Joker in The Dark Knight, it rings true here, for a better more benevolent reason. I think doing any kind of work as soon as you are able to is very important. When I turned 16 and could get my work permit, I almost immediately began working retail at the mall. The mall was a good half an hour away (without traffic) and my job paid $4.25/hr. Since I had to use my mom’s car to get to and from work, the likelihood is that my parents were losing a significant amount of money from me working.

      However, like the quote above, it’s not about the money, it’s about sending a message. The message is that the money has to come from somewhere. Even if you have to spend it yourself to demonstrate it to your children, I think we can take it as an investment — not just money lost.

      As a teenager, I learned the value of a dollar very quickly when I made $4.25/hr to get yelled daily by mean customers — especially during holiday hours. Then I had to struggle whether I should buy a soda for $0.75 right next to the store, or walk to the other side of the mall to buy a drink for $0.50. The extra $0.25 was worth the walk to me. That job was one of the best learning experiences for me which I only really appreciated much later on..

      Also, I think there is a significant difference in the jobs you do as a teenager versus the part time job you may have in college. The job I had in college paid significantly more for way easier work. As such, I think the first job(s) my children should have be before college.

      “When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years.” — Mark Twain

      As for parents dropping money on enrichment and handing over money whenever the kids go out, this comes from “past you”. The past you that wanted to have money to spend when going out. The you who who didn’t want to worry about not having enough money to do what your friends were doing. However, another good lesson is having them spend their own money. When it’s your money to spend, you suddenly become acutely more aware of how much everything costs and where it’s going… right?

      Thanks for your comment!

  • John B. Robertson

    Regularly volunteering and giving money to those less fortunate is quite valuable for one’s emotional development and right relationship with money.

    • Sensei Post author

      Hi John,

      I agree.

      I’ve been looking into opportunities for them to volunteer and would like to make it a regular occurrence.I also try to make sure they donate their gently used toys when they’ve outgrown them.

      Thanks for your comment!

  • Mr. Hobo Millionaire

    Nice post, Sensei. I agree with you that it’s hard (maybe impossible) to replicate the hunger and drive you had as a child. I, for sure, don’t have any specific answers. My 28 year old son, while not raised rich, was definitely not raised as “hungry” as I was. And to be fair, I wasn’t raised as “hungry” as my father and his multiple brothers and sisters were. I am first generation rich, and all I can and have done with my son is tell him “where he comes from” and what my father, his grandfather, came from, so he has an appreciation of where we are as a family. I’ve also frequently taken him back home to the country city I was raised in (North Louisiana) so he can be exposed to my country (hick) aunts, uncles, and cousins. I moved from there (to Texas) just as soon as I could at age 18, and I never moved back. I had a drive in me from a young age to “escape” and try to make something of my life. While my son will inherit maybe a third of my wealth, the rest will be controlled in trusts so it can’t be lost. I am doing that more to honor my father’s life and work than mine. I am first generation rich because my father made so many sacrifices working hard to just give me a chance at a better life.

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