Why wealth is not sustained by grandchildrens......

If you only know how to spend, and never learned how to earn or manage, you won’t know how to keep it from running out.

Easy money spends easier. It’s why most lottery winners end up broke, or why people who win at the casino blow it on upgrading their room, expensive dinners, or trying to win more instead of paying off their car. It’s why actors who go from waiting tables to box office success buy ostentatious houses and a million dollars worth of cars, while small business owners who make the same or more money every year as they do refuse to.

Hard earned money is spent more responsibly than easy money. Easy come, easy go, as they say.

The first generation learned how to build wealth and keep it. Their kids didn’t have to learn how to build it; they only learned how to sustain and manage it, maybe even grow it, but that’s a different skill than making it in the first place.

By the third generation, whatever market trend that was responsible for the original wealth will have changed, but they won’t know how to navigate that the way Grandpa could have. They’ll never have experienced the “getting through the hard times” part like he did. They won’t know how to fix what isn’t working, and won’t know how your money management style has to adapt when you’re in that situation.

When market trends change, they’ll need both sets of skills — how to make it like Grandpa did, and how to manage it like Dad did — but they’ll have neither. Without both, eventually the money will run out.      -Ron  Rule