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The Middle Class Parental Mindset
"Have kids so they can take care of you," they say.
My daughter moved to Seattle, and I didn't want her to live on campus," the father said, "so we bought her a small condo about 10 minutes away from school.
This was the statement made by a gentleman I've known for over 15 years. (For the sake of this article, we'll call him Scuba Steve.) Scuba Steve ran a financial services company with his partners and in 2006, Wells Fargo made a big offer to buy his company and all of their assets. He and his wife are no longer stressed about their future finances, nor the finances of their children.
Buying a condo for your daughter is normal behavior for those that can afford such luxuries. But, it is this type of behavior that demonstrates a class difference between those who are middle class versus upper class. It is this type of mindset that we can learn from the upper class because the fact of the matter is middle class parents do not think this way about their children. Let me explain.
Either from my personal experience, or my own friends or parents who are now empty nesters, the prevailing sentiment of having kids is so that one day the kids will take care of the parents. Certainly, from my own personal experience and in the Filipino culture, it is customary -- borderline necessity -- for kids to care for their parents, not just physically but financially.
In the Asian culture, the parental rules for children are: 1) finish school, 2) get a job, and 3) have a family. The Brookings Institution, a public policy think thank, conducted research on how children raised in poor households can climb the income ladder to middle class and beyond. They state that parents should encourage their children to: 1) finish high school, 2) get a full-time job, 3) wait until age 21 to get married and have children. In Czech Republic, traditional wisdom tells them to: 1) build a house, 2) plant a tree, 3) father a son (a bit patriarchal, but the wisdom here is to parent a child.)
Parents often embody the demeanor that since they brought the child into this world and cared for the child and protected and fed the child, that it is the duty of the child to return the favor by financially caring for their elderly parent. To most of us, this sounds completely normal and traditional. If the children are better off than the parents, then it is the duty and obligation of the child to financially care for the elderly parent.
We’ve always been doing it this way…
I challenge this perspective as this falls within the cliche of “we’ve always been doing it this way” and while there is merit to this consensus, it also is a reason on how to stymie the creation of generational wealth. If money has a generational start and end, then each generation will always start from scratch and when one generation ends, so does that money. This is the cycle of the middle class parental mindset, and it is a mindset baked heavy into culture and society where the middle class churns itself out generation after generation.
Scuba Steve embodies a different mindset because he did build a business that enriched him, his wife, and his family…for generations. His children do not have to worry or provide financial security to their parents, which thus enables his children to create more economic freedom and prosperity for themselves.
Why has traditional wisdom promoted the philosophy of “have kids so that one day they will take care of you?”
By looking back on the wisdom of the Asian and Czech cultures, as well as the research of the Brookings Institution, one can clearly see how there is simply a definitive end to the process until the cycle repeats.
Asian Culture: Finish school —> Get a job —> Have a family
Czech Culture: Build a home —> Plant a tree —> Father a son
Brookings Institution: Finish high school —> Get a full-time job —> wait until age 21 to get married and have kids
While there may be social wisdom in these philosophies, there is certainly no economic wisdom. And my bias is to look at life through an economic lens since money is thee currency that the modern world accepts in order to survive and thrive.
By combining these traditional philosophies with the pursuit of creating generational wealth, I take a page out of the classical economic theory on how to create economic freedom and prosperity.
To create economic freedom and prosperity, classical economic theory teaches to save, invest, and be entrepreneurial. Applying this theory to financial decisions, it looks like this:
The Avokado Decision Tree is a pattern for making good financial decisions. First, you save. Then, invest. Then, be entrepreneurial. (Pictured above: left side of the Avokado Decision Tree equation.)
With every financial situation, the more you make good, consecutive financial decisions, the more your money grows over time (Pictured below: right side of the Avokado Decision Tree equation):
Parents wanting to have more for their children than what their parents gave them, it takes adopting new philosophies and habits that aren’t part of a cycle that churns the exact same thing out. Learn how to create generational wealth by making good financial decisions and be like Scuba Steve.
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