All parents want nothing but the best for their kids, and that includes growing up to be successful in life. But when it comes to money, many parents struggle terribly to teach their kids about it. The good news: even parents who haven’t been financially successful themselves can teach their kids everything they need to know about money including how misunderstood it is by the masses.
Steve Siebold is author of the new book “How Money Works: Stop Being a Sucker,” and is a self-made millionaire who has interviewed more than 1,300 of the world’s wealthiest people over the last 35 years.
His 8 tips to help parents teach their kids how money works:
-Teach your kids to build a healthy relationship with money: Unfortunately, most people see money through the eyes of fear and scarcity. The wealthy teach their kids to look at money as a positive force in their lives, and see it through the eyes of freedom, possibility, abundance and opportunity.
-Teach your kids that wealth is nonlinear:School and most of what you learn is going to teach you to think in linear terms or in a straight line. 123. ABC. Unfortunately, the serious problems in society are rarely solved at this basic level of thought. Encourage your kids to look at things in as many different ways as possible, and in ways that other people never even consider. Teach them that linear thinking is the obvious. Nonlinear thinking is the nonobvious. Linear thinking will make your kids a living. Nonlinear thinking will make them rich.
-Teach your kids to maintain a sense of urgency: Teach your kids that with each passing year, time seems to accelerate, so they must operate with a sense of urgency. The masses procrastinate, stall and put-off fulfilling their commitments to the very last minute, which is often too late. Teach your kids it starts now by completing their class assignments, homework, chores, sports or music practice, and anything else they commit to in advance or at least on time.
-Teach your kids to embrace conflict: Most people avoid conflict at all costs. They hate it. Teach your kids that constructive conflict can be a valuable learning mechanism. When smart people disagree on ideas, philosophies and strategies, new levels of understanding can be reached. Teach your kids to keep their emotions out of conflict and look at it through the eyes of logic and learning. If they do this, they’ll be able to use conflict to learn, grow, be more successful and make more money. Remember, conflict is inevitable, but combat is optional.
-Teach your kids to fail forward: Teach your kids that success is usually built on a series of attempts and failures. Most of the world views failure as a death sentence. Instead of learning from the failure and moving forward, most people shrink back into their comfort zones and play it safe for the rest of their lives. Teach your kids that failure isn’t fun, but it is the required foundation of making it big. Making mistakes and the education they will give you is to be expected and embraced.
-Teach your kids to take responsibility:Teach your kids they are responsible for their success, fulfillment and happiness. Most people like to blame everyone and everything but themselves for their struggles. It’s never their faults because they refuse to grow up and accept the fact that they are makers of their own destinies. Teach your kids not to wait for the hero on the white horse to come riding in to save them. They are the heroes and they are 100% responsible for saving themselves.
-Teach your kids to cocoon themselves: Teach your kids to be selective over who gains access to their inner circle. The masses see this as an elitist action successful people take to isolate themselves from others because they think they’re better. That’s simply not true. Cocooning is about protecting your consciousness from the fear and scarcity mindsets that plagues the masses. Dr. Albert Einstein said, “Consciousness is contagious,” and he couldn’t be righter. Your kids will be the average of the five people they spend the most time with.
FAQs
Wealthy parents understand that investing is critical to building long-term wealth and introduce this concept to their children early on. They teach that money shouldn't just sit idle in a savings account and be put to work. These parents often start by explaining the basics of investing using simple analogies.
How do you think parents can teach the value of money to their children? ›
Here are some easy and fun ways to teach your kids about money.
- Introduce the Concept of Money: Introduce young kids to coins first. ...
- Take them to set up a bank account: Take your kid to a local bank to open a savings account. ...
- Let them earn money: Working for mom and dad will help kids learn.
Self-made millionaires tended to rely on capital appreciation from investments — as well as salary, stock options and profit-sharing. Those who inherited their wealth were more likely to cite entrepreneurship or real estate.
How do you teach kids the value of money? ›
When they're little
- Introduce the value of money.
- Emphasize saving.
- Introduce them to investing.
- Encourage a summer job.
- Introduce them to credit.
- Consider a Roth IRA.
- Help them set a budget.
- Encourage them to stay invested.
The most important lesson from Rich Dad, Poor Dad is that financial literacy is crucial to financial success. He argues that school education fails in this regard and needs to effectively teach financial literacy, including the basics of financial management and wealth building.
Do rich families stay rich? ›
Myth #1: Wealth Lasts Many Generations
It is easy to assume that a wealthy family has always been wealthy and will always be wealthy. But the truth is, around 70 percent of wealthy families lose their wealth by the second generation. More so, around 90 percent of families lose their wealth by the third generation.
What 3 ways do parents teach values to their children? ›
Praise your child when they demonstrate a family value, like empathy or respect. Show affection for family members through your actions and words. Talk about difficult situations in the news and ask your children to consider how they would respond based on your family values. Volunteer as a family.
Should parents teach their kids about money? ›
Teaching kids about money early on will help them to become more financially independent as they get older. Financial education has been linked to lower debt levels, higher savings, and higher credit scores as children mature into adulthood.
Why is it important to teach kids about money? ›
It can help them make better financial choices
From saving and investing to creating and sticking to a budget, early money lessons can give your kids a leg up when it's time for them to make more significant financial decisions.
Are 88% of millionaires self-made? ›
According to research from Zippia, 88% of millionaires are entrepreneurs, meaning they made their money through businesses, investments and their own salaries. While these figures are a few years old, it goes without saying that you can become a self-made millionaire if your business takes off.
But there are a small minority of billionaires who started from genuine poverty. Oprah Winfrey grew up in a home without power or running water, and Starbucks CEO Howard Schultz grew up in government-subsidized housing.
How rare are self-made millionaires? ›
Less Self-Made Millionaires Than Expected
The most surprising revelation from the survey was the following information: Only 27% of respondents claimed to be self-made (with over $3 million)! In the context of the survey, being self-made referred to individuals with a middle-class or poor upbringing and no inheritance.
How do you teach a spoiled child the value of money? ›
Talk with your kids about saving for short term wants, like a new cell phone for older kids or a Lego set or doll for younger kids. Help them set aside a specific amount of allowance each week to save so they can reward themselves with the exciting purchase. Long-term savings is critical, but often neglected.
When to start teaching kids about money? ›
He recommends teaching five- to eight-year-olds “very, very basic things” like that money has value and how choices made with it have an impact. For eight to 12-year-olds topics can be more complex, Landolt believes. “You can talk about the different types or uses of money.
How do I teach my 13 year old the value of money? ›
Give them financial responsibility. It's important that teenagers recognise the value of money and understand that it's not an unlimited resource. Giving them the freedom to manage their own budget will teach them two valuable lessons: Only spend what you can afford.
How do billionaires educate their kids? ›
They prioritize education and continued learning, ensuring their children receive formal and specialized training. Wealthy families send their children to the best private schools to ensure an early elite education so they learn how to think and are instilled with a strong academic work ethic.
What would wealthy children learn? ›
Teach them to shop wisely—to consider quality, need and price. Help your children feel grateful about the family wealth. Acknowledge the wealth. Identify family wealth as a resource to be used, respected and nurtured instead of used up, taken for granted and abused.
Do parents teach their kids about money? ›
Whether it's what parents buy, how often they buy things or whether they look for deals, children are watching just how their mom and dad spend money. Some experts even believe that this is one of the biggest financial patterns kids adapt early on.
What does Rich Dad Poor Dad say about saving? ›
Robert Kiyosaki, the bestselling author of “Rich Dad Poor Dad,” has argued — against conventional wisdom — that “the historical advice to 'save' is no longer a sufficient way to prepare for retirement.” According to the “Rich Dad” blog, you won't be able to retire if you rely on saving money alone.
