Skip to main content

What is inflation? How long will it last? Watch "Inflation on the Rise" for answers.

Three creative business team working on electronic devices in the office

Downward Mobility: Why So Many Kids from Wealthy Families Earn Less Than Their Parents

Photo of author, Will Carter, JD.
Will Carter, JD
Senior Advisor

One of the highest priorities for many of my clients is helping their children move into financially secure careers.

To some, this may seem a wasted worry. Research clearly documents that children with high income parents are three times as likely to go to college, and twice as likely as children of lower income parents to reach top tier incomes early in their careers.

But that same research also demonstrates that many children of wealthy parents end up earning far less than their parents.

One factor contributing to this latter tendency is the natural impulse of parents to want to help out their children. I have observed that in wealthy families this impulse can unwittingly nurture a soft type of entitlement -- not an in-your-face attitude of privilege, but rather ignorant naïveté. Parents are sometimes so focused on helping their kids get started in life (cell phones, cars, college) that their children grow up insulated not only from what it really costs to live a good life, but also from the real world's expectation that they create value for others in order to earn enough to pay for that life.

An essay in The Atlantic, however, suggests that there is another, more laudable, dynamic contributing to the tendency of some children from financially secure families to pursue lower paying careers. The essay starts with quotes from one of America’s founding fathers, John Adams. Adams once famously wrote (I'm paraphrasing here) that he was a revolutionary so his children could study nation-building professions like business, so his grandchildren could study arts, music, and poetry. The Atlantic essay then goes on to cite research documenting the fact that kids from lower income households are more likely to pursue "practical" majors, and that doctors and surgeons are more likely to come from families with lower incomes than musicians and artists.

Ultimately, the challenge for parents is to create conditions for their adolescent and young adult children that nurture their ability to pursue meaningful careers without instilling financial naïveté along the way. Knowing what the research shows, and what one of our founding fathers dreamed for, is a good place to start.

Related Insights
I Stock 518591158 FINAL IMAGE SAT blog Feb2022

Do You Have a Financial Timeline?

A financial timeline is a great way to help you track and understand financial data points from your past, as well as map out potential data points in the future for planning purposes. If you've never considered your own financial timeline, you should. Here's why.

Read More
I Stock 1324691776 JMJ blog Banner resized

Is My Money Improving My Life?

With the new year comes new resolutions and goals. If you're looking to get your financial house in order in 2022, don't forget to focus on your Return on Life. Learn what steps to take to help your financial goals become reality.

Read More
I Stock 1226418360 businessowner JGS Craft

Did You Know Less Than 2% of Businesses Value Themselves Annually?

If you're a business owner or entrepreneur, your business is your greatest asset. Not only do you invest your time and talent into growing your business, it takes significant capital too. But did you know less than 2% of businesses actually take the time to value themselves annually? Whether it’s simply due to a lack of time or expertise, today's business owners don't do a deep-dive analysis into their businesses every year, which results in a significant number of them being undercapitalized. Learn what you can do to keep your business operating at its full potential.

Read More
Play