Can I Teach My Kids to be Rich?

Can I Teach My Kids to be Rich?

The quick answer, I believe is, YES!

Trina from Dallas asked a very interesting question -- "Can a child be taught to be rich?"

One of the great debates we parents discuss is whether it's possible to inspire in our kids the attitudes needed to help them handle money well. Can you encourage a child to put his allowance into a savings account rather than spend it at the local toy store? Can you -- and should you -- inspire a child to dream of 10,000-square-foot homes and a sparkling new Mercedes? In short, can mastery over money, wealth, be taught?

Most experts believe the desire to amass an abundance of money, wealth, is the result of a friendly mixture of genes and good sense. In other words, much of how a child thinks about successful money endeavors is installed into the personality early on. On the other hand, experts also believe it is possible to teach your kids behaviors that will increase their wealth -- and that it is never too early to start thinking about money making scenarios.

When kids have both the inner drive and encouragement in the right direction, get out your calculator because the sky's the limit. Dreams are a natural by product of being young.  Many wealthy individuals keep on dreaming and chasing those dreams. Dreams are the early stages of an inspired plan. Many of us give up on those dreams and adopt a “settle for” mentality – and therefore manifest that as well. I’m not saying we teach our kids to lie around and dream about making a lot of money, but a good plan of action usually does start with an inspiration and the belief that it can happen; dreaming is a big part of that process. The next step will be to put those inspirations into action. Much of the time hard choices are needed to be made, buy the ice cream or save the money in an interest bearing account. It’s not much different than the choices we make everyday as an adult – buy the $3 coffee at Starbucks or place that into new shiny invest of a gold coin by the end of the month ($3x30 = $90 = a small gold investment).

Ever heard of Dr. Gabriela Cora? He's the president of the Executive Health & Wealth Institute, and he has identified three key characteristics that she believes most wealthy people possess:

1. Risk-taking

2. Creativity

3. Perseverance

Although these traits do have a genetic component, they can also be installed and brought to the forefront of a child’s mind. Item #1 “Risk-taking” should be “calculated risk” that includes some kind of “stop loss” mechanism to control the loss size.

More over, studies show that kids want to learn about money. According to Charles Schwab's annual Teens & Money survey, 89% of teens have said they “want to learn how to make their money grow”.

The trouble is, many kids aren't getting the financial guidance they need. According to the Schwab survey, fewer than one in three teens believe their parents or guardians are making sure their teens learn the basics of smart money management. And only five states require a financial education, reports the National Council on Economic Education.

Parents should exhibit behaviors that they want their kids to mimic. Children should see their parents budgeting both their time and money, as well as saving money and not spending the savings on unnecessary items.

Here are some examples of ways you can teach your kids the techniques that help build money into wealth:

• Create a list of priority activities for your child to teach them how to stay organized and focused on the important tasks in their lives.

• Include your children in business events so that they can learn the concept of being professional at an early age.

• Avoid living extravagantly and wasting money on unnecessary purchases. This will teach your child the concept of budgeting and being mindful of their expenses.

• Help your child set goals that require them to plan ahead. For example, saving for an important purchase like a computer.

• Encourage your child to pursue their career goals, from a result-oriented approach. Meaning pick a career and then plan out an approach on how to acquire the job in mind – NOT just saying go to college, spend 2  (or even 3 to 4) years undeclared as they see what looks good. Teach them to be proactive in seeking out what they want & analyze the work that needs to be done to acquire the goal. Emphasizing the importance of saving money and planning for the future, in-case something goes wrong with implementing the plan --- now might be a good time to explain “Murphy’s Law”. Whether your child wants to be an investment banker or a mechanic, he or she should understand the importance of saving regardless of their occupation.

On of the best thing a parent can do to teach kids about money is to expose them to behaviors and mindsets that lead to successful handling of money. Teach your kids to think like an entrepreneur and create opportunities for themselves - rather than to just think about money, teach your teens to think about the benefits of growing their money.