Revisiting The Millionaire Next Door

I just finished a quick second reading of The Millionaire Next Door.

This time around, the parts that resonated with me most were about children's financial education and inheritance. The book introduces two concepts: "PAWs" (Prodigious Accumulators of Wealth) and "UAWs" (Underaccumulators of Wealth). Many UAWs earn extremely high incomes, yet their actual net worth is pitifully low. That is because they are habituated to big spending, which often traces back to their parents' unconditional financial support.

The book points out a fascinating phenomenon: true PAWs rarely let their children know how wealthy they are while raising them. When planning inheritance trusts, they even deliberately bring in a third-party trustee. The logic is: they would rather have an outsider be resented by the children than have the family tear itself apart trying to manage it internally.

Let a professional institution play the bad guy. It is a pragmatic logic, but it is also the most effective.

Some might ask: doesn't this deliberate secrecy lead to resentment or power struggles when the children eventually discover the truth later in life?

Compared to the shock of "suddenly discovering the family has money," raising children without sound financial habits so they grow up to be UAWs is a far greater disaster. That is what today's society looks like. A more practical approach is to teach children that "the family is comfortable and we eat well, but we do not spend extravagantly." The key is not hiding the exact numbers of your wealth, but building the right relationship with money early on.

If we apply this perspective to present-day Taiwan, where is the biggest bottleneck?

Many parents in Taiwan are accustomed to leaving all their wealth to their children, often helping them pay down payments on homes directly. How do we break this culture of "unconditional support"?

I am quite pessimistic about this.

With skyrocketing housing prices and widening wealth gaps, many parents feel that if they do not help, their children will not even see the starting line. But this indulgence often backfires, ending with children taking support for granted and parents feeling exhausted.

In the face of this helplessness, what can we do?

Instead of hoping for the system to change, it is better to focus on the small, manageable shifts we can make as individuals. My thought is to let children engage with the real world while they are still in school, helping them understand what skills are valued and build their social sensitivity.

When entering the workforce, you either accept your lot or, like the semiconductor industry today, find your own "fast lane" to accumulate wealth rapidly.

A down payment from parents can only buy a house. But a child's own sensitivity to the world is what will actually help them survive in this increasingly chaotic era.