We are such a rich-shaming generation that I am, today, inclined to believe the first generation of kids to wear shoes or go to school were also considered spoiled and entitled.
My interactions with parents of different income brackets has made me believe all parents want to raise kids who know how to work hard - to create what they want in the world. The hidden reality, though, is that every parent wants to raise a child who feels worthy, deserving of the blessings of abundance; spiritual, emotional, and yes, physical - and the rich life that should be the birthright of every child.
In 2013, research from PNC Wealth Management, showed that 82% of millionaires in the U.S. believe their kids should be responsible for creating their own wealth rather than spending their life sponging off their parents - up from 65% in 2007.
But the same parents also admitted to giving their offspring almost everything they want, from cars and down-payments on houses to worldwide travel.
It is human to want your children to have a better life than you have had, as a parent. It is important to communicate early and often with children and grandchildren about their goals and expectations, both in terms of financial and life achievements. Ultimately, parents want their children to make their own way in life.
Almost every parent shall admit that raising successful, hard-working children is their most important goal.
It is natural and laudable for parents to want their children to prosper. It is also understandable that they’ll use the resources and means at their disposal to try to reduce the chances of their children being downwardly mobile. They are likely to try even harder if the drop looks big, in economic terms.
It is well documented that wealth correlations arise through opportunities provided by the environment the child grows up in, and any child given these opportunities would benefit. Wealthier parents may invest more in their children’s education, help them get better jobs, provide funding for business startups, give financial gifts, or influence child preferences or attitudes towards savings and investments.
At the start of the Covid-19 pandemic, I wanted to buy a Harrier, valued at about Ugx. 45 million. I did seek the opinion of a tutorial uncle - who talked me out of it. He pondered why I would want to spend such money on a car, and the other related costs that come with cars, when I was in position to move from point A to Z; using some of the available family cars.
He advised, that I would be better off buying land, a valuable and appreciating asset and setting up a structure to bring in income (which I did) rather than "waste" it on a car that would depreciate in value and not economically benefit me. After all, if I really wanted to use a car for substantial reasons, I could get one from home (after explaining) the need for it - which would be granted.
Surveys around wealth and wealth/income inequality have usually found that rich parents tend to coddle their kids, creating busy after-school schedules full of soccer games and swimming, dancing, and baking lessons, to mention but a few. Kids of the Working-class parents, however, are left much more to their own devices, given fewer resources and less stroking - this makes them (kids of working class parents) more independent and closer to their parents. Yet it doesn’t help working-class youths climb the socioeconomic ladder. Once they hit their working years, they struggle just as their parents did.
Much of this correlation has to do with education, including better schooling for rich children but also those after-school resources cited by above. But there’s a larger factor driving this, too: real estate. Rich kids are more likely to inherit property wealth from their parents, increasingly the fastest way up the economic ladder. Real estate is very important in building socioeconomic oligopolies.
This further explains why my uncle advised me to rather buy land and set up property than buy a car. There is something about a modern economy that is extremely real estate intensive - living in a ‘nice’ location is a high-income want, as is good education and health care.”
These desires are what economists call “elastic” wants. They are constantly in demand, and in lieu of proper price control, their cost can and will spiral almost infinitely unlike the prices of cars and other related material wants.
Banks aren’t willing to extend credit to those who can’t put down 30% cash on a new home - mortgage, and yet rising rent costs are making it tougher for people to save. That’s making it harder, if not impossible, for working-class (and even some middle-class) families to buy or construct a home. As an increasing share of global wealth is held in housing, those who lack real estate investment (portfolio) are left behind.
When only the rich can afford property (real estate), and property makes up an increasing amount of global wealth, and a larger percentage of that wealth is kept in the family, then you really do have the makings of a forever wealth inequality world.
And to conclude "A man who drives his own bicycle is better off than one driving his father's car," is misleading and out of touch with reality today. Many of those driving their father's cars are rather investing their money in more appreciating assets - than depreciating assets or rather, liabilities.