The right piece of advice at the right time can make great differences in the long run the kids of the rich have a massive head start not because of the resources they already have but because of the mindset their parents instill within them, they start with Decades of wisdom from people who achieved massive success these are 5 lessons Rich people teach their kids that the poor don’t.
Understanding how money works:
Number one is understanding how money works now this might sound basic to some of you but there aren’t that many people who ask themselves how people make money and why are being paid this much money by their employers what factors determine my salary or Revenue how do taxes work can that be optimized what needs to happen to improve my finances.
Now Rich parents usually make it a priority to discuss the value and importance of money in their household as soon as possible and this familiarizes kids from a young age with the concept of value in exchange for services provided they’re introduced to household expenses and put in real-life situations where they can figure out pretty quickly that money is a lot harder to earn than it seems on the other end of the spectrum the poor never talk about money at home.
It’s usually a secret how much money the parents earn or how much money is spent the only time the kids hear about money is when parents are arguing about not having enough thus associating the entire concept with negative feelings.
The difference between an asset and a liability:
Number two the difference between an asset and a liability the poor never know what’s a good purchase and what’s a bad purchase after poor people earn money they go ahead and spend it that’s how they stay poor let us explain in as simple terms as possible an asset makes you money while a liability costs you money the problem here is that poor people never realize what counts as a liability for example,
Both the car you drive to the grocery store and the house you live in are liabilities, okay they don’t generate any revenue for you they demand money to keep on running same goes for your new iPhone fancy clothes your smart TV and everything else you purchased without thinking while the rich Focus all of their time and money on acquiring more assets buying an apartment that generates rent writing a book that generates Revenue by purchasing parts of a the business that’s doing okay and more and while most rich people have fancy cars and fancy houses the assets they have pay for those kinds of luxuries rich people never buy luxuries from their own earnings.
They want a fancy new car well they figure out how to buy two apartments and then use the rent from those apartments to pay for the lease of the car that way when you get rid of that car you still have money coming in from the apartment rental, this is the crucial difference in behavior when money starts coming in focus on buying assets instead of spending.
They are not entitled to anything.
Number three they are not entitled to anything the rich know the world can take everything away if they’re not performing while the poor tend to look for someone else to take care of them being born into a wealthy family has its advantages no lies there you’ve got access to better tools and better resources you don’t have to worry about basic needs but you also open yourself up to new threats that poor people don’t have to worry about that.
There’s a lot more for you to lose if you’re not careful so the pressure is always on the wealthy need to teach their children that despite them getting a head start in life the journey ahead is just as long and they need to remain focused on growth not just maintaining the pace of growth whether or not they’ll be successful in life depends on their actions.
Daddy’s Money can only take them so far the fortune of a family where children feel entitled to well usually crumbles in the third generation first, there’s someone who’s hungry and works incredibly hard to build wealth second their children grow up with a sense that all they need to do is to maintain that wealth and lastly, the third generation has lost its hunger feels entitled to success without work or sacrifice and usually spends it all pretty stupidly teaching your kids the lessons from this article will help you to avoid this type of downfall.
How to be sociable and connect with other people:
Number four how to be sociable and connect with other people you would think that more people would realize how important it is to be able to have a pleasant conversation with others successful people socialize their kids.
Before the age of four not even kidding okay here’s why if your child gets socialized that other kids will want to play with them if they behave with other kids well other parents want to take care of them too while they play with their children and this has a massive Snowball Effect throughout? life if people like you and like being around you well this builds up and doors start to open for you that otherwise would stay shut teachers will treat you better you’ll get access to better job opportunities you’ll make better friends there’s an entire tree of benefits that grows from early socialization.
Increasing income instead of lowering expenses:
Number five in increasing income instead of lowering expenses one of the most valuable lessons a parent can teach their child is how to generate more money it takes the same amount of effort or work to barely survive or to make a fortune this might sound peculiar to some of you but it is the truth, okay the difference is the approach and the knowledge you use to back up that effort the smarter you are from a financial perspective the less amount of effort you have to deploy into the real world that’s why Wall Street brokers earn so much more than miners who between these two do you think deploys the most effort-poor people are always focused on lowering expenses as much as possible to the point that life is almost not worth living anymore do you think the rich care about buying a $5 coffee from Starbucks or not or spending $30 on a movie instead the wealthy put all of their attention to increasing the amount of money flowing in if you radically increase your income.
There’s always going to be a large amount of cash left over at the end of every month poor people teach their kids to lower expenses while rich people focus on increasing their income there’s a major difference here you combine that with lesson number two on this list and you are well on your way.