You'd be surprised how Warren passed on a little bit of his billions to Peter, now in his 50s. Grampas can learn a lot from the wise father (and grampa) and how he treated his son. The senior Buffett knew that a pile of big bucks would do nothing to develop his son, so he was careful to manage the process of what a limited amount of capital would do to enable his son to "grow" with the money.
1. HOW MUCH? He did leave him some money, but compared to the billions he could have left Peter, Warren encouraged him to follow his dreams. The amount? A mere $90,000--and only after he had turned 19. Peter's grampa left each of the Buffet gramchildren a farm. Warren didn't like the allocation of such resources, so without asking anybody he sold the farms and put the proceeds into Berkshire Hathaway stock when Peter was small.. The mature value of the stock when Peter turned 19 was $90,000. Now you know the WHY behind the HOW!
(Peter, left and his Dad joined with music star Akon to promote their social action site, http://www.dosomething.org/istheresomethingicando )
- Human Trafficking
- Female Empowerment
- Environmental Sustainability
- Economic Development
- Health & Preventable Diseases
4. PHILANTHROPY TRAINING:.Once Peter and his wife had progressed to investing in third world social causes, much like Buffet collaborator Bill Gates and his wife have done, Warren gave his son and daughter in law another gift - though it's not what you think! "Dad "gave" us a billion dollar philanthropy grant to manage," Peter explained. All the growth Peter had developed over the 32 years between 19 and 52, has finally been "put to work" for the good of the world. Peter says that he and his wife have studied a lot about philanthropy and feel they're beginning to understand how to develop the grant to the advantage of the "under valued assets" of the world.
LESSONS FOR GRAMPAS
A. GIFTS WITH GENTLE STRINGS: If you can, give some assets to your kids and gramkids to use with careful strings attached that will help them grow in the process.
B. NEVER LOAN A RELATIVE MONEY. You'll never see them again! Family reunions will never again be the same. Discreet gifts with suggestions that receiving kinders and grams never reveal amounts or you as a benefactor will give them a secret and often needed resources. (Recently, when we were going through a rough patch, a neighbor who shall always go nameless showed up on our doorstep with a check for a lot more than I've ever received from a neighbor and gave those two bits of counsel. That gift blessed our lives then and forever after.
C. KEEP YOUR LOVELY MOUTH SHUT: I write again, "Never tell anyone but your spouse and/or partner about a gift or the amount!" Just yesterday we got the final check from my parents estate. My great brother is a CPA and managed their money through to the end. The amount surprised us and after taking a digital picture of the check, just in case, I went down just before our credit union closed and deposited it. It took the clerk's breath away and I got a form that the funds were going to be "checked out" in the banking system before we could access them for at least nine days. All I'll share is that the check was in the low five figure range. Each of the brothers got exactly the same amount--and my sister's share was divided among her kids. Will we ever tell our great kids about the gift from Gramma? Don't think so! There may come a time when one of them (or both) will need some of that money--and it will always be freely given according to these Buffett inspired guidelines.
D. TITHE AND SAVE: A good friend runs a wonderful blog on Personal Finance with a Christian point of view. http://christianpf.com/. He has lots to share about the value of tithing all "increase" (10% to God through your church) I recommend it. My great friend Lynn Stevens (who qualifies as a real estate tycoon if anybody does) has always taught the time honored rule: "Pay yourself" Lynn means at least 20% of whatever you make--as an operating expense for services rendered to yourself. Good idea! We're finally getting to that point. Much of Gramma Delma's wonderful gift will be socked away for the as yet unbudgeted future.
E. DON'T FORGET TO WITHOLD TAX: (Usually 30%) When you hear of Willie Nelson or some other celebrity going "upside down" financially and owing big chunks of cash to the govenment--it's often because they forget this important step. One of the first calls Gramma Rosie will make this morning is to our accountant to get an accurate figure. (This means with a Tithe of 10%, Savings at 20% and Tax at 30% for a total of 60% you effectively have about 40% of a big gift to do with as your Spouse agrees.
NOTE: At the Bountiful LDS Temple marriage/sealing of two great friends of ours several years ago I heard a wise man give counsel about establishing married peace and love. The officiator's counsel could be summed up in one sentence: "How you handle money together will be one of the great tests of your marriage." It's taken me nearly 40 years of marriage to mention money, or do a budget in a kind, gentle, loving way. Putting it on paper is the best way Gramma Rosie and I have discovered. Hooray for spreadsheets. I usually do the first draft. I do my best to keep her interests and desires in mind. She'll make suggestions and ask what we've referred to as kindly leading questions. No demands. No absolutes. Everything is negotiable--and if it gets a little "warm" the best advice I've ever heard is move your chair opposite hers, hold both hands and begin with an apology. "I'm sorry, dear. I didn't realize how important that widget was in your process!" Thing is, sincere apologies seem to bring me back into "line" and, I say this lovingly, gives her "The illusion of complete control." lol
F. BUDGET RESOURCES YOU RECEIVE: My brother, the executor sent a letter to all the members of the immediate family letting us know about how much we'd be getting. As a part time instructor in community education at Highland High School, I had just given a homework assignment to my Microsoft Office Class to put together a budget in Microsoft Excel (Spreadsheets) for an unexpected gift of $50,000 to be spent during the month of May 2010. (They send me their assignments by e-mail, I put them on powerpoint slides and we talk about them in class.) I did one as an example with a regressive total by formula on one side so I knew entry by entry how much I was planning spending. It was fun--and a valuable prelude to our unexpected gift from mother after her passing.
G. BE CAREFUL WITH EXPECTATIONS: I was going to write about achieving that delicate balance between too much control and too little. As I finish this post, I'm rethinking. If my neighbor had asked for a budget for his loving gift, I would have likely told him it was none of his business and maybe have returned his gift. Parents and Gramparents have more of a responsibility to help youngsters of any age to learn the budgeting process. Frankly I haven't done it, but using Family Home Evening when kids are young to teach them how Mom and Dad spend the monthly income is a good idea. (I heartily recommend cashing your paycheck into quarters and stacking piles of coins for tithing, savings, rent, food, etc. It took me three banks before I turned my small salary check into a big bag of quarters, but similing clerks thought the idea was a good one.) Once or twice we've given little gifts of money to each of our kids--a couple hundred dollars unexpectedly. If I had asked our married son for a budget on how he was going to spend it, I know I would have caused some static with both him and his wife. Instead I trusted them--and I'd do it the same way again! You decide. The key, I believe is to promote growth and do it with as much positive energey as you can. This is not a time for control. It's a time for blessed giving with as few strings attached. That's the lesson Peter Buffet shares from his great Dad Warren. We could all take a lesson from that Nebraska wisdom. JRH
Funny you should post this. I am a friend with Peter on Facebook. I follow his comments. I also love his music.
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