Getting Rich Is Actually the Easy Part
There seem to be way more wealthy people around these days, and a lot more striving to join their ranks every day.
So many of those who have “arrived” in the land of wealth are satisfied that they have now made it, and assume that all their problems will disappear.
When you have a family, though, and you begin to ponder the transition of that wealth to the younger generation of your family, things get tricky.
Can it really be that getting rich was the easy part?
Concentrating on Financial Wealth – Like Everyone Else
When a family becomes wealthy, via a family business, working for a company that goes public, or via stardom in entertainment or sports, there’s often a nice period of adaptation where the newfound abundance of financial wealth solves so many problems, so it’s all viewed as a plus.
At some point, which could be months, years, or decades later, everyone realizes that there’s probably enough money to do whatever we want, and this is when the various views, needs, and wants of the different family members start to rise to the surface.
How will the family make the decisions around the deployment of the financial wealth?
How will the family members communicate about the wealth and how it will be saved, grown, spent, invested, given away, and transitioned for future generations?
How will the family members solve problems together, when they arise, without resorting to legal remedies?
The Other, Non-Financial, Capital of Families
This is where it’s good to look at the other kinds of capital that the family also has, and can try to develop, in order to help figure out answers to the tough questions we just raised around the financial wealth.
Let’s take a look at the family’s Intellectual, Human, and Social capital, and see how the financial capital can be used in ways to support those, and determine if looking at things from this angle might provide some useful viewpoints.
Intellectual Capital – Between Your Ears
The first other type of capital we often think of is intellectual, as in the things that you know and have learned.
My grandfather used to say that anything that you can put between your two ears, nobody can ever take away from you. Having had almost every possession of his taken away, he knew what he was talking about.
Most people think of formal education as their intellectual capital, and it is often a big part of it and the simplest example, but there can be more to it, of course.
Human Capital – More About Your Soul
When we switch to looking at human capital, that’s a lot more about your soul. Your humanity includes what you care about, what you pay attention to, and how you relate to other people.
It also includes health and mental well-being, how you communicate and solve problems with others, and your general ability to get along with others in all situations.
The way you communicate with others and demonstrate respect for others also falls in this category.
Social Capital – Where the Family’s Heart Is
My favourite form of non-financial capital is social capital, and when looking at families, it can really come to the forefront.
The problem is, making it one of the family’s strongest forms of capital isn’t usually simple and easy, and it takes a lot of work.
When talking about how wealthy families stay wealthy, all three of these are important, and social capital is where they all come together and become part of what the outside world will often see.
They all combine into a family’s legacy, and you will likely note that those families who have stayed wealthy through a few generations, almost always have a legacy component that we can see, respect, and relate to.
It’s About Much More Than Money
I’ve written about some of this already, notably in Is Your Continuity PAL in Danger, as well as in When Your Greatest Desire Is Also Your Greatest Fear.
Research shows that when families lose their financial fortunes, the reasons have less to do with events relating to the financial elements of their wealth.
Families usually fail to stay wealthy because the family falls apart, because they haven’t been properly prepared to inherit their wealth, and they haven’t learned to work together to maintain it.
So the key to maintaining a family’s financial capital lies in developing the other kinds of capital, not being ultra-focused on the money.
There’s help for that, you know…