The Millionaire Next Door
The Millionaire Next Door Post #3: The Surprising Truth About Making Your Children Rich
By: TERAN LONG
One might think that to make your children rich you should give them money, but once again, this would be completely wrong. The Millionaire Next Door by: Thomas J.Stanley, and William D. Danko highlights 5 guidelines to producing wealthy children, and they may not be what you think...
•1. Never tell children their parents are wealthy. (disk 3, part 2)
Those who grew up in a high-consumption lifestyle tend to live a high-consumption lifestyle as an adult, hence accumulating less wealth
•2. No matter how wealthy you are, teach your children discipline and frugality.
(disk 3, part 5)
The best accumulators of wealth are good role models in frugality. They teach their children to save money and live below their means from a young age.
•3. Assure that your children won't realize you're affluent until after they have established a mature, disciplined, and adult lifestyle and profession. (disk 3, part 9)
The best accumulators of wealth set up trust funds for their kids but the plan does not distribute money to their kids until they are the age of 40.
•4. Minimize discussions of the items that each child and grandchild will inherit or receive as gifts. (disk 3, part 12)
Discussing money or inheritance a child will receive later can create an attitude of dependence and be cause for less accumulation of wealth
•5. Never give cash or other significant gifts to your adult children as part of a negotiation strategy. (disk 3, part 16)
Give because of love and kindness. Adult children lose their respect for their parents resort to barging tactics involving money.
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| George is my role model for discipline and frugality (bullet point #2) |
I plan to follow most of these guidelines as a parent in order to give my children the best chance I can for them to become wealthy when they reach adulthood. I might not follow all of the guidelines listed above, but I will certainly do my best to give my children a good basis of financial habits. I do not my future children to struggle to keep wealth as an adult so teaching them important lessons as a child will be a priority.
Thought provoking question: Do you see any parallels from these guidelines to your life?
Citations:
Stanley, Thomas J., and William D. Danko. The Millionaire Next Door: The Surprising Secrets of America's Wealthy. Atlanta, Ga.: Longstreet Press, 1996.
I found your post very interesting Teran! To answer your question, I have seen these scenarios done incorrectly with my cousin. As a child, his parents gave him many things to the point where now, he expects to have the latest technology as an elementary school student. If only his parents took your advice. I hope that he will become more disciplined in the future and realize the importance of saving money in efforts to become a millionaire.
ReplyDeleteVery cool Kenny, you can see first hand some of the principles that I talked about.
DeleteI agree that these tactics would be very useful in not only raising an economically responsible child, but also saving tons of money for the parents! Most would say I have good savings because I spend my money wisely, when in reality I just always work money out of my parents for the movies, or shopping. To some this may be perceived as me just being spoiled, or that I don't have to work for what I want. This may be true, but I protect my feelings by the rule that my parents have set: as long as I'm participating in school activities or sports, they will pay - within reason - for things that I want to do. If not, I can get a job and use my own money.
ReplyDeleteYeah Brooke, I think you have valid points. I think that these are guidelines and a balance should be sought out. One should keep these in mind and they to live by them but following them religiously is not necessary. It sounds like you have some good millionaire-like habits already, keep it up.
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