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Wednesday, May 18, 2022

Flush, Not Plush

Flush, Not Plush

Contrary to Stereotypes, Many of the Children of L.A.’s Wealthy Are Living Lives of Moderation, Preferring to Hide Wealth Rather Than Flaunt It

Name: Anthony Rodriguez

Age: 21

Home: Studio City

Parents’ Background: Vitamins, skin products

Education: Junior at USC, business major

‘Although I do come from money, I’m not like most kids who do. I’ve worked my whole life to make money. I’ve worked jobs since I was 12 years old, in warehouses, in promotions, as a sales rep and I’ve started three of my own businesses. Money was not just given to me.

“My (parents) could have afforded to buy me anything in the world. But they didn’t do that. Even to go to the movies on a Saturday night, I had to work around the house and yard all day before they would let me go. Now that I’m in college, I had to work all summer to afford my fraternity, and to be able to go on vacation for spring break.

“Most of the kids I know who have money really had to work for it. And I know a lot of guys who came from money that were cut off the minute they graduated. Then again, I know another kid that has three of his own cars and lives better than Bill Gates and has never worked a day in his life. But that is not the norm.

“I have a friend who is easily worth over a billion dollars, and several friends worth hundreds of millions. And only one of them is out of hand with spending. Rich kids really don’t want to show it off, and they don’t want others to know about how much money they have.

“There’s also a huge difference depending on how their family made their money. The ones that made their money from zero and the ones who have old money really have their heads on straight and raise their kids to work hard and have some class. But the ones that are second or third generation that were spoiled kids themselves pretty much end up raising spoiled kids. The third generation just has no clue. They’re usually the ones heavy into drugs and alcohol, and they have less of a desire to live.”

Name: Charlene Kim

Age: 21

Home: Diamond Bar

Parents’ Background: Orthodontist/Dental practice

Education: Graduating senior, USC, double major biology and religion; plans to attend USC Medical School in fall

‘I felt pretty normal growing up, although I was aware that I was well off. I never had to worry about financial aid for college like my friends had to. They always had burdens and family problems because of money. I never had those kinds of problems. I almost felt alienated because I didn’t have to deal with that kind of stuff.

“My parents definitely gave me most of what I wanted, but they also were very aware of what they were giving me. They didn’t spoil me to the degree where I was a brat. I did have all my Barbies and all the toys that little girls got, and probably had more than others, but I think in general my parents kept it under control.

“I drive a Mercedes C-Class now because my dad was concerned with my safety and he insisted on buying me a reliable European car. I told him that I was okay with the Accord I used to drive, but he insisted. So then I suggested they get me a used Volkswagen something dependable. I begged them not to buy the Mercedes, because I thought it would look like I was showing it off, and everyone would be looking at me and judging me. I really don’t like to flaunt.

“Just driving that car proves that people have stereotypes about rich people. So I try to play it down. I’m really careful about how and when I spend my money.

“I’m a bargain hunter. I always have been. Maybe it’s because my mom is thrifty, I never buy anything full price. I think I’m very aware of my spending habits because I don’t want people to judge. As a rich person, people are extremely critical when they’re watching you and they’re always judging you.

“This past summer I got my first job. I worked in retail. And I got the job not because I needed the money, but because I wanted to learn for myself the value of the dollar. My mom kept asking me, ‘Why are you working?’ She would be like, ‘Just quit, quit,’ because I was working over Christmas and it was so busy. But I wanted to be almost normal in that sense, where I needed that kind of responsibility. I wanted to learn how to manage that money and see how much I would make. I really did enjoy my experience and had fun.

“I’ve never felt that pressure where people will be my friend because I’m rich, but I also don’t want people to not hang around with me just because I do come from money. I want to be like everyone else.”

Name: Tarek Itani

Age: 24

Home: Los Angeles, originally from Lebanon

Parents’ Background: Politics

Education: Graduating senior, USC, business

‘In Lebanon my father and uncle are in politics, so my family is privileged. They have bodyguards and drivers and their cars have blue government license plates so everyone knows who they are.

“When I first came to L.A., I went to a junior college, and I think that’s the only time I’ve felt taken advantage of for my money. You know, it’s hard to fit in and make friends when you’re a foreigner. People won’t let you into their circles because they don’t trust very easily in this country. And in college, a lot of them already had their friends from high school, so they didn’t necessarily want to let anyone else in. So I was probably more generous than I should have been. I think they looked at me as some rich kid they could take advantage of.

“It’s not the same back in Lebanon. We have more of a tight community and it’s really easy to meet people. It’s a country of only three million people so there are a lot of people who have friends and family in common.

“Generosity is a big part of the culture. When I go out with my friends back home, one person will always pick up the check, and we all take turns. Here it’s totally different. Even when you’re out with people who have a ton of money, everyone pitches in for their share of the bill.

“Back home, you don’t work if you’re super rich. It’s a status thing. If I got a job back home, for example, people would say, ‘Oh, there’s so and so’s kid,’ and they would really look down on it.

“I have a cousin back home who’s 30 years old, and here in America he would be considered the ultimate bum. He lives a lavish lifestyle at home and has never worked a day in his life. But it’s different over there. Parents don’t kick their kids out of the house no matter how old they are.”

Name: Omid Sharbati

Age: 21

Home: Bakersfield

Parents’ Background: Dry cleaning

Education: Economics major at USC

‘My parents always taught me money doesn’t grow on trees. They didn’t spend a lot of money on us and taught us at an early age the value of a dollar. I actually had to work growing up. I earned my own money and learned to respect it.

“I also learned that when you buy something, you make sure that it’s worth it. So I do buy nice things because I want them to last, whether it’s a computer or sports equipment.

“I always had a mix of friends growing up. At school I had a lot of rich friends, but I had friends from the other side of town that I hung out with too. I didn’t have problems with people trying to be my friend because of the money. You can tell who the people like that are.”

Name: Joe (would not disclose last name)

Age: 21

Home: Seattle

Parents’ Background: Father is an executive at Kodak

Education: Junior at USC

‘I had a really good childhood but I wasn’t spoiled or anything. I always had the latest Nintendo and Nintendo games and I got a car right when I turned 16. They gave me a new Acura Integra, which was pretty cool in high school. But my parents made me work and I still work now in the summers.

“Money is never really an issue. I usually have enough money to do what I want, to go to Las Vegas or take a trip down to Tijuana. I just tell my parents I need money for this or that, I have to give them a specific reason why I want it and they give me what I need.

“I was unaware of how much money we had growing up. My parents would tell us, ‘No, we can’t afford that,’ but I realize now they were just saying that to keep us from being spoiled.

“I think the way kids turn out is totally based on the parents. It depends on how much money they give their kids and how much they teach them the value of a dollar. I think it’s important not to spoil kids but to still give them a financial foundation and push them to get an education.

“I do know the kinds of kids that were messed up by money. One of my best friends grew up with a ton of money and he dropped out of high school. His parents split and they just give him money, like a couple hundred a day. Now’s he’s twenty-something and he just lives at home. He doesn’t work or anything. I don’t know what he’s going to do.”

Name: Joe Boskovich

Age: 22

Home: Thousand Oaks

Parents’ Background: Produce

Education: Finance major, USC

‘We really don’t have an extravagant lifestyle. My dad has always been smart with his investments. He’s never been flashy with his money. He never owned a luxury vehicle. They’re just careful with how they spend money.

“I think a lot of their values were passed on to me, because I would be embarrassed to drive a Porsche or something like that. I see people driving luxury cars Porsches, Lamborghinis, Ferraris and I think it’s unnecessary. They must feel the need to impress people.

“I think the majority of people with money don’t handle it well. They need the finer things in life to make them happy. I think stereotypes for the large part are accurate. You can just tell by their attitudes by the remarks they make. They expect really nice things and when they don’t have them something’s wrong.

“Growing up, my family always provided all of us with the essentials. But other than that, we really didn’t stand out. Maybe my house was nicer than the majority of my friends. But my possessions were no different than any one else.

“I really admire my dad and my mom for how they raised us. They’ve done a great job raising their family. They’re really teaching us what’s important, and that nothing that money can buy is really important.”

Addressing the Wealth

L.A.’s very wealthy families tend to be smaller in size than the countywide average and clustered in relatively small enclaves throughout the county like Rolling Hills, Hidden Hills and San Marino.

What’s more, the wealthier the family, the lower the percentage actually having dependent children.

“It’s not that multimillionaires don’t have kids. But by the time they accumulate $5 million or $50 million in net worth, the children are grown up and have left the nest,” said Scott Slater, director of Spectrem Group, a Chicago-based market research firm catering to the very wealthy.

Slater cited Spectrem figures showing an inverse correlation between the net worth of the family and the percentage of families in that demographic having dependent children.

In past generations, when inheritance was a major factor in wealth, children of the very rich often grew up in the midst of big money. But today, most of the households with net worth exceeding $5 million have created their own fortunes, Slater said. This is especially true for Los Angeles County, which is one of the most entrepreneurial areas in the nation.

This helps explain why it sometimes takes decades to accumulate enough wealth to be worth at least $5 million, and why children are typically grown before that milestone is reached.

According to Spectrem figures from 2001, roughly 20,000 households in L.A. County had net worth exceeding $5 million. That’s less than 1 percent of the 3.1 million households in L.A. County.

Spectrem does not compile data at the local level for family size or numbers of dependent children. But the nationwide figures appear to hold up for L.A., at least as they relate to income figures compiled from 2000 U.S. Census data for the pockets of wealth ringing the county. Those pockets can be found along the coast, in the West San Fernando Valley, near Pasadena and on the Palos Verdes Peninsula.

Each of the 10 communities with the highest percentage of families with annual income in excess of $200,000 has a smaller average family size than the 3.61 persons per family countywide.

Also, these communities have a lower percentage of family households with children under age 18, with the exception of Hidden Hills.

The Census Bureau tracks income data, but not net worth. Therefore the group with incomes exceeding $200,000, somewhat larger than those with net worth of $500,000 or $1 million, becomes the closest approximation of high net worth.

And many high-income families do have school-age children. In communities like Hidden Hills and La Canada-Flintridge, more than half of all families have dependent children.

This can be costly. Most multimillionaire families send their children to private schools that can cost on average about $15,000 a year. “You can easily spend up to $200,000 on tuition in the K-12 years, and that doesn’t even include expected donations to the schools,” said Len Brisco, private wealth advisor with Merrill Lynch & Co. in Los Angeles.

Such spending hits hardest for those families still climbing the net worth ladder. That doesn’t mean spending necessarily tapers off by the time these families enter the ranks of pentamillionaires (with net worth of over $5 million). At that point, many wealthy couples are grandparents and dote on their grandchildren. But grandchildren typically do not reside in the households of pentamillionaire couples with grown children, so they don’t show up in the Census figures.

Howard Fine

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