20 Lessons Wealthy Parents Teach Their Children About Money
It is fairly well-known that if you are born wealthy you are more likely to become wealthy yourself. In fact, a study in UK found that children born to the wealthiest 5th were 8 times more likely to be in the wealthiest 5th themselves. Here’s 20 money lessons wealthy parents teach their children that you can do too.
1. They talk about money
The first and most important of the lessons wealthy parents teach their children is taught simply by talking about money.
Having constructive and inclusive money conversations at home will make them normal and erase the taboo around talking about money.
Being included in money conversations will also give children confidence in their own ability with money as it has been normalised at home.
2. They teach money management
No matter the amount of money you have, it requires money management. Just consider the statistic that says 70% of lottery winner lose it all within 5 years.
So wealthy parents teach their children to manage their money, to understand cash flow, to budget and how to prioritise.
They let their children practice by providing pocket money and/or allowance and show their children how they manage the family money, and how that has resulted in a financial successful position.
3. They teach the difference between assets and liabilities
In accounting terms, assets are something you own and liabilities are something you owe.
When considering things this way, your home and your car are assets and your mortgage and car loan are your liabilities.
These are used to calculate your net worth, which is assets less liabilities.
But, there is another way to define assets and liabilities, which is that assets are something that bring money in, where as liabilities are something that cost you money.
According to this your home or your car are no longer assets as they cost you in upkeep and in interest costs due to debt attached to them, and usually neither of these items bring any money in. So, they would be liabilities instead.
When considering things this way, your ability to work and earn money is an asset, often considered your biggest asset, among other investments of course.
Wealthy parents teach the difference between these two ideas and help their children understand what truly is an asset to them.
4. They teach delayed gratification
Delayed gratification is the ability to forego spending today in order to get something better later.
Impulse control, the ability to think ahead and stick to a plan to get there are important skills to learn.
You can find my post on how to teach delayed gratification to kids here.
5. They teach abundance mindset
Wealthy parents teach their children that there’s plenty of money to go around, and the wealth of someone isn’t away from you.
This is called the abundance mindset.
Abundance mindset means that you have faith in yourself and your ability to make money, and you are also grateful for what you already have.
Knowing that there is plenty of money to go around can help you be creative in your ventures to make more money, so it is one of the lessons wealthy parents teach their children.
You can read how to turn scarcity mindset to abundance mindset in this post I wrote.
6. They teach about investing
Surprise, surprise, wealthy parents teach they children to invest their money, not keep it in a savings account.
This goes back to them telling their children what assets are, investments, and encourage them to buy them.
Investments are the way to accumulate wealth, so this really is a no-brainer lesson to teach your children.
7. They teach their children to spend smart
Spending money is both necessary and fun. It buys us the necessities, but also the wants.
Wealthy parents teach their children spend smart, meaning that they first of all spend within their means (no going into debt to pay for the newest phone that loses value straight away, or the holiday!), and spend their money on assets rather than liabilities.
They teach their children about values, and how to spend money based on them, because value based spending brings joy and contentment, now and in the future.
8. Wealthy parents teach their children to focus on earning
There’s three ways to increase the amount money you have for discretionary spending: earn more, spend less and combination of earn more/spend less.
There’s a limit in how much you can cut back and still live an enjoyable life, and this different for everyone.
But there is no limit in how much you can earn. Really, there isn’t. (Remember the abundance mindset!)
And this is what wealthy parents focus on when they are teaching their children.
9. They teach their children to surround themselves with successful people
Ever heard the expression “you are who you surround yourself with”?
While it is not as clear-cut as you will be exactly what the people around you are like, it does affect us.
We feed from our surroundings and if you are surrounded by negativity and scarcity and a mindset were money is evil, it is going to be hard to believe in all the possibilities.
This is why wealthy people teach their kids to surround themselves with people who already are where you want get to.
Seeing the success and hearing their stories can be inspiring and give you drive and faith that you will get there too.
10. They teach that solving problems brings money
Marketing 101 is that people don’t buy products, they buy solutions to problems.
Wealthy people know that in order to make money, you need to solve a problem and sell that solution. The bigger the problem, the more money you can make from solving it.
So, wealthy parents encourage creativity and problem solving.
11. They teach that money does solve problems
“Money doesn’t buy happiness”… but it does solve problems, and that makes life easier.
Wealthy parents know this and encourage their children first to make their money by solving problems for others, then they can pay their own problems away from the money they make.
There’s nothing wrong with being able to afford to make life easier for yourself, and that is what wealthy parents teach their children.
12. They teach that you don’t need to be the smartest to succeed
Successful people are not always the smartest, and in fact a lot of other personal qualities are much more important in order to succeed compared to intelligence.
Success is often thought to be related to higher education, but wealthy parents know that this isn’t always true.
While there are professions where higher education is necessary for success (medical field for example, or lawyers), there are plenty of successful people who don’t have any formal higher education.
Wealthy parents share this with their children and remind them that they don’t have to be the best in order to succeed in life.
13. They teach that success isn’t free
One of the lessons wealthy parents teach their children as well is that success doesn’t come free, or overnight.
Success requires work and time, and wealthy parents won’t sugar coat this.
They teach their children about opportunity cost, how you have to give something up in order to get something else.
This could be having a weekend job while studying in order to save for a house when all their friends are having fun.
Wealthy parents tell their children that they can put in the hard work now, and have it easier later in life, or have fun now and then struggle later on to have the life of their dreams.
14. They teach consistency and perseverance
It is amazing what you can achieve with consistency and by not giving up.
Wealthy parents know what can be achieved by consistency, especially when it comes to money management, and investments.
They teach their children that even a small effort consistently matters over time.
Perseverance is equally important. We all experience set backs in life, the important thing is to get back up and try again.
15. Wealthy parents teach their children to choose prosperity over entertainment
Time is your biggest asset, and wealthy parents know that.
They encourage their children to invest their time into themselves, to learn and to work on their goals over entertainment.
Wealthy parents understand that life is for living but that there is a trade-off between spending your time having fun and working on your goals.
So they teach their children to remember that they need to consider carefully how they spend their time.
16. They teach their children to expect to make it
Mindset is so important in life. When you are positive, you will see opportunities and possibilities where others might not.
With positivity also comes believing in yourself and knowing you can get where you want to go.
Wealthy parents support their children, believe in their abilities and encourage them to believe in themselves.
While positivity and self-belief are important, it is also essential that parents help their children make realistic goals that they can really can achieve.
17. They teach their children that they deserve to make it
There are many things wrong with the world, people who suffer and people who don’t deserve the struggles they face.
Money is often thought by some people as the root of all evil and that those who have it are selfish.
But money is not a bad thing, in fact it can be a great tool for good.
Wealthy parents know that life isn’t fair and privilege plays a part in who succeeds and who doesn’t.
They teach their children to appreciate and acknowledge that privilege, but also that they don’t need to feel guilty about it. That they deserve to do well in life.
18. They teach them self sufficiency
Self sufficiency is an important skill to have. Being not reliant on others for money is essential for the feeling of freedom and self esteem, especially for women who traditionally rely on partners for money.
Wealthy parents teach they children the skills to manage their life and money affairs so that they aren’t reliant on others.
19. They teach them basic social rules
We all need other people, and it is common knowledge that the connections you have play a big part in how well you can do.
But even if you get handed those connections through family, wealthy parents know that you need to also have the appropriate behaviour to maintain and utilise those connections through your adult life.
So wealthy parents ensure their children learn how to navigate the world from a social perspective as well.
20. They teach that wealth creates freedom
One of the most important lessons wealthy parents teach their children is what wealth does for them.
They teach their children what is the difference between being rich and being wealthy.
They teach their children that wealth creates freedom, it creates a freedom of choice and location.
Wealth gives you options and possibilities and the chance to live the life of your dreams.
Which of these do you already teach your children? Will you incorporate something new from this list? Let me know in the comments!
