I recently read an article by Porter Stansberry on how to teach your children to be millionaires by age 40. At first glance, I asked myself “why should it take so long?”, especially when the value of the US dollars used as the measuring stick are declining, turning out more faux millionaires than ever before.
Porter’s suggestions are straightforward: start working young, figure out how to add value, increase your income, and be smart with your money. You won’t miss out on much gravy skipping college, he surmises (I happen to agree). Pay attention to opportunity costs and focus on the bottom line.
While that is good advice, I wanted to take it a step further and address a few other ways to set your children up for success. It’s amazing how much power parents have to determine the kind of life and career their children will have without even knowing it.
Based on the offshore principles we discuss here, I wanted to highlight three other ways to give your children a leg up using the internationalization principles we talk about here at Nomad Capitalist.
1. Give them multiple nationalities by heritage
Forget stereotypes of guys marrying supermodels or women marrying the rich doctor. Having a spouse of a different nationality allows you to pass on multiple nationalities to your own children.
In many cases, the more nationalities your child has, the more opportunities they will have. One friend of mine was born with two citizenships – one from each parent – along with a family tree that allowed him to claim Italian and Spanish citizenship by descent.
For example, getting citizenship in a stable, developed country from one parent and an up-and-coming emerging country (potentially one that gives investment priority to citizens, as is the case in much of Asia) could be the perfect one-two punch.
As you know, only two countries in the world tax their citizens no matter where they live: the United States and Eritrea. While the decline of some bankrupt western nations may lead a few other countries to enact this type of citizenship-based taxation, odds are it will be harder to some of them because they either don’t have the resources or the ability to chase everyone down all over the globe.
If you are a US citizenship, it may be worth renouncing your US citizenship before giving birth to a child. As with many nationalities, US citizenship is not only conferred on those born in the United States, but to those with at least one US parent.
Especially if you plan to live overseas, your child will be at a severe disadvantage as a US citizen when seeking employment, saving for college, or even saving money in a bank account if he or she is a US person and subject to all of the requirements that come with it.
Parents can not renounce the citizenship of their minor children, so if you want to save yourself – and your child – 18 years and then some of future hassles tied to the ever-growing burdens of being American, a second citizenship for you and your child can be quite helpful.
2. Give birth to them in the right place
This can potentially be the gift that also gives back.
The strategy for obtaining multiple nationalities based on a child’s parents is rooted in the concept of “right of blood”, also called Jus sanguinis. Basically, the right of blood means that a child obtains its nationality from a citizen parent.
This is how most citizenships in Europe and Asia are passed on; you can’t simply go to Austria, give birth, and have an Austrian child with the rights that come with that.
However, some countries in the Americas do offer that under citizenship standards called “right of the soil”, or Jus soil. This is where a child’s citizenship is determined where he or she is born, which means that a child born in a country that offers citizenship to anyone born there would have one more nationality than those offered by his or her parents.
If you live in The Land of the Free, you should be well-aware of the political hot potato that this issue has become. Conservatives complain that mothers come to the United States from Mexico and Central America seeking to have “anchor babies” that receive instant US citizenship, and put the parents on the fast track to being American.
The same opportunity is available to those who believe passing US citizenship to their children is a bad – not a good – thing to do. Canada, Panama, Mexico, and Belize are just a few countries that confer citizenship in (almost) all cases to children born within their borders.
Depending on how far you’re willing to go down the emerging world ladder, you can find dozens of countries through Central and South America and Oceania that will grant instant citizenship. However, when it comes to passports, I generally advise you stick to stable, low-tax countries and leave places like Cambodia for investing.
Additionally, the island nations of St. Kitts and Nevis and Antigua offer the same provisions, which means your child could receive the benefits of a pricey economic citizenship without making an investment.
Perhaps the best place to give birth, however, is Brazil. In addition to an expedited citizenship process for spouses of Brazilian nationals, Brazil offers fast track naturalization to anyone responsible for a Brazilian child.
Not only will your Brazilian-born child have citizenship in a large, relatively well-developed country that has a large enough world presence to stand up for itself, but you will have the opportunity to get Brazilian citizenship in as little as one year (excluding the red tape, of course).
When you consider that countries like Panama and Brazil are becoming highly desirable centers of medical tourism, having a child there could not only be a way to get a great citizenship with easy visa-free travel, but also a way for westerners to escape increasingly high costs of giving birth in hospitals plagued by Obamacare and socialized medicine.
3. Travel and live overseas
It’s often been said that experience is the best education. And I couldn’t agree more.
When I was a child, my family discussed moving to New Zealand to escape what they say as a large number of coming problems in the United States. Not only would that move have given me the option of future New Zealand citizenship, but it would have exposed me to a lot of things most children don’t get the chance to see.
As the cost of college education spirals out of control in the United States, I and many others are encouraging any kid with half a brain to skip the student loans and professor brainwashing and skip right to starting a business.
I learned how to start and manage a business spending summers at my father’s financial services office. However, I would have learned even more about business and the world in general hanging out on the streets of Bogota or Hong Kong.
Giving your children the chance to travel and see history in the making – whether it’s things that don’t work, or the things that do – gives them a great global perspective that no college professor teaching pure theory can replicate.
Personally, I’d like my future children to just as easily fit in selling trinkets on a tourist street in Mexico as they would in a boardroom. The days of raising kids in some lily-white suburb, sending them to a public school, prepping them for the SAT, and sending them off into the world are gone.
Today’s business environment is more global than ever, and not only is the competition greater, but the tide of business is shifting to the south and to the east. If your children aren’t prepared for this, they will not enjoy the success previous generations have.