Why rich kids aren't always wealthy: Unpacking parental misconceptions

Words by Jessica McGawley

For years, I've observed a common misconception that ripples through families, affecting both the parents who built their fortunes and the children poised to inherit them. It’s the idea that money and wealth are interchangeable. They are not. In my experience, working closely with families navigating significant fortunes, I’ve come to firmly believe that wealth and money are two separate things, and mistaking one for the other can have far-reaching, even damaging, consequences for the next generation.

 We often assume that an abundance of cash automatically equates to a life of fulfilment and opportunity. Yet, this narrow definition is precisely where the problems begin. Take the issue of entitlement. I say this plainly to parents: your children don't just become entitled; we, their parents, often entitle them. It’s a behaviour we inadvertently cultivate, a byproduct of an environment where every desire can be met with a swipe of a card.

My firm belief is that parents must take radical responsibility for the entitlement they created, or are creating, in their child. It’s a behaviour that can be addressed, but only if we acknowledge our role in it.

The cashless blind spots

Just because a child grows up amidst affluence, attends a top private school, and sees money circulating freely, does not mean they possess any inherent financial acumen. We cannot assume this translates into understanding value, budgeting, or investment. In fact, some of my clients, despite their privileged backgrounds, arrive with startling gaps in their basic financial knowledge.

Consider this: most children today are growing up in an increasingly cashless society. Their parents, particularly first-generation wealth creators, likely remember the exact price of a pint of milk or a loaf of bread. Why? Because they were often responsible for buying it, handled physical cash, and learned firsthand about inflation by simply observing prices rise. This tangible lived experience of money's value is often absent for the next generation.

There’s an age-appropriate curriculum for finance, just as there is for any other subject - there are distinct concepts and skills that need to be introduced and reinforced progressively. Without this intentional teaching, understanding the worth of money and how it truly works, remains a complete mystery for our children.

Defining true wealth

I often say that a lot of money without purpose is dangerous. You can have deep purpose and absolutely no money, and don’t get me wrong, that’s a struggle. But purpose gives you something essential: a reason to get up, a sense of direction, a fire that keeps you moving forward. The inverse is far more troubling: having money, but no purpose. When there’s no goal beyond the accumulation or presence of wealth, it often leads to destructive behaviours, addictions, escapism, or a numbing sense of aimlessness that no amount of money can resolve.

I believe that anyone has the right, and the ability, to be wealthy, but only if they are willing to define what wealth truly means for them. It might mean absolute financial freedom, but it could equally mean rich relationships, impactful work, personal growth, or time for passion projects.

So, how do we equip our children with true wealth, rather than just money?

Firstly, we must foster big ideas. Children come to us with these wonderfully “crazy" aspirations. Don't crush them with adult pragmatism. There are no entrepreneurs without crazy big ideas. Encourage their expansive thinking - it’s the fertile ground from which future purpose and innovation spring.

Secondly, we must embrace failure. This is perhaps the most critical lesson. I tell people to "invest in your failure." If you're not making multiple mistakes early in your career, are you truly trying? These early stumbles are invaluable training. As parents, if your child fails, be it in school, with friends, or in a personal endeavour, use it as an opportunity for reflection and learning. If nothing is learned, then it's a true failure. Otherwise, it's simply experience.

We also need to address the increasing visibility on children growing up with wealth, particularly in the age of the "nepo baby" narrative. While nepotism exists everywhere, the spotlight on affluent families can create immense pressure. I’ve had clients who’ve lied to their university friends about their background, too embarrassed or fearful of judgment to bring friends home. We must help our children understand how the world might perceive them and equip them to navigate these perceptions with authenticity and resilience.

Finally, for parents contemplating the ongoing wealth creation journey, I urge you to acknowledge what you will lose in the process. A healthy exercise is to define your "number". Not just a financial target, but a clear understanding of what you need to feel fulfilled as a parent, including quality time and experiences. This pragmatic approach can allow you the freedom to say "no" to endless work commitments and prioritise what truly matters.

Ultimately, we must shift our focus from merely accumulating money to cultivating a profound and purposeful wealth. If you’re a parent challenged with these complexities, seeking guidance on how to raise grounded, purposeful, and financially literate children, I encourage you to arrange a consultation to redefine what true prosperity looks like for your family.