The 'shirt sleeves to shirt sleeves' adage isn't about financial mismanagement. The third generation fails because they emulate the second generation, who were taught to manage existing value. They never learn the first generation's builder mindset, becoming consumers instead of creators.
A Columbia study showed that praising fifth graders for being 'smart' led them to choose easier tasks to avoid disproving the label. In contrast, kids praised for effort chose harder puzzles. Praising innate intelligence creates a fragile identity and makes children more likely to lie about their scores.
Entitlement in children isn't simply being a 'brat.' It's often a fear of discomfort. When parents constantly use money to remove obstacles, kids learn that someone else will always solve their problems, leaving them terrified and unequipped for real-world challenges.
Giving a child an allowance is pointless if they have unrestricted access to parents' credit cards or Amazon accounts. To teach financial literacy, money must be finite. Parents must create scenarios where choosing one thing (a candy bar) means sacrificing another (sparkling water) to build the cognitive muscle for financial decisions.
Children absorb their parents' emotional state. A parent who is physically present but constantly checking their phone or mentally preoccupied with work transmits anxious energy. Kids don't understand the context of the stress; they just conclude that being an adult means being perpetually worried and anxious.
For wealthy parents, a large home can inadvertently create isolation. Successful founders Hank and Neil Patel found that downsizing from massive compounds to smaller houses forced more frequent, natural interactions, significantly increasing family presence and connection with their children.
Research by Sunia Luthar reveals children from households earning over $200k annually experience clinical anxiety, depression, and substance abuse at rates two to three times the national average. This is primarily driven by immense pressure to achieve and emotional or physical isolation from parents.