The Reason Warren Buffett Isn’t Leaving His $200B Fortune To His Kids Actually Makes A Lot Of Sense

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warren buffett giving money away

It has become a popular trend for billionaires to pledge (through The Giving Pledge) the majority of their wealth to charity. Why do billionaires want to give all their money away? Presumably it’s because they want to leave the world a better place. Or maybe they just hate their family. Who can say for sure?

On top of Warren Buffett, there are several notable billionaires who are a part of the Giving Pledge. The likes of Bill and Melinda Gates, Mark Zuckerberg, Elon Musk, Richard Branson, MacKenzie Scott, Michael Bloomberg and others have all taken the pledge to donate massive amounts of their wealth. All for the betterment of mankind.

Looking at this from a personal lens might make the Giving Pledge seem like pure madness.

After all, when you are a normal person who is on a mission to create generational wealth, it’s hard to grasp why Warren Buffett is giving away his money. Every generation of Buffett from here until the end of time would be well taken care of. Surely, that would be an amazing legacy to leave.

For Buffett, however, he’s seen the effect money can have on people, and if he wants to control where his wealth will go after he is gone, he’s earned that right.

Warren Buffett Advice
via Wikimedia Commons

Per a recent note to his shareholders, here are a few of the highlights as to why Warren Buffett is giving his money away rather than passing it down from generation to generation.

– “My personal situation: The easiest deed in the world is to give away money that will never be of any real use to you or your family. The giving is painless and may well lead to a better life for both you and your children.

– “Over many decades I have accumulated an almost incomprehensible sum simply by doing what I love to do,” he said. “I’ve made no sacrifice nor has my family. Compound interest, a long runway, wonderful associates and our incredible country have simply worked their magic. Society has a use for my money; I don’t.”

– “After much observation of super-wealthy families, here’s my recommendation: Leave the children enough so that they can do anything but not enough that they can do nothing.”

– “I’m delighted that my three children – now in their mid-60s – pursue philanthropic efforts that involve both money and time. More important, they are happy that they can be involved in helping others. They have their mother’s genes.”

All of this makes a great deal of sense. When you’re at the stage of life that Buffett is, and when you have such excess, it is a lot easier to part ways with it. Because he is right, $200 billion isn’t going to change the world unless you allow it to. And he certainly can’t ensure that it is going to change the world by being inherited by the next 10 generations of Buffetts.

In the end, you get a sense that Buffett’s is giving so much of his wealth away not only because he believes in the causes he is passionate about, but also as a way of making up for never being a “time and effort” kind of philanthropist. He is simply a rich guy who was capable of writing a big check while leaving others to do all the hard work. And he was quick to admit that in his note to shareholders, “A much more admirable form of philanthropy than mine involves the giving of personal time and effort. I’ve done little of that.”

You really have to applaud not only Buffett’s self-awareness, but also his rational for why he is a part of the Giving Pledge.

Author
C. James

C. James is the managing editor at Wealth Gang. He has a degree in finance and a passion for creating passive income streams and wealth management.

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