Could Your Family Have an Affluenza Problem?

Understanding Affluenza: Protecting Your Family's Future

Affluenza, a term that refers to the entitlement and reckless behavior sometimes seen in children of affluent families, is a growing concern. Small business owners who have worked tirelessly to build their wealth must navigate this challenge carefully. This blog aims to provide practical strategies to prevent affluenza from impacting your family's legacy.

Defining Affluenza

Affluenza is not an official medical diagnosis, but it often manifests as a sense of entitlement, hedonism, and a disregard for laws and social norms. These attitudes can lead to problematic behaviors, such as addiction or lawlessness. While some signs may appear publicly, many overprivileged children indulge in excess away from the public eye. Parents can intervene by recognizing these behaviors early and taking preventive measures.

Steps to Address Affluenza

1. Crisis Management: Immediate action is essential if a child is in danger or has run into legal trouble. Seek legal help if they are arrested or arrange medical care for addiction or mental health issues.

2. Problem Management: Mitigate and resolve existing problems by addressing negative behaviors directly. If a child is struggling with addiction, consider rehabilitation. In other cases, implement corrective measures to ensure behaviors aren't repeated.

3. Long-term Strategy: Help your children transition into responsible adults by developing a long-term strategy. Focus on building a positive relationship with money and providing financial education that helps them value hard work.

Proactive Wealth Planning

Proactive wealth management can also play a significant role in curbing affluenza. Here are some strategies to consider:

Trusts with Oversight: Setting up trusts with built-in oversight ensures your children receive their inheritance responsibly. Trusts can impose conditions or stagger disbursements to prevent financial mismanagement.

· Estate Planning: Carefully plan your estate to distribute assets fairly and strategically. This prevents overprivileged children from causing harm due to easy access to money.

· Asset Protection: Protect your family's legacy from potential misuse through asset protection planning. This may involve restricting access to assets if your children exhibit harmful behaviors.

Encouraging Responsibility

It's crucial to instill the right values around money from an early age. Create opportunities for your children to earn money and understand the importance of budgeting and saving. Consider involving them in family business discussions or philanthropy to build their sense of purpose and work ethic.

Partnering with Experts

Navigating affluenza can be challenging, but you don't have to face it alone. Working with wealth management professionals can help you uncover specific needs, identify goals, and find solutions that align with your values. Whether it's trusts, estate planning, or financial education, partnering with a team experienced in addressing affluenza is invaluable.

Conclusion

Affluenza doesn't have to define your family's future. By recognizing warning signs early, implementing practical strategies, and working with experts, small business owners can protect their legacy and empower their children to build a positive, healthy relationship with wealth.

Contact us at Diversified Asset Management Inc. to secure your family's future and develop a tailored strategy to address affluenza.

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Robert J. Pyle, CFP®, CFA, AEP® founded Diversified Asset Management, Inc., in 1996 to provide personalized, comprehensive wealth management services to successful individuals, families, single women, and business owners. His specialty is addressing the complex financial needs of self-employed professionals, corporate executives, and small-business owners. Our disclosure can be found here. The views, opinion, information, and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting, or tax advice.