Warren Buffett and Charlie Munger, the legendary investors behind Berkshire Hathaway, are known for their annual shareholder meetings, where they often share insightful advice on investing and life lessons. One particularly memorable question arose at the 2011 meeting, focusing on how to raise children in a wealthy family. An audience member inquired about incentivizing children of wealthy families to stay motivated and competitive, particularly against driven individuals from emerging markets like China, Brazil, Russia, and India.
Buffett, a father of three, addressed the question by emphasizing the importance of humility. “If you are very rich and you bring up your kids to think that they are more important in society or that they have some special privilege… that’s just a terrible mistake,” he stated. He stressed that while it’s crucial to avoid stifling ambition, it’s equally important not to create incentives for children to compete with their parents’ successes. “I don’t think that makes sense.” Ultimately, he concluded, the responsibility for motivating children lies with the parents. He emphasized the need for children of wealthy parents to understand that they shouldn’t rely on their parents’ wealth to succeed, as this could lead to undesirable outcomes.
Charlie Munger, Berkshire Hathaway’s long-time vice chairman, echoed this sentiment. He cautioned that while it’s important to have the right expectations for parenting while being wealthy, it’s unrealistic to expect children to share the same work ethic as their parents. “I don’t think you can raise children, an affluent family, and have them love working 60 hours a week,” he said. He acknowledged that raising children in a wealthy environment can sometimes hinder their motivation to achieve independently. Munger offered a piece of advice that resonates beyond parenting and wealth: “My advice to you is lose your fight as gracefully as you can.” This simple yet profound statement speaks to the importance of accepting reality and finding peace with the inevitability of life’s challenges.
