Inherited wealth is fleeting.
One of the myths I frequently dispel is the myth that most wealthy people inherited their wealth.
The reality is, most wealthy people are first generation rich.
In my Rich Habits Study, 76% of the wealthy created their own wealth.
In other studies, 80% seems to be the magic number.
A 2015 Williams Group Wealth Consultancy Survey, in which more than 3,200 high-net-worth families were studied, found the following:
- 70% of rich families lose their wealth by the second generation;
- 90% of rich families lose their wealth by the third generation;
- The average recipient of an inheritance purchases a car within 19 days of the inheritance.
Why is it so hard to hold on to inherited money?
When you are given money, it has less value to you than when you are required to work to earn it.
Building wealth takes a long time. The few who are able to forge habits that create their wealth, take great pains in holding onto their wealth.
This human tendency to spend money that you did not earn is one of the reasons Warren Buffet and Bill Gates have greatly limited how much wealth their children will inherit.
Don’t buy into the myth that the wealthy inherited their wealth. It’s a myth. Most wealth in America is earned wealth. And this is a good thing.
About Thomas C. Corley
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